Your bank has written about US tax: what a FATCA letter means

Figures relate to tax year 2025 (US) · 2025-26 (UK)

A FATCA letter is your bank asking whether you are American for tax purposes. It is routine, it goes out in batches, and it is not an accusation of anything. But it does start a data trail, because your answer determines what gets reported to the IRS.

That is why people panic at the wrong part. The letter itself is harmless. What matters is whether your American filings are in order before the reporting begins. So this guide covers what the letter is, how to answer it, and what to do if your filings are behind.

Key takeaways

• Banks send these letters to satisfy their own reporting duties, not because you are suspected of anything.
• Ignoring one usually leads to restricted or closed accounts.
• Answering honestly starts annual reporting of your account details to the IRS.
• Being behind on US filings is fixable, and cheaper before the data arrives than after.
• Being American by birth counts, even if you have never lived there or hold no passport.

What is a FATCA letter?

A FATCA letter is a request to confirm your tax residence, usually sent with a self-certification form. Banks must identify American customers under an agreement between the two governments, then report those accounts annually.

According to the IRS guidance on FATCA (opens in a new tab), banks abroad report accounts held by US persons. Britain does this under its rules on automatic exchange of information (opens in a new tab). That is why a British bank asks American questions.

Why did your bank write to you now?

Usually because a review flagged something. A FATCA letter follows a US place of birth more often than anything else. A US address, a US phone number or regular payments to America can do it too. Sometimes a routine sweep of old records is all it takes.

Timing rarely means anything. Banks work through their books in waves, so a letter after fifteen quiet years is normal rather than ominous. In our practice we see whole batches arrive from one bank within a fortnight.

What does the letter actually ask?

A FATCA letter asks three things, in most versions. Whether you are a US citizen or tax resident, your taxpayer identification number if so, and a signed certification confirming the answer. Some banks add a W-9 for Americans or a W-8BEN for everyone else.

The letter is a form. What it starts is a data feed. Those are two very different things to prepare for.

What happens if you ignore it?

Banks escalate. First come reminders, then restrictions on the account, and eventually closure. Some institutions treat non-response as a recalcitrant classification and report the account anyway, which is the worst of both outcomes.

Closure is genuinely disruptive when it lands on a current account holding your salary. So ignoring the letter buys nothing, and the deadline in it is usually real rather than notional.

What if you are behind on US filings?

Then the letter is useful information rather than bad news. It tells you roughly when your account details will start reaching the IRS, which gives you a window to put filings right on your own terms first.

That order matters a great deal. Catch-up routes need the IRS not to have contacted you first. So acting before the data arrives keeps the penalty-free options open. Our streamlined filing guide covers the main one.

How should you respond, step by step?

Answer honestly, but get your position clear before you sign anything. The certification is a formal statement, and a wrong answer is a far bigger problem than a late one. Work through this sequence:

1. Read the letter and note the response deadline, which is usually 30 to 90 days.
2. Establish your actual status: citizenship, green card, place of birth, days in America.
3. If your US filings are behind, take advice before returning the form.
4. Gather what the answer needs, such as a Social Security number or a renunciation certificate.
5. Complete the self-certification accurately, and keep a copy of everything you send.
6. Return it within the deadline, by the route the bank specified.
7. Diary the following year, because reporting then runs annually without further letters.

The accidental American problem

Many people learn they are American from one of these letters. Birth in the United States generally confers citizenship, so a person who left as a baby and never returned still counts. Some inherit it through a parent instead.

That discovery is disorienting, and the filing duties are real. Our guide to the accidental American problem covers the position. Routes through it exist that do not involve years of back tax.

Is there a balance below which nothing is reported?

Not for you, in practice. Banks may apply de minimis thresholds when reviewing pre-existing accounts, and $50,000 is a common one in the rules. But those thresholds govern the bank's search, not your own duties.

Your filing obligations run on separate numbers entirely. The FBAR starts at $10,000 across all accounts. Reporting on the return itself starts far higher, at $200,000 for a single filer abroad for the 2025 tax year.

