FBAR & FATCA Reporting 2026: A Complete Guide for US Expats Living in London and the UK
For US citizens living in London or elsewhere in the United Kingdom, tax compliance extends far beyond filing a UK Self Assessment return. The United States is one of the few countries that taxes its citizens based on citizenship rather than residence.
That means even if you have lived in London for years, pay UK income tax, and hold only UK bank accounts — you are still required to report foreign financial assets to the IRS.
In 2026, two reporting regimes remain central to US expat compliance:
- FBAR (FinCEN Form 114)
- FATCA (Form 8938 under the Foreign Account Tax Compliance Act)
Failure to comply can lead to severe penalties. This pillar guide explains everything US citizens in the UK need to know.
Why US Expats in London Must File FBAR
FBAR (Report of Foreign Bank and Financial Accounts) applies when the total value of your non-US financial accounts exceeds $10,000 at any point during the calendar year.
This threshold is aggregate — not per account.
If you live in London and hold:
- UK current accounts
- Savings accounts
- ISAs
- Premium Bonds
- Investment portfolios
- UK pension accounts (in certain cases)
You may need to file an FBAR.
The reporting is submitted electronically to FinCEN — not directly to the IRS — but enforcement penalties are administered through IRS mechanisms.
The $10,000 Threshold Explained
Many London-based US expats misunderstand the threshold.
If you hold:
- £4,000 in one account
- £3,500 in another
- £2,600 in a joint account
You have crossed the threshold once converted into USD.
Even temporary balances (for example, receiving a property sale deposit or annual bonus) can trigger filing requirements.
FBAR Deadline for 2026
The FBAR deadline aligns with US tax filing deadlines:
- 15 April 2026
- Automatic extension to 15 October 2026
However, waiting until October increases risk if records are incomplete.
FATCA (Form 8938) – Separate from FBAR
Many US expats in London incorrectly assume FBAR filing satisfies FATCA.
It does not.
FATCA reporting is required when foreign assets exceed higher thresholds, depending on marital status and residency.
For US citizens living abroad:
- $200,000 on the last day of the year
- OR $300,000 at any time during the year
(Married filing jointly thresholds are higher.)
FATCA is filed with your US tax return.
FBAR vs FATCA: Key Differences
| Feature | FBAR | FATCA |
|---|---|---|
| Filed With | FinCEN | IRS |
| Threshold | $10,000 aggregate | Higher asset thresholds |
| Included Assets | Bank & financial accounts | Broader foreign financial assets |
| Penalties | Severe | Severe |
Many London professionals are required to file both.
Common Mistakes Made by US Expats in the UK
- Failing to Report Joint Accounts : If your spouse is not American, joint UK accounts may still be reportable.
- Ignoring UK ISAs : ISAs are tax-free in the UK — but not necessarily tax-free in the US.
- Misreporting UK Pensions : Treatment varies depending on structure.
- Believing UK Tax Paid Means No US Obligation : Foreign Tax Credits prevent double taxation — but reporting is still mandatory.
Penalties for Non-Compliance
FBAR penalties can include:
- Up to $10,000 per non-willful violation
- Significantly higher penalties for willful violations
- Potential criminal enforcement in extreme cases
FATCA penalties can start at $10,000 per failure to file.
For high earners in London’s finance and technology sectors, exposure can be substantial.
Streamlined Filing Procedures
If you have failed to file FBAR or FATCA in prior years, the IRS offers the Streamlined Foreign Offshore Procedure, allowing eligible taxpayers to:
- File previous returns
- Submit missing FBARs
- Avoid severe penalties
However, eligibility depends on non-willfulness.
Professional guidance is critical before making submissions.
Special Considerations for London Professionals
Many US expats in London work in:
- Banking & finance
- Technology
- Consulting
- Law
- Entrepreneurship
Complex compensation structures — including bonuses, share schemes and carried interest — require careful reporting.
Foreign investment vehicles may also trigger PFIC (Passive Foreign Investment Company) complications.
US Entrepreneurs with UK Limited Companies
If you own or control a UK Ltd company, additional forms may apply:
- Form 5471
- GILTI reporting
- Subpart F considerations
Failure to file these informational returns carries penalties starting at $10,000 per form.
Currency Conversion Issues
FBAR requires USD reporting using Treasury year-end exchange rates.
Using incorrect exchange rates is a common compliance error.
Why London-Based Specialist Advice Matters
US expat taxation is highly specialised.
Generic accountants may:
- Miss foreign asset reporting
- Incorrectly handle UK pension treatment
- Overlook informational forms
Specialist US/UK cross-border advisers reduce compliance risk.
How Xerxes Associates LLP Supports US Expats in London
Xerxes Associates LLP advises:
- US citizens living in London
- Dual nationals
- Entrepreneurs
- Senior finance professionals
Services include:
- US tax return preparation
- FBAR & FATCA reporting
- Streamlined disclosure submissions
- UK/US double tax planning
Clients across Greater London and the UK receive structured compliance support.
Frequently Asked Questions
Do I need to file FBAR if I pay UK tax?
Yes. US reporting is separate from UK taxation.
Are UK pensions reportable?
Often yes — but treatment depends on structure.
What if I didn’t know about FBAR?
Streamlined procedures may apply, but advice is essential.
Final Thoughts
FBAR and FATCA compliance is not optional for US citizens living in London. Penalties are severe, but proactive management eliminates risk.
Early 2026 is the ideal time to review:
- All UK financial accounts
- Investment structures
- Pension arrangements
- Taxable ownership
Professional advice ensures compliance while minimising exposure.
