FBAR and FATCA for UK Residents: Reporting UK Accounts to the US

What is the FBAR and who has to file it

The FBAR is FinCEN Form 114, the Report of Foreign Bank and Financial Accounts. A US person files it for any calendar year in which the combined value of their financial accounts outside the United States exceeded $10,000 at any time. It is an information report filed with FinCEN, and it carries no tax.

The FBAR comes from the Bank Secrecy Act, not from the tax code. That origin explains most of what is unusual about it. It is sent to the Financial Crimes Enforcement Network, a bureau of the US Treasury, and not to the IRS. It is not attached to the tax return. It has its own threshold, deadline and penalty regime. The FinCEN page on reporting foreign accounts (opens the official FinCEN page in a new tab) is the primary source, and the IRS, which enforces the rules on FinCEN's behalf, publishes its own FBAR guidance (opens the official IRS page in a new tab).

For someone living in Britain, foreign simply means not in the United States. A current account at a high street bank in Leeds is a foreign financial account for these purposes, even though it is the account your salary is paid into and nothing about it feels offshore.

Who counts as a US person for the FBAR

• US citizens, wherever they live and whether or not they have ever held a US passport
• Green card holders, including those who have left the US without formally giving up the card
• People who meet the substantial presence test (an election to file jointly with a US spouse does not count for the FBAR)
• Children who are US citizens, who have their own filing obligation
• Companies, partnerships, trusts and estates formed under US law

Two points catch people out. An accidental American, born in the US or born abroad to a US parent and raised entirely in Britain, is a US citizen for these purposes and has the same obligation as someone who moved to London last year. And the IRS position is that a green card holder who claims treaty non-residence for income tax still counts as a US resident for the FBAR, because the treaty governs income tax and the FBAR is not an income tax rule.

A US person has to report an account when they have a financial interest in it or signature authority over it. Ownership is the obvious case. The less obvious cases are accounts held through a nominee, accounts of a company the person controls, and accounts they can operate for an employer, a parent or a trust. The annual report sits alongside the tax return described in our guide to US and UK tax returns for Americans in the UK, and we prepare both as part of our foreign income and FBAR reporting service.

How does the $10,000 FBAR threshold work

The FBAR threshold is an aggregate. You take the highest value each foreign account reached during the calendar year, convert each to US dollars, and add them together. If the total exceeds $10,000, every account is reported, including the small ones. No single account needs to cross the threshold on its own.

This is the rule most often misread. People check whether any one account went over the figure, see that none did, and conclude there is nothing to file. The test does not work account by account. It adds the peaks together, and the peaks do not have to fall on the same day.

Worked example: four small accounts

Take a US citizen employed in London on a UK salary. She has a current account that her pay goes into, a cash ISA, a regular saver she opened for a holiday, and some Premium Bonds her grandmother bought for her. None of the four has ever held anything close to the threshold. In March she moves her bonus through the current account before sending most of it to the cash ISA.

For the FBAR she takes the highest balance of each account in the year. The current account is counted at its March peak, with the bonus in it. The cash ISA is counted at its own peak later in the year, with the same bonus now sitting there. The regular saver and the Premium Bonds are added on top. The same money has been counted twice, and that is how the rule is designed. The four peaks together exceed the threshold, so she files and lists all four accounts.

• The test looks at the whole calendar year, 1 January to 31 December, not the UK tax year
• Joint accounts are counted at their full value, not your share
• Accounts you can sign on but do not own are counted too
• Once the threshold is crossed, every account is reported, however small

The threshold is set in dollars and has not moved for decades, so sterling balances have to be converted before the comparison is made. The conversion uses a single published year-end rate, explained in the section on maximum values below. A house deposit passing through a current account will cross the threshold on its own, and one day over the line is enough.

Which UK accounts go on the FBAR and Form 8938

Most UK financial accounts are reportable: current and savings accounts, cash and stocks and shares ISAs, investment platforms, pension pots and insurance policies with a cash value. The UK State Pension and a house you own directly are not accounts and are not reported. Form 8938 covers broadly the same accounts, with some differences.

