Why are UK ISAs a problem for US persons?

Funds inside UK ISAs are typically PFICs. Default PFIC taxation is punitive — ordinary-income rates on excess distributions plus compounding interest charges on all gains, regardless of your actual holding period.

What's the MTM election and should I make it?

Mark-to-market lets you tax gains annually at ordinary rates — usually materially better than default PFIC rules. Requires publicly traded shares; most listed UK funds qualify. Must be elected on the first year of ownership or via a 'purging' election.

Should I just sell my ISA before filing?

Sometimes — particularly if balances are small and the paperwork outweighs the UK tax-free wrapper benefit. We model the break-even against PFIC reporting costs before recommending.

Are UK-domiciled ETFs PFICs too?

Almost always. US-domiciled ETFs are not PFICs (but may be inaccessible from the UK under PRIIPS rules). A common workaround for UK-resident Americans is to use US-domiciled ETFs in general investment accounts — if they can access them.

How many 8621s do I file?

One per PFIC holding per year. A five-fund ISA means five 8621s annually — each running to 4–6 pages. Volume quickly adds up, which is why cleanup conversations are common.

◉ Foreign Asset Reporting

PFIC / ISA reporting (Form 8621)

UK ISAs, unit trusts, and OEICs are typically PFICs for US tax purposes — triggering punitive taxation unless elected properly.

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Short answer

Most UK funds — unit trusts, OEICs, ETFs and the holdings inside a stocks-and-shares ISA — are Passive Foreign Investment Companies (PFICs) to the IRS. Each one is reported annually on Form 8621, and without a timely QEF or mark-to-market election gains are taxed under a punitive default regime with an interest charge.

Overview

Why this filing matters

UK ISAs, unit trusts, and OEICs are typically PFICs for US tax purposes — triggering punitive taxation unless elected properly.

Note — UK ISAs, unit trusts, OEICs — PFIC rules apply.

◉ Who this is for

•US persons holding UK ISAs
•US persons invested in UK unit trusts or OEICs

✓ What you get

✓PFIC identification & categorisation
✓Mark-to-market or QEF election analysis
✓Form 8621 preparation per holding

At a glance

Key forms: 8621
Category: Foreign Asset Reporting
Turnaround: 2–3 weeks once documents are complete
Filed by: ACCA-qualified IRS Enrolled Agent

Our approach

Every account mapped before anything is filed.

FBAR, Form 8938 and Form 8621 overlap but are not the same: different thresholds, different account definitions, different homes (FinCEN vs your 1040), and different penalties. A UK current account, an ISA, a workplace pension and a stocks-and-shares account can each land on a different form — or on two.

We start by mapping every foreign account and asset you hold or have signature authority over, then slot each one onto the forms that actually apply, so nothing is double-counted and nothing is missed. Where an ISA or fund turns out to be a PFIC, we catch it before it becomes a Form 8621 problem.

Full account and asset inventory, with signature-authority holdings included
Each asset mapped to FBAR, 8938 and/or 8621 — no double-counting, no gaps
PFIC exposure inside ISAs and funds identified before it compounds

Adviser reviewing foreign financial account records for FBAR and FATCA reporting

Our process

How we handle your filing

Four steps from first email to filed return. Fixed fee confirmed in writing before any work begins.

Intake

Send us your situation by email or the enquiry form. We come back with the questions we need answered — every source of income for the year, filing history, accounts and entities — and a tailored document list.

Review

We analyse your position, flag any cross-border risks, and confirm the scope and fixed fee in writing before any work starts.

Prepare

Draft returns and schedules are prepared with plain-English commentary on key positions for your review.

File

You sign electronically; we e-file with the IRS / FinCEN and send you the acceptance confirmations for your records.

Pricing

Fixed fees — no surprises

PFIC analysis and Form 8621 preparation: £150 + VAT per holding, with volume discounts for multiple funds. Initial PFIC cleanup or QEF-vs-MTM election strategy starts from £400 + VAT.

Prices are indicative starting points and exclude UK VAT, which applies to UK-resident clients only. We quote in writing once we have confirmed every source of income and your filing history for the years involved.

Request fee quote See full pricing →

FAQs

Common questions

Sources

Rules, thresholds and penalties are as published by the IRS and FinCEN at the time of our last review (2026-09-08); always check the current instructions for the year you are filing.

Related services

Others in Foreign Asset Reporting

FBAR — Foreign Bank Account Reporting (FinCEN 114)

Required if your foreign financial accounts exceeded $10,000 in aggregate at any point during the calendar year.

Learn more →

FATCA reporting (Form 8938)

Report specified foreign financial assets on Form 8938 when thresholds are met — separate from, and in addition to, FBAR.

Learn more →

Who this is for

Situations where this filing usually applies

Guides from our team on this topic

Ready to get this filed?

Tell us your situation and we’ll reply by email within 2 working days with our questions, then a written scope, fixed fee and document list.

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