UK Bank account but US Resident


Not sure what section this actually belongs in, but here goes.

My aunt is 78 and lives in the USA, but is a British Citizen. She gets a UK pension - not state pension, something about a windowers pension. And it gets paid into a UK bank account.

Shes recently been told that she needs to fill in a load of forms for her UK bank, including a IRS W9 form... looks like for tax identification purposes etc - suppose nothing too major.

The bank she gets her pension to in the UK, is a Savings Account.

She has been told that taxes cannot be taken from this and she may need to pay her own etc... shes in a bit of a confusing situation.

I know its a hard one to address, but has anyone else been in this situation or know anyone who has? What was the outcome?


  • dlk
    dlk Posts: 255 Forumite
    First Post First Anniversary Combo Breaker
    Google FATCA. FATCA is a policy the US have imposed on the world's banking system that is designed to ensure nobody gets away with not paying tax in the US on their worldwide income. Unfortunately your mother's bank has no choice but to comply with the regulations and your mother has no choice but to jump through the hoops they'll make her jump through. I'd simply tell her to fill in what they ask for and tell them what they need to know and get it out of the way. Is there a specific problem you're having with it that's causing a problem?
  • peterc2609
    Yeah... old age probably ha.

    Its my aunt, and she was told years ago never to give her social security number to anyone... and is really reluctant to give it to a uk bank ha ha.

    She has around 40-50k in this UK bank account, built up over years...

    Should I take this out of her account and put it in mine before she fills these forms in or anything??
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Name Dropper First Post First Anniversary Post of the Month
    edited 25 November 2016 at 6:19PM
    You are right, it's nothing too major. UK banks, stockbrokers and investment funds etc have to identify non-UK accountholders properly so their year end balances and the total amount of interest earned during the calendar year can be reported by HMRC to the appropriate foreign government (in this case the US IRS).

    She is right that US and other governments always tell you to keep your tax ID confidential because it's a key bit of personal info and can be used for identity theft etc. However, one of the specific cases you have to be willing to have it disclosed is in connection with tax compliance.

    Without the W9 form and confirmation of her US SSN, they would have to just assume from her address that she was a US tax resident and make do with just reporting her name and address and date of birth, but they would still be telling Uncle Sam that she had this money and this income. And the bank would still be required by UK regulations to make best efforts to obtain the tax ID, so would be badgering her at least once a year to satisfy their own internal compliance rules.

    As she is a US resident but with income and financial assets outside the US, she should be reporting the existence of her worldwide income to the IRS each year as part of her tax returns, and she should also fill out the separate return that discloses her foreign bank accounts (foreign bank account reporting, FBAR) given the balances in them are over $10,000. Although the relatively small amounts of bank interest each year might not actually attract any tax and may be allowed to be ignored.

    But basically the reporting performed by the bank to HMRC and then on to the IRS will help them identify if she has been "accidentally" forgetting to mention she has non US income and financial assets. This does not mean they will bother picking her out for an audit because they only look at a small fraction of taxpayers each year, but if gives them some data to help if they want it.

    Moving money from her account to yours would change the amount they would report as the 2016 year end balance (if you didn't put it back by year end) but it would not change the reportable activity that happened over the course of the year before you did that.

    Also fyi, her closing the account with that bank entirely wouldn't change anything, because the bank would still report the balance taken out of the account in connection with closure, in lieu of a year end balance. And her new bank would be subject to the same rules and regulations on what needs to be reported, and wouldn't even open an account without getting the declaration forms up front these days
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