The table sets out the treatment we apply to the accounts a UK resident is likely to hold. It follows the IRS comparison of Form 8938 and FBAR requirements (opens the official IRS page in a new tab). It names account categories, not UK products, so some rows reflect the cautious reading. Form 8938 treatment applies only once that form's higher thresholds are met.

The rows that need a closer look

Premium Bonds are held in an account with National Savings and Investments. There is no FinCEN statement that names them, so the cautious practice, which we follow, is to report them at their face value. E-money and app-based accounts follow the entity that holds the account. An account with a UK-authorised firm is treated as a foreign account.

Cryptocurrency is the least settled row. FinCEN stated in Notice 2020-2 that the FBAR regulations do not currently define a foreign account holding only virtual currency as a reportable account, and that it intends to propose a change. We have not found a final rule making that change. An account that holds reportable assets such as cash alongside virtual currency is reportable. The IRS has not published definitive guidance on Form 8938 either, so the IRS digital assets page (opens the official IRS page in a new tab) is worth checking each year.

How are ISAs and UK pensions reported to the US

An ISA has no special status under US law, so it is reported like any other account and its income is taxable on the US return. Funds held inside a stocks and shares ISA are commonly passive foreign investment companies, which need Form 8621. UK pension pots are reported as accounts, and the treaty governs how they are taxed.

The UK grants Individual Savings Accounts (opens the official GOV.UK page in a new tab) freedom from UK income tax and capital gains tax. The US does not recognise the wrapper. Interest in a cash ISA is taxable on Form 1040 in the year it is credited, and the account goes on the FBAR and, where the thresholds are met, on Form 8938.

A stocks and shares ISA is different because of what it holds. UK unit trusts, OEICs, investment trusts and most exchange-traded funds listed outside the US are commonly passive foreign investment companies, or PFICs. Each PFIC is reported on its own Form 8621 (opens the official IRS page in a new tab), with a punitive default tax treatment unless an election is made. Individual company shares are usually not PFICs, though a foreign company that is mostly passive can be one. Our article on why a stocks and shares ISA worries the IRS sets out the detail.

Form 8621 has a limited exception. For tax year 2025, where the total value of all PFIC holdings is $25,000 or less, or $50,000 for joint filers, and there were no relevant distributions or disposals, the annual reporting in Part I may not be required. The form carries no standalone monetary penalty, but leaving it off a return that needs it keeps the limitation period open for the whole return. Our PFIC reporting service and the page on Form 8621 cover the elections.

Workplace pensions and SIPPs

A defined contribution workplace pension and a self-invested personal pension each have an identifiable pot with a value, and we report both on the FBAR. The FBAR exception for retirement accounts covers US plans such as IRAs, and it does not extend to UK schemes. A defined benefit scheme promises an income and often has no individual account, so its FBAR treatment depends on the scheme. On Form 8938 the IRS is explicit that an interest in a foreign pension is a specified foreign financial asset.

Reporting a pension is separate from being taxed on it. Under the US-UK treaty, growth inside a UK pension scheme is generally protected from current US tax for a US citizen. Relief for contributions is narrower and is limited by the saving clause. See our US and UK pensions service and the guide to US-UK double taxation.

How do you work out the maximum account value in dollars

For each account, find the highest balance shown during the calendar year, in pounds. Convert it to US dollars using the Treasury reporting rate of exchange for 31 December of that year, and round up to the next whole dollar. Periodic statements are acceptable evidence as long as they fairly reflect the highest value.

The FBAR asks for a reasonable approximation of the greatest value of each account during the year. It does not ask for the average, the year-end balance or the balance on any particular date. For a current account that means reading through twelve months of statements, or the transaction export from online banking, for the highest closing balance. For an investment account, quarterly or annual valuations are normally enough, unless you know of a higher value between statement dates.

1. 01

   List every account

   Include accounts closed during the year, dormant accounts, and accounts you can operate but do not own.

2. 02

   Find each highest balance in sterling

   Use statements or a transaction download for the calendar year. Record the figure and the date, and keep the page it came from.

