- 1 UK Assets & Form 8938
- 2 5 Common Reportable Form 8938 Foreign Financial Assets
- 3 Bank Accounts & Form 8938
- 4 Investment Accounts & Form 8938
- 5 Employer Pension & Form 8938
- 6 Personal Pension/Life Insurance & Form 8938
- 7 ISA and Form 8938
- 8 Form 8938 is Required for Many Foreign Assets
- 9 Our International Tax Lawyers Represent Clients Worldwide
UK Assets & Form 8938
UK Assets & Form 8938: There are many US persons who have a Form 8938 reporting requirement because of foreign financial assets they own in the United Kingdom — and therefore have to file an annual Form 8938 along with their Tax Return. The Form 8938 evolved from FATCA — which is the Foreign Accoubt Tax Compliance Act. There are a broad range of different types of offshore accounts and assets that need to be reported each year for taxpayers who meet the threshold requirements for reporting. The threshold requirements for Form 8938 vary based on whether the filer is Married Filing Jointly or Married Filing Separate/Single and if they are are a U.S. Resident or Foreign Resident.
5 Common Reportable Form 8938 Foreign Financial Assets
Here are five common types of reportable financial accounts from the UK
Bank Accounts & Form 8938
The term Specified Foreign Financial Assets includes US Account Holders with foreign bank accounts in the UK. The term “bank accounts” essentially includes all types of bank accounts at all different types of institutions.
As provided by the IRS:
Maximum value of specified foreign financial assets, which include financial accounts with foreign financial institutions and certain other foreign non-account investment assets
Investment Accounts & Form 8938
Investment accounts are reportable on the annual Form 8938. For example, if a person has a stock account or fund account at Barclays, Lloyds or any of the other thousands of institutions throughout the UK — the account must be reported. Unlike the FBAR, which is limited to stock accounts, even stock certificates are reportable as assets on the Form 8938.
One important factor keep in mind is that it does not matter whether or not the account generates income or not.
*Investment accounts with a PFIC component will (usually) require additional reporting.
Employer Pension & Form 8938
When a person has a pension from an employer that is located in the UK, the pension account is also reportable on Form 8938. It does not matter whether or not a person is receiving distributions or whether the pension is covered by the treaty. The pension is considered a financial account and reported on the annual 8938 Form.
Personal Pension/Life Insurance & Form 8938
Many Taxpayers who are originally from the UK — or previously worked in the UK may have taken out a personal pension early in their career. The investment may be wrapped in an insurance policy or something similar and contain an account number, policy number or other identification number.
This is a type of an investment account that would need to be reported on the Form 8938. For many of our clients, these investments may only contain a fund or two, and the taxpayer has not touched the investment for many years — but still, it must be included on Form 8938.
ISA and Form 8938
ISAs are used for tax deferred purposes in the UK. There are many different types of ISAs, including Cash ISAs and Investment ISAs. The ISA is a reportable account that is included on the Form 8938. As with the other type of accounts above, this type of account is included — even if there are no distributions and no tax consequences at the time of reporting (since ISAs grow tax free in the UK).
Form 8938 is Required for Many Foreign Assets
In conclusion, when a US person has foreign accounts, they may have significant reporting requirements depending on the cross-section of their investment portfolio. The reporting is not limited to bank accounts; it includes several other types of accounts such as investment accounts, pension accounts, and foreign life insurance. If a person is out of compliance for prior years they should consider one of the Offshore amnesty programs before submitting the current year Form 8938.
Our International Tax Lawyers Represent Clients Worldwide
Our International Tax & Legal team specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm today for assistance with getting compliant.