The act would have required UK pension providers and ISA managers to search their client banks for details of US persons and report details of financial assets and transactions to HM Treasury to be passed on to the US Internal Revenue Service.
In a bilateral agreement between the United States and United Kingdom which has been signed today UK registered pension schemes and ISAs are exempted from these requirements.
Andy Bell, Chief Executive of AJ Bell said “Given the low level of risk of tax evasion associated with UK pensions and ISAs it is to be welcomed that they have been excluded from the requirements. FATCA had been expected to cost the UK financial services industry billions of pounds to implement and this would inevitably have been passed on to the consumer in one way or another. This will significantly reduce that burden.”
Bell continued “There are a few questions to be answered regarding the pension scheme exemption as it has been set at a very high level. It exempts schemes provided that they do not allow individuals to access benefits before age 55, except in cases of serious ill health. However there are valid circumstances, which most UK pensions allow, where some individuals can access their benefits earlier than this. It is to be hoped that these wrinkles will be ironed out in further guidance.”