FBAR vs FATCA in London: What US Expats Get Wrong in 2026

If you're an American living in London, you've probably heard the terms FBAR and FATCA thrown around, usually followed by a vague sense of dread. And honestly, that dread is fair. Both are US reporting rules for foreign accounts, both carry real penalties, and both trip up even financially savvy expats every year. The good news? Once you understand the difference, they're not that complicated. As UK-US tax advisors and UK international tax advisors who work with the American community in London every day, we see the same handful of mistakes over and over. Let's clear them up.

FBAR and FATCA Are Not the Same Thing

This is the single biggest point of confusion, so let's start here.FBAR (Foreign Bank Account Report) isn't actually a tax form at all; it's a report filed with FinCEN, a bureau of the US Treasury, not the IRS. It exists purely to disclose foreign accounts, not to calculate tax owed.

FATCA (Foreign Account Tax Compliance Act), on the other hand, is filed as Form 8938 alongside your actual US tax return, and it goes to the Internal Revenue Service. It is also an important consideration when preparing income tax preparation services for US citizens living abroad. It's part of your income tax preparation, not a separate disclosure exercise.

Different agency, different form, different filing threshold, different deadline. Many people assume that filing one automatically covers the other. It doesn't, and that assumption is exactly where trouble starts.

Mistake 1: "I Filed My FBAR, So I'm Covered"

This is the mistake we hear most often from clients in London's finance and tech sectors, where multiple accounts and investment holdings are common. FBAR applies once your combined foreign account balances exceed $10,000 at any point in the year a threshold that's easy to cross with even one UK current account and a savings account. FATCA, by contrast, only kicks in at much higher asset levels, and those levels depend on your filing status and whether you live in the US or abroad. Filing one report says nothing about your obligation for the other. If you meet both thresholds, you file both. Full stop.

Mistake 2: Believing "Tax-Free" UK Accounts Are Invisible to the IRS

ISAs are a classic trap. They're tax-free under UK rules, so people assume they're simply irrelevant to their US filing. They're not. An ISA is still a foreign financial account for FBAR purposes and can also count toward your FATCA threshold. The interest or gains inside it are generally still taxable on your US return, even though HMRC doesn't touch them.

The same logic applies to workplace pensions and SIPPs. UK tax treatment and US tax treatment are two completely separate systems, and one does not defer to the other.

Mistake 3: Assuming a Non-American Spouse's Accounts Don't Count

If you're married to a UK citizen and hold joint accounts, those accounts can still be reportable on your FBAR, even though your spouse isn't a US person. This surprises a lot of couples, particularly when the account is technically "theirs" for day-to-day purposes.

Mistake 4: "I Already Paid UK Tax, So I'm Done"

Paying tax to HMRC feels like it should settle things, and in terms of avoiding double taxation, Foreign Tax Credits do genuinely help offset what you owe the IRS. But credits reduce your tax bill; they don't remove your filing and reporting obligations. You can owe zero US tax and still be required to file FBAR and FATCA. Skipping the paperwork because "there's nothing to pay" is one of the most common and costly misunderstandings we see.

Mistake 5: Not Realising the UK Reports You Too

Here's something that catches people off guard: UK financial institutions report US account holders directly to HMRC under FATCA's intergovernmental agreement, which flows through to the IRS. In other words, the US government often already knows the accounts exist. Non-disclosure isn't really a risk-free option anymore; it's a matter of when discrepancies surface, not if.

Why This Matters More in 2026

Reporting thresholds, penalty amounts, and forms are reviewed and adjusted regularly, and 2026 is no exception. Penalties for missed or incorrect FBAR filings can run into the tens of thousands of dollars, and FATCA non-compliance carries its own separate penalty structure. For Americans building up savings, investments, or pensions in London, the numbers involved, and therefore the exposure, tend to grow every year you're here.

What Should You Actually Do?

If you're unsure whether you meet either threshold, the safest move is a proper review rather than a guess. A few things worth checking every year:

• Did your combined foreign account balances exceed $10,000 at any point, even briefly?

• Do your foreign financial assets exceed the FATCA threshold for your filing status?

• Have you disclosed joint accounts, ISAs, and pensions accurately?

• Are you claiming the Foreign Tax Credit correctly to avoid paying tax twice?

If you've missed a filing in a previous year, there are IRS programmes designed to help you catch up without the harshest penalties, but the sooner you address it, the better your options.

Get It Right With Local, Specialist Help

FBAR and FATCA rules aren't designed to be intuitive, and getting them wrong isn't usually a matter of carelessness; it's a matter of not knowing what you don't know. That's exactly why working with UK international tax advisors who understand both the UK and US systems can make such a difference.

At Jaffe & Co, we're a family-run firm of US and UK tax advisors based in London, and unusually for this field, we're US citizens and taxpayers ourselves. We've spent decades helping the American community here navigate exactly these issues, from straightforward FBAR filings to more complex FATCA and pension reporting questions. Our income tax preparation services also help clients manage their broader US tax filing and reporting responsibilities. Understanding the requirements of the United States Internal Revenue Service alongside UK tax rules can be particularly important when your financial affairs span both countries. If you're not sure where you stand, we're happy to help you find out.

Frequently Asked Questions

Do I need to file both FBAR and FATCA? Yes, if you meet both thresholds, they're separate requirements, and filing one doesn't satisfy the other.

Does FBAR apply if I don't owe any US tax? Yes. FBAR is a disclosure requirement, not a tax bill, so you can owe nothing and still need to file.

Are UK ISAs exempt from US reporting? No. ISAs are tax-free in the UK, but they're still reportable and often taxable on your US return.

Will HMRC or my UK bank tell the IRS about my accounts? Often, yes. UK institutions report US account holders to HMRC, which shares that data under FATCA agreements.

What happens if I missed a filing in a previous year?

There are IRS streamlined procedures to help you catch up with reduced penalties, but acting early matters.