What is FATCA and does it affect UK taxpayers?
Answered 17 March 2026
Based on the retrieved sources, I can now provide a comprehensive answer.
What is FATCA and Does It Affect UK Taxpayers?
What the law says
FATCA — the Foreign Account Tax Compliance Act — was enacted by the United States in 2010 as part of the HIRE Act 2010. Its purpose is to reduce tax evasion by US citizens and entities.
FATCA requires financial institutions outside the USA to pass information about their US customers to the US Internal Revenue Service (IRS). Non-compliant institutions face a 30% withholding tax on their US-source income.
To address this in the UK, the UK and USA signed a bilateral treaty on 12 September 2012 — "The UK-US Agreement to Improve International Tax Compliance and to Implement FATCA" (the US IGA). The enabling legislation is now found at section 349, Finance (No. 2) Act 2023 (originally section 222, Finance Act 2013), which gives HM Treasury powers to make regulations giving effect to the agreement. This was implemented through the International Tax Compliance Regulations 2015 (SI 2015/878).
HMRC guidance / practice
Who is affected — UK Financial Institutions, not ordinary UK taxpayers
FATCA primarily affects UK Financial Institutions (FIs), not ordinary UK resident taxpayers. The regulations impose obligations on UK FIs to identify, capture and report information to HMRC on financial accounts held by US citizens and entities. Provided they comply, they will not be subject to the 30% withholding tax.
There are four categories of Financial Institution covered by both FATCA and the Common Reporting Standard (CRS):
- Custodial Institutions
- Depository Institutions
- Investment Entities
- Specified Insurance Companies
Obligations on UK Financial Institutions
UK FIs must collect and maintain information about the residence — and in the case of the USA, the citizenship — of individuals and entities for whom they maintain financial accounts. Under the "wider approach," they must retain this information for 5 years and report it to HMRC to the extent it is reportable.
Reporting is submitted to HMRC via the UK Government Gateway portal using a prescribed XML schema. From 1 January 2027, CRS and FATCA reporting must be done separately using their respective schemas.
Non-compliance
A UK FI that fails to comply with FATCA obligations may ultimately be classified as a Non-Participating Financial Institution (NPFI) by the IRS — meaning it loses the protection of the UK-US IGA and its details may be published electronically by the IRS.
In summary: FATCA is a US law targeting tax evasion by US persons. It does not directly impose obligations on ordinary UK taxpayers. However, it significantly affects UK Financial Institutions, which are legally required under UK regulations to identify US account holders and report their account information to HMRC (which then passes it to the IRS). UK individuals who are US citizens or dual nationals holding accounts at UK FIs will find that their account information is reported under FATCA.
Citation sources
In 2010 the United States of America enacted the Foreign Account Tax Compliance Act provisions (FATCA) which are contained in the HIRE Act 2010. These provisions are aimed at reducing tax evasion by US citizens and entities. FATCA requires Financial Institutions outside the USA to pass information about their USA customers to the US tax administration, the Internal Revenue Service. The legislation allows for a 30% withholding tax to be applied to the US source income of any non-US Financial Inst
UK Financial Institutions who want to directly upload their return of Reportable Accounts must submit their returns to HMRC using the UK submission schema. This can be found at – Automatic Exchange of Information: registering and reporting guidance - Publications - GOV.UK From 1 January 2027, CRS and FATCA reporting will need to be done separately. HMRC’s combined CRS/FATCA schema will no longer be in use after 31 December 2026. It will be replaced by the amended CRS XML schema published by the
A Non-Participating Financial Institution (NPFI) is a Financial Institution that is not FATCA compliant. This non-compliance arises either where: the Financial Institution is located in a jurisdiction that does not have an Intergovernmental Agreement with the US and the Financial Institution has not entered into a FATCA agreement with the US that requires direct reporting of information to the IRS, or, the Financial Institution is classified by the IRS as being a NPFI following the conclusion of
The UK regulations for automatic exchange of financial account information impose obligations on UK Financial Institutions to collect and maintain information about the residence, and in the case of the USA the citizenship as well, of individuals and entities for whom they maintain financial accounts. Under the ‘wider approach’ [see IEIM400140] they are required to keep that information in respect of all Account Holders for a period of 5 years and to report it to HMRC to the extent that it is re