PFIC analysis and Form 8621, for the funds you already hold.
Most UK funds, index trackers and ETFs are Passive Foreign Investment Companies to the IRS — including everything inside a Stocks & Shares ISA. The default tax treatment is punitive, and the reporting is the most technical form in expat filing.
Figures relate to tax year 2025 (US) · 2025-26 (UK)
Your ISA is not invisible to the IRS
The ISA wrapper means nothing in US law. Each fund inside it is tested separately, and a fund that is a PFIC drags gains into the excess-distribution regime: taxed at top rates with an interest charge running back through your holding period.
We identify which holdings are PFICs, prepare Form 8621 for each, and where available make the QEF or mark-to-market elections that convert the treatment into something rational.
- Holding-by-holding PFIC determination
- Form 8621 preparation for each reportable fund
- QEF and mark-to-market elections where beneficial
- Restructuring advice for portfolios that cannot be fixed
Sometimes the answer is to sell, carefully
For long-held PFICs the elections are often unavailable and the arithmetic favours a purge — realising the position, paying the historic charge once, and reinvesting in US-compliant funds. We model the cost of leaving versus staying so the decision is made on numbers, not fear.
Then a portfolio both systems leave alone
The end state matters as much as the clean-up: a portfolio of US-domiciled ETFs with HMRC reporting status is taxed rationally by both authorities — capital gains treatment in the UK, ordinary fund treatment in the US, and no Form 8621 in sight.
We hand you the design and the platform options that can actually hold those funds for UK residents, so the problem is solved once rather than annually.
- US-domiciled, HMRC-reporting fund shortlist
- Platform options that serve UK-resident US persons
- Wrapper strategy: what to fund and what to freeze
Primary sources
Official guidance from the IRS, FinCEN and GOV.UK. Thresholds and rates on those pages are updated annually — check the current tax year before relying on a figure.
Questions, Answered.
What clients ask about pfic reporting
How much does the reporting actually involve?
A separate Form 8621 for each fund, for each year you hold it, regardless of the size of the holding.
Somebody holding a modest portfolio of a dozen funds can generate more forms than their entire tax return would otherwise need.
What if I sell before I find out?
The default regime still applies to the disposal, and the interest charge is calculated across the whole holding period.
Selling in a rush is not always the right answer - it can crystallise the worst treatment rather than avoid it.
Are US-domiciled ETFs a safe alternative?
They are outside the PFIC regime, which removes the US problem. But if you are UK resident, HMRC reporting fund status becomes the question instead.
The workable answer is usually a fund recognised by both systems, not one optimised for either.
Is my ISA a PFIC?
The ISA wrapper itself is not, but what sits inside it usually is. Unit trusts, OEICs and investment trusts are almost all PFICs under US rules.
The wrapper also gives you nothing on the US side - the IRS does not recognise it, so income and gains inside are taxable to you as they arise.
Why is PFIC treatment so punitive?
The default regime taxes gains at the highest ordinary rate and adds an interest charge as if the gain had built up evenly over the years you held it.
The reporting burden is also disproportionate: a separate form per fund, per year, regardless of how small the holding is.
Can an election improve the outcome?
Often, yes. A mark-to-market election taxes the annual movement instead and removes the interest charge, which is usually far better.
The catch is timing. Elections generally have to be made in the right year, which is why this is worth looking at before a holding has grown for a decade.
Can I still invest as a US person in the UK?
Yes. It means choosing the account type and the funds inside it with both systems in view, rather than discovering the problem at filing.
Equivalent exposure held through US-domiciled funds or direct holdings often sidesteps PFIC treatment entirely.
Next Step.
Tell us what you hold — the scope and a fixed fee follow in writing.