Is a UK building society share account a securities account or a bank account for FBAR purposes?

It is a bank account. The FBAR regulations at 31 CFR 1010.350 define a bank account as a savings deposit, demand deposit, checking, or any other account maintained with a person engaged in the business of banking, and define a securities account as an account with a person in the business of buying, selling, holding or trading securities. A building society share account is a savings deposit that carries membership of a mutual, so it belongs in the bank account category on FinCEN Form 114 despite the word share.

Do I have to report a building society account if the interest is covered by my UK personal savings allowance?

Yes. The personal savings allowance is a UK income tax relief and has no effect on US information reporting. GOV.UK sets the allowance at 1,000 pounds for basic rate taxpayers, 500 pounds for higher rate taxpayers and nil for additional rate taxpayers. Even where the interest is entirely untaxed in the UK, the balance is still a foreign financial account for FinCEN Form 114 and the interest is still ordinary income on your US return. Interest that bears no UK tax also generates no foreign tax credit against the US liability.

Do I need Form 8938 as well as the FBAR for a building society share account?

If your specified foreign financial assets exceed the Form 8938 thresholds, yes. The IRS comparison of the two reports confirms foreign deposit and savings accounts are reportable on both. For filers living abroad the thresholds are 200,000 US dollars at year end or 300,000 US dollars at any time for a single filer, and 400,000 US dollars or 600,000 US dollars respectively on a joint return. Form 8938 is filed with your Form 1040; FinCEN Form 114 is filed separately with FinCEN, and filing one does not satisfy the other.

What if the building society will not give me statements going back six years?

The FBAR filing instructions allow a reasonable determination of the maximum value where periodic account statements are not available. In practice we work from the passbook entries, annual interest certificates, and a reconstruction from a known opening balance plus interest credited. Record the source used, the request made and the date, so the determination is evidenced rather than asserted, and apply the Treasury exchange rate for the last day of each separate calendar year rather than a single rate across all years.

I received free shares when my building society converted to a bank. Does that change my reporting?

Significantly. HMRC treats shares received without payment on a conversion as having no acquisition cost, and a cash bonus on a share account is chargeable because the holder is a member, whereas a bonus on a deposit account is not. For US purposes the cash bonus raises the account maximum value in that year, and the free shares create a separate securities holding that is reportable in its own right and that will produce dividend income. The US basis of those shares is its own question and should be documented at the time of conversion.

Missed FBAR UK Building Society Share Account

Q: My share account never exceeded 10,000 dollars on its own. Do I still have a missed FBAR?

Almost certainly yes, because the test is aggregate. IRS.gov requires an FBAR where the combined value of all your foreign financial accounts exceeded 10,000 US dollars at any time during the calendar year. A share account holding the equivalent of 4,000 US dollars is fully reportable once a current account, a cash ISA or any other foreign balance takes the combined peak past the threshold. Leaving it off a report you were already filing makes that report incomplete, which is itself a reporting failure.

Missed FBAR UK building society accounts are one of the most common remediation jobs we take on for Americans in Britain, and the cause is almost always a single word: share. A UK building society share account is a savings deposit that carries membership of a mutual. It is not a holding of securities, and it is a foreign financial account reportable on FinCEN Form 114 once your foreign accounts in aggregate exceed 10,000 US dollars at any point in the calendar year. The account does not fall outside the reporting net because it pays modest interest, lives in a paper passbook, or has not been touched since the Nineties.

The reporting is retrospective, and the route back depends on one question: were the underlying US returns also wrong? FinCEN Form 114 is filed with the Financial Crimes Enforcement Network through the BSA E-Filing System, separately from your Form 1040. IRS.gov confirms it is due on 15 April with an automatic extension to 15 October that you do not need to request. Late reports go through the same system with a reason for filing late recorded on the report.

Why is a UK building society share account not a securities account?

A building society share account is a savings deposit that also confers membership of the society. The word share is a survival from mutual ownership law, not a description of an equity investment. There is no market price, no broker, no dividend and no capital risk of the kind a shareholding carries. What you have is a credit balance that earns interest, plus a vote.

HMRC draws exactly this line in its Capital Gains Manual guidance on building societies, separating share accounts, treated as chargeable assets because the investor is a member, from deposit accounts, which are simple debts outside capital gains tax under section 251 of the Taxation of Chargeable Gains Act 1992. That distinction is about membership rights. It is not a statement that a share account holds securities, and HMRC notes that in normal circumstances an investor cannot make a gain or loss on the balance itself.