3. 03

   Convert at the Treasury year-end rate

   Divide the sterling figure by the pound rate published in the Treasury reporting rates of exchange (opens the official US Treasury page in a new tab) for 31 December.

4. 04

   Round up and add the accounts together

   Round each converted amount up to the next whole dollar. A negative figure, such as an overdrawn account, is entered as zero. Then test the total against the threshold.

The year-end rate is used even when the highest balance fell in a different month. That feels odd, but it is what the instructions require, and it makes the exercise simpler. Form 8938 uses the same Treasury year-end rate for its maximum values, so one schedule of balances serves both reports. Income is different. Interest and dividends on the tax return are converted at the rate on the day received or at a yearly average rate (opens the official IRS page in a new tab), as the IRS explains in its note on foreign currency and exchange rates (opens the official IRS page in a new tab).

Pensions and insurance policies rarely show a daily balance. For a pension pot, the annual statement value or the valuation on the provider's portal is the usual figure. For an insurance policy, use the cash surrender value. For Premium Bonds, use the total holding. The document checklist in our client portal lists the statements we ask for.

How do you file an FBAR from the UK

The FBAR is filed electronically through FinCEN's BSA E-Filing System. It is not sent to the IRS and is not attached to Form 1040. An individual can file without registering for an account, there is no fee, and FinCEN issues a confirmation with a tracking number once the report is accepted.

Because the FBAR travels separately from the return, it is easy to miss. Tax software aimed at US residents often omits it, and a preparer engaged only for the Form 1040 may not file it unless asked. They are two obligations with two recipients, and filing one does nothing for the other. The FinCEN FBAR page (opens the official FinCEN page in a new tab) links to the filing system and the line-by-line instructions.

1. 01

   Gather account details

   For each account you need the institution's name and address, the account number, the account type, and the maximum value in dollars worked out as described above.

2. 02

   Open the individual filing option

   On the BSA E-Filing site, individuals can complete FinCEN Form 114 online without creating an account.

3. 03

   Complete the filer section

   Enter your name, address, date of birth and US taxpayer identification number. Select the calendar year being reported, which is the year before the one you are filing in.

4. 04

   Enter accounts by category

   Accounts you own alone, accounts you own jointly, and accounts where you have signature authority but no financial interest each have their own part of the form.

5. 05

   Sign and submit

   Sign electronically and submit. If someone else files for you, sign FinCEN Form 114a first to authorise them.

6. 06

   Save the confirmation

   Keep the submission confirmation and the tracking identifier with a copy of the report. If you later find an error, file an amended report through the same system.

Spouses and the joint filing exception

Two spouses who are both US persons can sometimes be covered by one report. The exception applies only where every account the non-filing spouse must report is jointly owned with the filing spouse, the report is filed on time, and both have signed Form 114a. If either has an account in their sole name, or signature authority over an employer's account, each files separately and each lists the joint accounts in full.

We file the FBAR alongside the federal return as part of individual tax return preparation, working from one schedule of accounts so that the figures on the FBAR, Form 8938 and Schedule B of Form 1040 agree. The FinCEN Form 114 page on this site describes the form itself.

When is the FBAR due and what records must you keep

The FBAR for a calendar year is due on 15 April, extended automatically to 15 October. No form or request is needed for the extension. It is due whether or not you have to file a tax return for that year, and the supporting records must be kept for five years from the due date.

The FBAR due date follows the federal tax return date of 15 April, but the extension works differently. For the tax return, a filer living abroad gets an automatic extension to 15 June and can ask for more time with Form 4868. For the FBAR, every filer receives the later date automatically and there is nothing to request.

Due even when no tax return is

The FBAR obligation does not depend on income. A US citizen who is a student in Edinburgh with no earnings, or a retired spouse whose income is below the filing threshold, still files an FBAR if their accounts cross the aggregate threshold. Form 8938 is the opposite: the IRS states that a person who does not have to file an income tax return does not have to file Form 8938, whatever the value of their assets.

