The Government has signed an agreement with the US which will exempt UK pension schemes and Isas from onerous reporting requirements under the Foreign Account Tax Compliance Act.
Fatca aims to tackle tax evasion by US taxpayers through the use of foreign accounts. The rules require foreign financial institutions to report certain information about financial accounts held by US investors from 30 June 2013.
The agreement with the US, signed last week, comes after UK-specific negotiations.
Certain pension schemes registered with HM Revenue & Customs will not be considered as foreign accounts and will be exempt from Fatca.
Schemes are exempt where annual contributions are limited to £50,000 and funds cannot be accessed before age 55 except in cases of serious ill health.
Other exempt products include Isas, National Savings & Investments premium bonds and company share save schemes.
AJ Bell chief executive Andy Bell says the exemptions will “significantly reduce” the costs for UK financial services firms in complying with Fatca but he argues the standard for scheme exemption should be revisited.
Bell says: “There are valid circumstances, which most UK pensions allow, where some individuals can access their benefits earlier than age 55. It is to be hoped these wrinkles will be ironed out in further guidance.”