Form 8621: the PFIC form, one per fund, per year.
If you are a US person holding UK funds — including anything inside a Stocks and Shares ISA — Form 8621 is probably required, separately for each holding, whether or not you sold anything.
Figures on this page are stated for tax year 2025/26 UK · 2025 US. Thresholds change annually.
The default regime is the punitive one
Without an election, gains and excess distributions are allocated across your entire holding period, taxed at the highest ordinary rate in force for each year, and charged interest as though the tax had been due back then. Long-held positions can lose more than half the gain this way.
The test that catches the funds is mechanical: 75% passive income or 50% passive assets. Pooled investment vehicles pass it by construction, which is why OEICs, unit trusts, investment trusts and non-US ETFs are almost all PFICs.
- One form per fund, per year, above the de minimis thresholds
- The ISA or SIPP wrapper does not change PFIC status
- Shares in an operating company are not PFICs; a foreign company that is mostly cash or investments can be
The elections, and their timing
A QEF election taxes you on your share of the fund's actual income each year, which is the cleanest outcome — but it needs annual information statements that UK retail funds rarely produce. Mark-to-market works for regularly traded holdings, taxing unrealised gains annually as ordinary income.
Both generally have to be made in the first year of holding or of US personhood. Late elections have limited routes back, which is why an existing portfolio often does better with a planned disposal and rebuild into US-domiciled, HMRC-reporting funds.
Questions we get about this
Usually yes. Above the de minimis thresholds the annual filing is required for each PFIC held, distribution or not, election or not.
An unfiled 8621 also holds the statute of limitations open under section 6501(c)(8) - on the whole return, or just the related items where the failure was for reasonable cause. Either way it is a quiet risk few people price in.
Domicile is the fastest indicator - an ISIN beginning US is generally safe, while GB, IE or LU generally is not.
It is the fund's domicile that matters, not what it invests in: a UK-domiciled S&P 500 tracker is a PFIC, a US-domiciled one is not.
Frequently the arithmetic favours it - realise the position, pay the historic charge once, and rebuild in funds both systems treat sensibly.
But not always, and not without modelling. The right answer depends on holding period, embedded gain and which tax year the disposal lands in.
Where the treaty protects the pension, the conservative reading generally extends that shelter to the funds inside it, and Form 8621 is not filed for them.
SIPPs holding retail funds still deserve a look, because the analysis depends on the scheme and how it is claimed.
Last reviewed · Figures stated for tax year 2025/26 UK · 2025 US. Thresholds and rates change annually — check figures against the current tax year before relying on them.
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