That said, the tax return threshold is lower than many people assume. A US citizen married to a non-US spouse normally files as married filing separately, and for that status the gross income threshold is $5. In practice almost every US person in the UK with an account earning interest has both obligations, as Publication 54 (opens the official IRS page in a new tab) explains.

Records to keep

• The name in which each account is held
• The account number or other designation
• The name and address of the bank or institution
• The type of account
• The maximum value of the account during the year

These records must be kept for five years from the due date of the report. UK banks limit how far back online statements go, and a closed account can be slow to retrieve, so download the year's statements when you file.

What is FATCA and how does it affect people in the UK

FATCA is the Foreign Account Tax Compliance Act, a US law from 2010 with two halves. Individuals report their foreign financial assets on Form 8938 with their tax return. Separately, UK financial institutions identify accounts held by US persons and report them each year to HMRC, which passes the information to the IRS.

People use the word FATCA for both halves, which causes confusion. When a bank writes about FATCA, it means its own duty to identify and report US account holders. When a tax preparer says FATCA reporting, they usually mean Form 8938. The two halves are connected only in the sense that the IRS can compare one with the other. The IRS overview of FATCA (opens the official IRS page in a new tab) covers both, and its summary of FATCA reporting for US taxpayers (opens the official IRS page in a new tab) covers the individual side.

The institution half: the UK-US agreement

As enacted, FATCA required foreign financial institutions to report directly to the IRS or face withholding on US-source payments. The UK was the first country to sign an intergovernmental agreement with the US, in 2012, which replaced that direct relationship. Under it, UK institutions report to HMRC under UK regulations, and HMRC exchanges the data with the IRS. HMRC describes the arrangement in its introduction to automatic exchange of information (opens the official HMRC page in a new tab).

• Who reports: banks, building societies, investment platforms, certain insurers and other custodial or investment entities
• Who is reported: account holders who are US citizens or US residents, and certain entities controlled by them
• What is reported: name, address, US taxpayer identification number, account number, year-end balance or value, and income paid
• Route: institution to HMRC, then HMRC to the IRS

The agreement also lists UK products that institutions do not have to report, which is why some pension schemes and certain savings products never generate a FATCA report from the provider. That exemption belongs to the institution. It does not remove the account from the individual's own FBAR or Form 8938.

The practical consequence is that the IRS already holds a list of UK accounts belonging to people its counterpart has identified as American. A person who has never filed is not invisible. That is not a reason for alarm, but it is a reason to deal with missed years before a letter arrives, because the gentler correction routes close once the IRS makes contact.

Why has my UK bank sent a FATCA letter asking for a US TIN

A UK bank sends a FATCA self-certification letter when its records suggest a customer may be a US person, for example a US place of birth, address or telephone number. It is required to ask for your tax status and, if you are a US person, your US taxpayer identification number, usually on a self-certification form or Form W-9.

The bank is carrying out due diligence that UK regulations require of it. When an account is opened, the institution must obtain a self-certification, which is the customer's own statement of where they are tax resident and whether they are a US citizen. For existing accounts, it searches its records for signs of a US connection, known as US indicia. When it finds one, it writes to the customer to confirm or disprove the connection.

• A US place of birth on a passport or application form
• A current US residential or mailing address
• A US telephone number

What the bank wants back

If you are a US person, the bank wants confirmation and your US taxpayer identification number, which for an individual is a Social Security number. If you are not a US person despite the US connection, the bank needs evidence. A US person should never sign Form W-8BEN, which is a declaration of foreign status. That form is for the non-US spouse or the British investor, and the IRS page on Form W-8BEN (opens the official IRS page in a new tab) says who may use it.

Worked example: an accidental American

Consider a British woman born in Texas while her father was on a work assignment, who left as a baby and has never held a US passport. Her building society writes asking for a US taxpayer identification number. She has none. She is nonetheless a US citizen by birth, and the letter is the first sign that the US regards her as one of its taxpayers.

