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🇬🇧 UK Accounts (ISAs vs. SIPPs)
UK-based retirement and savings wrappers face complex tax classification rules under the IRS and the U.S.-UK Double Taxation Treaty.
| Account Wrapper | IRS Reporting Status | Details & Compliance |
|---|---|---|
| Stocks & Shares ISA / Cash ISA | Taxable & High Risk No Treaty Protection | While tax-free in the UK, ISAs are fully taxable by the U.S. All capital gains, dividends, and interest must be reported. Foreign mutual funds/ETFs inside an ISA are classified as PFICs, requiring Form 8621 filings. |
| Self-Invested Personal Pension (SIPP) | Tax-Deferred Article 18 Protected | SIPPs are recognized as qualified pensions under the treaty. Growth and contributions remain tax-deferred in the U.S. SIPP accounts are generally exempt from the Form 8621 PFIC reporting rules. |
⚠️ PFIC & Tax Warning: Do not purchase UK-domiciled mutual funds or ETFs inside your ISA. They are classified as Passive Foreign Investment Companies (PFICs) and face severe U.S. tax rates.
FBAR vs. FATCA Limits
FBAR (FinCEN 114): Mandatory if the aggregate balance of all foreign accounts exceeds $10,000 at any time during the calendar year.
FATCA (Form 8938): For single taxpayers living in the U.S., mandatory if foreign assets exceed $50,000 on the last day of the year or $75,000 at any point.