What Is FATCA? A Plain-English Guide for Americans in the UK
What the Foreign Account Tax Compliance Act is, what UK banks report about you, when you file Form 8938, and how FATCA differs from the FBAR.
UK banks in the City and beyond report accounts held by Americans to HMRC, which passes the details to the IRS.
Written by the US UK Tax Experts team, cross-border tax specialists
What is FATCA: an introduction
If you are asking what is FATCA, it is the Foreign Account Tax Compliance Act, a US law passed in 2010 that makes foreign banks report accounts held by Americans. It also requires US taxpayers to report their own foreign financial assets on Form 8938. For Americans in Britain, it explains why UK banks ask about US citizenship. It also explains why the IRS may already know about your accounts.
This guide explains what the law does, what UK banks report and what you file yourself. Our full guide to FBAR and FATCA reporting covers both regimes in more depth, with worked figures.
What is FATCA in one sentence?
FATCA is a reporting regime with two halves: one aimed at foreign financial institutions and one aimed at US taxpayers. The IRS describes it on its Foreign Account Tax Compliance Act page. Institutions report on their US account holders. Meanwhile, individuals report specified foreign financial assets with their tax return.
Why Congress passed it
Congress enacted FATCA in 2010 to target non-compliance by US taxpayers using foreign accounts, according to the US Treasury FATCA page. Before then, the IRS relied mostly on taxpayers to declare foreign accounts themselves. FATCA added a second source of information from the banks. Consequently, unreported accounts became much easier to find.
What does FATCA require of UK banks?
UK banks and other financial institutions must identify accounts held by US persons and report them each year. In the UK, they report to HMRC, which passes the information to the IRS. The details come from US law and a UK-US agreement.
Identifying US account holders
Banks look for signs of US status, such as a US birthplace, a US address or a US phone number. Where they find one, they ask you to confirm your status. Many use the IRS Form W-9 or their own self-certification form. Our article on what to do about a FATCA letter from a UK bank explains how to answer one.
What banks report
Section 1471(c) of the Internal Revenue Code lists the information. It covers the name, address and US taxpayer identification number of each US account holder. It also covers the account number, the account balance or value, and gross receipts and withdrawals. You can read the text at 26 US Code section 1471.
How UK reporting reaches the IRS
The UK and the United States have an intergovernmental agreement in force, which the Treasury lists as a Model 1 agreement. Under a Model 1 agreement, institutions report to their own tax authority rather than directly to the IRS. In the UK, the rules sit in The International Tax Compliance Regulations 2015. HMRC's manual on automatic exchange of financial accounts information explains its process.
Withholding on non-participating institutions
The law's enforcement tool is withholding. A withholding agent must withhold 30% of certain US-source payments made to a foreign financial institution that does not meet the requirements. As a result, almost every major bank takes part. The IRS publishes a searchable FATCA foreign financial institution list of registered institutions.
Who counts as a US person under FATCA?
US citizens, green card holders and others who are US tax residents count as US persons, wherever they live. Dual nationals count too, even if they have never lived in the United States. That is why the question of what is FATCA reaches so many British residents.
Citizens and dual nationals
Every US citizen is a US person for tax purposes, including those who also hold British citizenship. Someone born in the United States who left as a baby is still a citizen unless they have formally given it up. Consequently, many people first learn they are in scope when their UK bank asks about a US birthplace. The IRS confirms the wider filing duty on its page for US citizens and resident aliens abroad.
Green card holders
A green card holder is a lawful permanent resident of the United States. Holding a green card makes you a US tax resident, even after you move to the UK, until the status is formally ended. Therefore, green card holders living in Britain face the same FATCA reporting as citizens. Many do not realise this until a bank or adviser raises it.
Joint accounts with a non-US spouse
Where an American holds a joint account with a British spouse, the account is treated as held by a US person. For your own FBAR, the full balance of a joint account is normally shown. Therefore, couples should agree how joint accounts are reported before filing.
Which UK accounts does FATCA reach?
FATCA reaches most UK financial accounts, including current accounts, savings accounts, ISAs and investment platforms. Your own reporting duties, however, follow the FBAR and Form 8938 rules rather than what the bank reports. The two lists are similar but not identical.
Current and savings accounts
Everyday current accounts and savings accounts with UK banks and building societies are financial accounts for FATCA purposes. Banks identify US holders when accounts are opened and review existing accounts for US signs. Consequently, almost every American in Britain has at least one reportable account. Understanding what is FATCA means accepting that the IRS will see these balances.
ISAs and investment platforms
ISAs and general investment accounts held with UK platforms are also financial accounts. The UK tax-free status of an ISA has no effect in the United States. Moreover, the funds held inside these accounts are often passive foreign investment companies for US purposes. That brings a separate reporting duty on top of FATCA.
Pensions
Whether a UK pension appears on your FBAR or Form 8938 is a technical question. The answer comes from the IRS instructions for each form, not from the bank's FATCA reporting. Therefore, treat each pension separately and record its value each year. Our pensions service covers this reporting.
What does FATCA require of you?
For individuals, the answer to what is FATCA is mostly Form 8938. You file it with your US tax return if your specified foreign financial assets exceed the thresholds for your filing status and residence. It sits alongside, not instead of, the FBAR.
Form 8938
Form 8938 is the Statement of Specified Foreign Financial Assets. It comes from section 6038D of the Internal Revenue Code. You attach it to your annual return, and it shares that return's due date, including extensions. The IRS summary of key FATCA provisions notes that it applies to assets held in tax years beginning after 18 March 2010.