So a small account can stay unreported by the bank while you still owe filings. And a large one can be reported while you owe nothing at all. Treat the two questions as unrelated, because they are.

What actually gets reported?

Account identifying details, the balance, and income such as interest paid during the year. The bank sends it to HMRC, which passes it to the IRS under the intergovernmental agreement. Nobody is reading your shopping.

The reporting also runs both ways. American institutions send equivalent data about British residents to HMRC, which is why the arrangement survives politically. Per the guidance above, the exchange is annual and automatic rather than case by case.

What if the account is joint with a non-American?

The bank still reports it, generally at full value, because one American holder is enough to bring the account into scope. Your British spouse does not become a US taxpayer through the account, though the balance appears in the reported data.

That surprises couples, and it occasionally strains them. It helps to explain the mechanism early: the reporting describes an account rather than assessing a person. Nobody acquires American tax duties by marrying someone who has them.

Filing status is a separate decision with real consequences. Our guide to filing with a nonresident alien spouse covers the options. Sometimes keeping a spouse outside the American system is worth the higher rates.

A worked example

Take an illustrative example. A woman born in Chicago to British parents left America aged two and has lived in Leeds since. Her bank writes in March, asking her to confirm US status within 60 days.

She is American by birth, so the honest answer is yes. Before returning the form, she uses the window to prepare three years of returns and six FBARs through the streamlined route. Her filings land first, and the reported data arrives to a clean record.

Does answering create a tax bill?

Rarely by itself. Most Americans in Britain owe little or no US tax once credits apply, because British rates run higher. The reporting is about visibility. It does not create a liability that was not there before.

The cost sits in the filings rather than the tax. Returns need preparing and accounts need reporting, which takes real work. Our guide to what the streamlined route costs sets out honest ranges.

The mistakes and penalties that follow a FATCA letter

A FATCA letter carries no penalty by itself. What follows it can, and these are the responses we spend most time repairing:

• Ticking 'not a US person' when born in America, which certifies something untrue.
• Ignoring the letter until the account is restricted or closed.
• Returning the form immediately while years of filings sit missing.
• Assuming a British passport cancels American citizenship, which it does not.
• Closing the account to avoid the question, when the reporting duty follows the person.
• Treating the letter as an IRS enquiry, and responding to the wrong body entirely.

The first one deserves emphasis. A false self-certification is a serious matter with your bank and potentially beyond it. Honest answers, given after taking advice, are always the cheaper path.

What if you have already renounced?

Then you are not a US person, and the reporting should not apply. Banks generally want evidence, meaning your certificate of loss of nationality rather than your word. Keep that document permanently, because these requests recur.

Renunciation has its own tax consequences, handled when you exit. Our guide to renouncing US citizenship covers those. A clean exit is what makes future letters simple.

Can a bank refuse to open an account for Americans?

Some do, and it is legal. Compliance with the reporting rules costs money, so a handful of British institutions decline American customers rather than carry the burden. Others restrict which products are available to them.

It is frustrating, though rarely universal. High-street banking remains available, and specialist providers work with dual filers routinely. Ask before applying rather than after a refusal appears on your record.

Investment products are where the door closes most often. Many British platforms will not open accounts for American customers at all, which shapes where a dual filer can realistically invest.

How US UK Tax Accountants helps

We tell you what your honest answer to a FATCA letter is. Then we handle whatever that answer creates. Our streamlined catch-up filing service covers the returns and account reports, timed to land before the data does.

One senior specialist owns the file, on a fixed fee agreed in writing before any work begins. Where nothing needs fixing, we say so and you simply return the form.

Answer the letter properly

A FATCA letter is a deadline, not a disaster. Tell us what your FATCA letter says and what your filing history looks like. We will confirm your position, put anything missing right, and quote a fixed fee in writing. Book a consultation and hear back within one working day.

Last reviewed 9 September 2026 by the US UK Tax Accountants Tax Team. This article is general information, not personal tax advice — speak to a qualified US/UK tax adviser about your own position.