Her sensible order of events is to answer the bank truthfully, apply for a Social Security number through the Federal Benefits Unit at the US Embassy, and take advice on bringing the missed years up to date. Our guide to IRS streamlined filing from the UK covers that last step.

What happens if you ignore the letter

Not replying does not make the question go away. Where US indicia are on file and are not disproved, the institution generally has to treat the account as reportable and send what it holds to HMRC. Many institutions will not open a new account without a completed self-certification, and some restrict or close existing accounts as a commercial decision when customers do not respond. Completing the bank's form satisfies the bank's obligation and not yours: it does not file an FBAR, a Form 8938 or a tax return.

Form 8938 or FBAR: which do you file and what are the thresholds

Many people file both. The FBAR applies once foreign accounts exceed $10,000 in aggregate. Form 8938 applies at higher levels: for tax year 2025, a US person living abroad and not filing jointly files when specified foreign financial assets exceed $200,000 at year end or $300,000 at any time. Filing one never satisfies the other.

Form 8938 thresholds depend on where you live and how you file. The higher figures for people abroad apply to a US citizen who is a bona fide resident of a foreign country for a full tax year, or to a citizen or resident present abroad for at least 330 full days in a twelve-month period ending in the tax year. Most Americans settled in the UK qualify. The IRS tool Do I need to file Form 8938 (opens the official IRS page in a new tab) walks through the tests.

On Form 8938 but not on the FBAR

• Shares in a UK company held directly, outside any account, including a founder's shares in their own company
• An interest in a foreign partnership, private equity fund or hedge fund
• A beneficial interest in a foreign trust or estate

On the FBAR but not on Form 8938

• Accounts where you have signature authority and no financial interest
• Accounts of a company or partnership in which you own more than half

Take a US citizen in Manchester filing separately from her British husband, with ordinary bank accounts, a stocks and shares ISA and a workplace pension built up over two decades. The bank accounts alone put her over the FBAR threshold, and the pension takes her past the Form 8938 level for a person abroad, so every account goes on both reports. Our article FBAR or Form 8938: which do you file and the Form 8938 page take the comparison further.

How are joint accounts with a non-US spouse and children's accounts reported

A US person reports a joint account at its full value on the FBAR, even when the other holder is a non-US spouse who contributed all the money. The non-US spouse has no FBAR obligation of their own. A child who is a US citizen has a separate filing obligation, which a parent meets for them.

The FBAR does not apportion. Each US person with a financial interest in a joint account reports the entire maximum value and states the number of joint owners. For a principal joint owner the form asks for a name, an address and a taxpayer identification number if they have one. A British spouse with no US number is identified by name and address, and the number field is left blank.

Worked example: a joint account with a British spouse

A US citizen married to a British national holds a joint current account and a joint savings account with him. He is paid a UK salary taxed partly at the higher rate, and most of the money in the accounts is his. She also has a small account in her sole name. For the FBAR she reports all three accounts at their full highest balances. Whose money it is makes no difference.

Her husband files nothing. He is not a US person, so he has no FBAR and no US tax return. If the couple elect to treat him as a US resident in order to file jointly, his worldwide income comes into US tax and his assets count towards Form 8938 on the joint return, so the election needs modelling before it is made. The FBAR is different: the IRS manual says that election is disregarded for FBAR purposes, so it does not by itself give him an FBAR of his own. For Form 8938, the instructions say that a specified individual who owns an asset jointly with a spouse who is not a specified individual includes the full value of the asset. Mixed households like this are the main work of our individuals and families division.

Children's accounts and Junior ISAs

A child with US citizenship is a US person from birth. If the child's own accounts exceed the aggregate threshold, an FBAR is due in the child's name, and FinCEN's instructions say a parent or guardian files and signs it where the child cannot. For Form 8938, a parent who elects to report a child's investment income on their own return is treated as having an interest in the child's foreign assets.

