Published 19 June 2026 · Updated 7 November 2026 · 3 min read
The Foreign Account Tax Compliance Act requires US persons to report specified foreign financial assets on Form 8938 when their value exceeds set thresholds. It sits alongside the FBAR but is a separate obligation with different rules, a different agency and different penalties.
FATCA versus FBAR in one paragraph
The FBAR goes to FinCEN, applies from an aggregate US$10,000 and covers foreign financial accounts. Form 8938 goes to the IRS with your Form 1040, has much higher thresholds for people living abroad, and covers a broader set of assets including interests in foreign entities and some pensions. If you meet the Form 8938 thresholds you file it even if the same assets already appear on your FBAR.
Thresholds for people living outside the US
You qualify for the higher "abroad" thresholds if your tax home is in a foreign country and you meet the bona fide residence or physical presence test.
| Filing status | Value on the last day of the year | Value at any time in the year |
|---|---|---|
| Single or married filing separately | more than US$200,000 | more than US$300,000 |
| Married filing jointly | more than US$400,000 | more than US$600,000 |
For people living in the US the thresholds are US$50,000 / US$75,000 (single) and US$100,000 / US$150,000 (joint). Because the abroad thresholds are high, many Americans in the UK file an FBAR each year but not Form 8938. Those with substantial investments, pensions or interests in UK companies and trusts often need both.
What is a specified foreign financial asset?
- Bank, savings and deposit accounts held with non-US institutions
- Investment and brokerage accounts, and shares or bonds held directly with a foreign issuer
- Foreign mutual funds, unit trusts, OEICs and similar collective investments
- Interests in foreign partnerships, corporations, trusts and estates
- Foreign pension plans, subject to the treaty points below
- Foreign life insurance and annuity contracts with a cash value
Not reported on Form 8938: foreign real estate held directly in your own name (a foreign entity that holds property is reportable), and assets already reported on certain other forms such as Form 5471 or Form 3520, which are instead referenced on Form 8938.
UK-specific points
UK pensions
Whether and how a UK pension is reported on Form 8938 is one of the more technical areas of US–UK compliance. A defined contribution pot, a defined benefit entitlement and the state pension are each valued and treated differently, and the US–UK treaty's pension article affects the US tax treatment of the growth. The cautious approach is to report with a clearly stated valuation basis and to document the method so it is consistent year on year.
ISAs
An ISA is reportable if the thresholds are met. The UK tax exemption does not carry over: dividends, interest and gains inside the ISA are taxable in the US, and funds within it are usually PFICs requiring Form 8621.
UK trusts
US beneficiaries of UK trusts may have Form 8938 and Form 3520 obligations. Discretionary trusts, where the interest is not fixed, need careful analysis.
Penalties
Failure to file Form 8938 carries a US$10,000 penalty, rising by US$10,000 for each 30 days after an IRS notice up to a further US$50,000. Tax underpaid on an undisclosed asset attracts a 40% accuracy-related penalty. The normal three-year assessment window extends to six years where Form 8938 should have been filed and was not, and stays open indefinitely while the form remains unfiled in some circumstances.
Catching up
Missed Forms 8938 are commonly corrected through the Streamlined Foreign Offshore Procedures alongside the returns and FBARs. If accepted, information-return penalties are not applied. See Streamlined filing.
Frequently asked questions
Do I need both the FBAR and Form 8938?
Possibly. They are separate tests. Use the threshold checker for a first view and we confirm the position when we prepare your return.
Does my UK workplace pension count towards the threshold?
Usually it is included in the value test, with the valuation basis stated. The treaty affects how the pension is taxed, not whether the form is required.
Does FATCA mean the IRS already knows about my UK accounts?
UK banks identify US persons among their customers and report account information to HMRC, which exchanges it with the IRS under the UK–US intergovernmental agreement. That is why a FATCA letter from your bank is a prompt to put your filings in order rather than something to ignore.
Written by the US UK Expat Tax advisory team. Last reviewed 7 November 2026 · Figures relate to the 2025 (filed 2026) tax year unless stated.
Primary sources checked
General information, not personal tax advice. Rules and thresholds change; we confirm the position for your facts before any work.