Thresholds for Americans abroad
The thresholds are higher if you live abroad. For a single filer living abroad, Form 8938 applies above $200,000 at year end or $300,000 at any time in the year. For a married couple filing jointly and living abroad, the figures are $400,000 and $600,000. In contrast, a single filer living in the United States reports above $50,000 at year end or $75,000 at any time.
What counts as a specified foreign financial asset
Specified foreign financial assets include foreign bank and investment accounts. They also include foreign shares and securities held outside an account, and interests in foreign entities. For example, a UK current account, an ISA and a stake in a UK private company can all count. However, some UK assets, such as directly held property, are not reported on Form 8938 unless held through an entity.
What is the difference between FATCA and the FBAR?
The FBAR is a FinCEN report of foreign accounts with a $10,000 aggregate threshold, filed separately from your return. Form 8938 is an IRS form filed with your return, with much higher thresholds and a wider range of assets. Many Americans in the UK file both.
Different agencies, different forms
The FBAR is filed with the Financial Crimes Enforcement Network through its BSA E-Filing System. FinCEN explains the duty on its page about how to report foreign bank and financial accounts. Form 8938, by contrast, goes to the IRS with your Form 1040. Therefore, filing one never satisfies the other.
Different thresholds
The FBAR applies when your foreign accounts together exceed $10,000 at any time in the calendar year. That is a low bar, so most Americans with UK accounts meet it. Form 8938 applies only above the much higher figures above. The IRS compares the two in its comparison of Form 8938 and FBAR requirements.
Filing both
If you meet both tests, you file both, even though they repeat much of the same information. Knowing what is FATCA and what is the FBAR helps you see why. The FBAR is due on 15 April with an automatic extension to 15 October. Form 8938 follows your tax return's deadline. Accordingly, a joined-up preparer handles them from the same account list.
What happens if you do not comply with FATCA?
Missing Form 8938 can bring a $10,000 penalty, with more after an IRS notice. Banks may also restrict accounts if you do not answer their FATCA questions. Catch-up routes exist for non-wilful cases.
Penalties for Form 8938
The IRS describes a penalty of up to $10,000 for failing to file Form 8938. A further $10,000 can apply for each 30 days of continued failure after an IRS notice, up to a maximum of $60,000. Additionally, underpayments linked to unreported assets can attract a 40% penalty, according to the IRS summary. Criminal penalties may also apply in serious cases.
Bank requests and self-certification
UK banks must document the US status of their customers. If you do not reply to a self-certification request, the bank may treat the account as reportable or restrict it. Therefore, answer accurately and keep a copy. Remember that what you tell the bank will reach the IRS through HMRC.
Catching up
If you have missed Form 8938 or FBARs through non-wilful conduct, the usual route for people abroad is the Streamlined Foreign Offshore Procedures. The IRS sets out the terms on its page for US taxpayers residing outside the United States. Our guide to IRS Streamlined Filing from the UK explains the steps. Note that the IRS removed its Delinquent FBAR Submission Procedures page in July 2026, so late FBARs alone are not a penalty-free route.
An illustrative example
Consider a typical case. Laura is a US citizen who has lived in Bristol for six years. She has a current account, a cash ISA and a stocks and shares ISA. Her bank recently sent her a self-certification form asking about US citizenship.
For Laura, the practical answer to what is FATCA is twofold. Her bank will report her accounts to HMRC, which will pass them to the IRS. Her own accounts together exceed $10,000, so she must file FBARs. Her assets are below the Form 8938 threshold for someone living abroad, so that form does not apply yet. However, the funds in her stocks and shares ISA may need Form 8621.
How US UK Tax Experts can help
We prepare the US filings that FATCA touches for Americans in the UK. If you are still asking what is FATCA, we start with a plain review of your accounts. First, we list every account and asset and test them against the FBAR and Form 8938 thresholds. Next, we prepare the FBAR and, where needed, Form 8938 with your Form 1040. We then check the UK return reports the same income, so the two returns agree.
Our FBAR and FATCA service covers the account reports. Our streamlined filing service covers catch-up cases. In addition, we can help you understand a bank's self-certification request before you reply.
Conclusion
In summary, what is FATCA comes down to two duties. Foreign banks, including UK banks through HMRC, report accounts held by Americans to the IRS. Meanwhile, you report your own foreign assets on Form 8938 when they pass the thresholds. Therefore, keep the FBAR and Form 8938 in step, and answer bank requests accurately.
Contact us
Still wondering what is FATCA asking of you this year? Email us at hello@usuktaxexperts.com, or describe your accounts through our contact page. We reply within one working day with the forms that apply to you.
Frequently asked questions
FATCA is a US law that makes foreign banks report accounts held by Americans and requires Americans to report foreign assets on Form 8938. It was enacted in 2010. In the UK, banks report to HMRC, which passes the information to the IRS.
They report the account holder's name, address and US taxpayer identification number. They also report the account number, the balance or value, and gross receipts and withdrawals. The rules come from section 1471 of the Internal Revenue Code and UK regulations.
The FBAR is filed with FinCEN when foreign accounts together exceed $10,000 at any time in the year. Form 8938, the FATCA form, is filed with your tax return and has much higher thresholds. Many Americans in the UK must file both.
Only if your specified foreign financial assets exceed the thresholds for people living abroad. For a single filer, that is more than $200,000 at year end or $300,000 at any time. For married couples filing jointly, the figures are $400,000 and $600,000.
The bank may treat your account as reportable or restrict it. Therefore, it is better to reply accurately. Understanding what is FATCA asking of you helps you answer with confidence.
The IRS describes a penalty of up to $10,000. A further $10,000 can apply for each 30 days after an IRS notice, up to $60,000 in total. Additionally, a 40% penalty can apply to underpayments linked to unreported assets.