• US child, account in the child's name: the child's FBAR, filed by a parent
• US parent who can operate the child's account: the parent may also have to list it, on the basis of signature authority
• Non-US child, US parent as registered contact or trustee: the parent's position depends on the authority they hold over the account

Do you report accounts you can sign on but do not own

Yes, on the FBAR. Signature authority means you can control what happens to the money in an account by instructing the bank, alone or with someone else. A finance director who can approve payments, an attorney acting for a parent and a trustee all report those accounts, although none of the money belongs to them.

Signature authority is the part of the FBAR that surprises employees most. The test is whether the bank will act on your instruction. Being named on the mandate is enough, even if you have never used it. Online banking access that lets you make or approve payments counts.

Worked example: a finance director

A US green card holder who has moved to Bristol works as finance director of a UK trading company in which she owns no shares. She is one of two people who can approve payments from the company's three bank accounts. She files an FBAR listing each one in the signature authority section, giving the company's name as owner. They do not go on her Form 8938, because she has no interest in the assets.

Your own company's accounts

Where a US person owns, directly or indirectly, more than half of the voting power or value of a company, the FBAR treats them as having a financial interest in the company's accounts. A US founder of a UK limited company therefore reports the business accounts as their own, and the company's shares are a Form 8938 asset. Ownership at that level also brings Form 5471 (opens the official IRS page in a new tab), an information return with an initial penalty for each year it is missed. Our page on Form 5471 and the guide for founders, fund managers and executives cover this.

Attorneys, executors and trustees

A US person acting under a lasting power of attorney for a British parent has signature authority over the parent's accounts once the power allows them to operate those accounts, whether or not they have used it. An executor administering a UK estate and a trustee of a UK family trust are in the same position while they control the accounts. None of this makes the money theirs.

• US person who set up a foreign trust and is treated as its owner: financial interest in its accounts
• Beneficiary entitled to more than half of the trust's assets or income: financial interest
• Discretionary beneficiary with no fixed entitlement: generally no FBAR interest, though Form 8938 and Form 3520 questions remain

Trusts bring their own returns. Transactions with a foreign trust and distributions from one go on Form 3520 (opens the official IRS page in a new tab), and a foreign trust with a US owner files Form 3520-A (opens the official IRS page in a new tab). The penalties are proportional: for unreported transfers and distributions, the greater of $10,000 or 35% of the gross reportable amount. See our pages on Form 3520 and Form 3520-A, and our estate and trust planning service.

What are the penalties for not filing an FBAR or Form 8938

FBAR penalties depend on whether the failure was wilful. A non-wilful failure can carry a civil penalty for each report not filed, and none where there was reasonable cause. A wilful failure carries a much heavier penalty measured against the account balances, and can be criminal. Form 8938 has its own separate penalty under the tax code.

Non-wilful failures and the Bittner decision

A non-wilful failure is one that results from negligence, inadvertence, mistake or a good-faith misunderstanding of the law. Many UK residents who have missed FBARs are in this category: they did not know the form existed. In Bittner v. United States, decided in 2023, the US Supreme Court held that the non-wilful penalty applies per report, not per account. A person who failed to file one annual FBAR listing twelve accounts has committed one violation for that year, not twelve. The law also provides that no penalty applies to a non-wilful failure where there was reasonable cause and the account balances were properly reported once the failure was corrected.

Wilful failures

A wilful failure is a voluntary, intentional breach of a known legal duty. The courts have extended the civil standard to recklessness and wilful blindness, which means deliberately avoiding finding out. The penalty for a wilful failure is calculated by reference to the balance in the unreported accounts and can be many times the non-wilful figure. The Bittner per-report rule concerned non-wilful penalties. Criminal prosecution is possible in serious cases.

• Answering No to the foreign accounts question on Schedule B while holding UK accounts
• Continuing not to file after a preparer or bank has explained the requirement
• Withholding the existence of accounts from the person preparing the return

The items above are the kinds of fact that examiners and courts have treated as pointing towards wilfulness. None is conclusive, and the absence of all of them does not settle the matter. Where there is real doubt, the question should go to a US tax attorney before anything is filed, because advice from an attorney is privileged in a way that an accountant's generally is not.

