Segal, Cohen & Landis, P.C.
UK ISA Holders: Your IRS Tax and Reporting Obligations
IRS tax attorneys — Beverly Hills, CA. National representation.
UK Individual Savings Accounts (ISAs) are the UK's most popular tax-sheltered savings vehicle — entirely tax-free under UK law. For US citizens and Green Card holders, the situation is far more complex.
The US-UK tax treaty does not exempt UK ISAs from US income tax. Interest, dividends, and capital gains earned inside an ISA are taxable to US persons annually. The ISA may contain PFICs. The account must be reported on the FBAR and potentially Form 8938. The ISA provider typically does not issue any US tax documents.
How We Help
Our Approach to UK ISA Tax Attorney for US Citizens
UK ISA Income Calculation
We calculate taxable interest, dividends, and capital gains inside your ISA for each year. Since UK ISA providers do not issue US tax forms, we reconstruct income from UK account statements.
PFIC Analysis for ISA Funds
If your ISA holds equity funds, those funds are likely PFICs. We analyze each fund's PFIC status, make appropriate elections, and prepare Form 8621.
FBAR and Form 8938 Filing
UK ISAs must be reported on the FBAR (FinCEN 114) and Form 8938 if the applicable threshold is met.
ISA Cleanup for Prior Years
For clients who held ISAs without reporting income or accounts in prior years, we assess the disclosure path and execute the cleanup.
How It Works
The Resolution Process
ISA Account Analysis
We analyze the ISA type, identify the funds held, and determine applicable US tax and reporting requirements.
Income Reconstruction
We reconstruct annual taxable income from UK account statements for all years requiring disclosure.
Return and Form Preparation
We prepare or amend annual returns, file Form 8621 for PFIC funds, and include ISA accounts on FBAR and Form 8938.
Ongoing Compliance
We handle annual ISA reporting as part of an ongoing expat tax compliance engagement.
Ready to Resolve Your Tax Problem?
Our attorneys have helped thousands of clients resolve IRS matters. Your consultation is free and confidential.
Common Questions
Frequently Asked Questions
Is my UK ISA taxable in the US?+
Yes. The US-UK income tax treaty does not exempt ISAs from US income tax. Interest, dividends, and capital gains are taxable to US persons in the year earned. The fact that the income is tax-free in the UK does not affect US taxability.
Is a Stocks and Shares ISA a PFIC?+
The ISA itself is not a PFIC — it is an account, not a corporation. However, the equity funds held inside the ISA may be PFICs. Most UK-listed investment funds and ETFs qualify as PFICs under the US income test.
Related Tax Services
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Segal, Cohen & Landis, P.C.
9100 Wilshire Boulevard, 601 East Tower, Beverly Hills, CA 90212
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