Form 8938 penalties

Failing to file a required Form 8938 carries an initial penalty of $10,000, with further penalties if the failure continues after the IRS sends notice. There is a reasonable cause exception. Two indirect consequences often matter more. Tax underpaid on income from an undisclosed asset attracts an accuracy-related penalty at a higher rate than usual, and the limitation period for the return can stay open until the form is filed. The IRS page for Form 8938 (opens the official IRS page in a new tab) links to the instructions.

What should you do about missed FBARs

File them, through a route that fits the facts. If all income from the accounts was already reported on US tax returns, the late FBARs are filed with FinCEN with a reason for lateness. If tax returns are also missing or wrong, the streamlined filing compliance procedures deal with returns and FBARs together.

The first step is to work out what is actually missing. Some people have filed tax returns every year and simply never knew about the FBAR. Others have filed nothing. Others filed returns that left out UK interest or an ISA. The right route differs for each.

Filing late FBARs on their own

This is for people whose tax returns were right and who have not been contacted by the IRS about the missing reports. The FBARs are filed through the BSA E-Filing System in the normal way, with a reason for late filing selected on the form and a short explanation. For years the IRS published separate delinquent FBAR submission procedures, which said no penalty would be imposed where the income had been reported and the tax paid. That page was withdrawn in mid-2026 and has not been replaced. The current IRS guidance on the FBAR (opens the official IRS page in a new tab) says that late filing is a violation, that penalties depend on the facts, and that filing promptly before any IRS contact keeps exposure to a minimum. The explanation therefore needs to be accurate and carefully written.

The streamlined routes in brief

The streamlined filing compliance procedures (opens the official IRS page in a new tab) need a signed certification that the failures were non-wilful, and neither route is available once the IRS has opened an examination. On the Streamlined Foreign Offshore Procedures (opens the official IRS page in a new tab), for people who meet the non-residence test of 330 full days outside the US in at least one of the last three years, no penalty is charged. The Streamlined Domestic Offshore Procedures (opens the official IRS page in a new tab), for US residents, carry a miscellaneous offshore penalty of 5% of the highest year-end value of the relevant assets.

Late Forms 8938, 5471 or 3520 with no tax effect have their own route, the delinquent international information return submission procedures (opens the official IRS page in a new tab), which rest on a reasonable cause statement. Where conduct may have been wilful, the voluntary disclosure practice (opens the official IRS page in a new tab) is the relevant programme. Our IRS streamlined filing service prepares these submissions, and the article on the streamlined routes for people behind on US returns explains the certification.

Does filing an FBAR mean you owe US tax

No. The FBAR is a report of account details and balances, and no tax is calculated or paid on it. Form 8938 is also an information return. Any US tax on the accounts arises on Form 1040, on the interest, dividends and gains they produce, and UK tax paid usually reduces or removes it.

A large balance on an FBAR has no tax consequence in itself. The US does not tax savings for existing. It taxes the income they produce, and that income belongs on the tax return whether or not an FBAR is due. For most UK residents, the UK tax already paid on the same income is claimed as a foreign tax credit, and the US bill after credits is small or nil. ISA income is the usual exception, because the UK charges nothing on it and so there is no credit to claim.

Common mistakes

• Testing each account against the threshold separately when the test is the aggregate
• Leaving out pensions, ISAs and Premium Bonds because they are tax-free in the UK
• Assuming the tax preparer or the tax software filed the FBAR with the return
• Reporting half of a joint account because the other half belongs to a spouse
• Forgetting accounts closed during the year and accounts with signature authority only
• Ticking No to the Schedule B question about foreign accounts on Form 1040

Three questions to keep apart

The three US obligations work independently, and it helps to ask them separately. First, whether you must file a tax return, which depends on gross income and filing status. Second, whether you must file an FBAR, which depends only on the aggregate value of your accounts. Third, whether you must file Form 8938, which depends on a higher asset value and on having a return to attach it to.

People with larger and more varied holdings usually face all three, together with Form 8621 for funds, Form 5471 for companies and the trust forms. That coordination is the work of our high net worth division, and it starts with one schedule of every account and asset, valued once.