For US reporting, the characterisation is settled by the FBAR regulations rather than by the product name. Under 31 CFR 1010.350, a bank account means a savings deposit, demand deposit, checking, or any other account maintained with a person engaged in the business of banking, while a securities account means an account with a person engaged in the business of buying, selling, holding or trading stock or other securities. A share account is a savings deposit held with a deposit taking institution. On FinCEN Form 114 it belongs in the bank account category, and no amount of shareholding language on the passbook changes that.

This matters more than a box on a form. The society reports the balance to HMRC, and under the FATCA framework treats the relationship as a depository account. If your report describes the same balance as a securities account, your disclosure is inconsistent with the data trail behind it. We see this mis-boxing regularly on self-prepared reports and on reports prepared by US firms with no UK product knowledge, and it is one of the few FBAR errors that creates a question rather than answering one.

The passbook says share balance, so the filer looks for a broker tax voucher that will never exist and concludes the account is out of scope.
A preparer questionnaire asks about foreign bank accounts, the client answers no because they hold shares, and the account never reaches the FBAR schedule.
The balance is small on its own, so it is never aggregated with a current account, a cash ISA and a workplace savings balance to test the threshold.
The account is passbook only, with no downloadable statement, so it is invisible to any digital document gathering process.
The society has since merged and the name on the passbook no longer exists, so the client believes the account was closed when the balance was simply transferred.

What does membership of a mutual actually mean for your US filings?

A building society is owned by its members rather than by external shareholders. Membership generally follows from holding a savings account or a mortgage, and the standard mutual constitution gives one vote per member regardless of how much is invested or borrowed. Membership is a governance right attached to the relationship. It cannot be bought, sold, valued or transferred separately from the account.

For US information reporting that has a clean consequence. Membership itself is not a separate reportable financial account and has no maximum value to disclose. What is reportable is the deposit balance in the share account. Membership only becomes a reporting event if the society converts to a company or is taken over, at which point what you hold can change character entirely, and that is the single most common trigger for a client discovering a reporting history that was never right.

Is a building society share account reportable on FinCEN Form 114?

Yes. The FBAR test is not applied account by account. IRS.gov states that a US person must file where the aggregate value of their foreign financial accounts exceeded 10,000 US dollars at any time during the calendar year. That is a peak test across every foreign account you own or control, not a year end test. A share account holding the equivalent of 4,000 US dollars is fully reportable if your other balances take the combined peak past the threshold.

Two further points catch people out. First, an account closed during the year is still reportable for that year, because the test is whether it existed and what its maximum value was. Second, signature authority over an account you do not own is separately reportable, which matters where a US person operates a family savings balance held in a UK mutual.

For each year you will need the full legal name and address of the society, the account number as it appears on the passbook or annual interest certificate, the account type, the maximum value translated into US dollars, and whether the account is held solely, jointly or only under signature authority.

How do permanent interest bearing shares differ from a share account?

Permanent interest bearing shares, usually abbreviated to PIBS, are the genuine security a building society issues, and setting them alongside a share account is the cleanest way to see why the two are not the same thing. HMRC describes PIBS as a form of building society share introduced in 1990 to strengthen the capital base. They are perpetual, pay a fixed rate of interest, trade, can fall in value, and rank behind ordinary savings balances if the society fails.

The UK tax treatment reflects that. HMRC guidance treats PIBS broadly like loan finance rather than equity: a sterling PIBS is subject to the same treatment as a qualifying corporate bond, so a gain on disposal is not a chargeable gain; transfers are exempt from stamp duty; and PIBS fall within the Accrued Income Scheme as negotiable interest bearing instruments. None of that applies to a savings share account, which pays interest on a credit balance and nothing more.

For US purposes the contrast is sharper still. PIBS held through a UK broker sit in a securities account, reportable in the securities category on FinCEN Form 114. PIBS held directly are not held in a financial account at all, which changes where they are disclosed on the FATCA return rather than whether. And the UK exemption from a chargeable gain has no US counterpart: a disposal producing no UK capital gains tax can still produce a US gain, because the US computes the result under its own rules with sterling translated into dollars.

Does the same account also need Form 8938?

Possibly, and the two reports are genuinely different obligations rather than duplicates. Form 8938, Statement of Specified Foreign Financial Assets, is a FATCA disclosure attached to your Form 1040. FinCEN Form 114 is a Bank Secrecy Act report filed with FinCEN. IRS.gov publishes a direct comparison of the two, and its answer for foreign deposit and savings accounts is that they are reportable on both. Filing one has never satisfied the other.

Agency and route: Form 8938 goes to the IRS with your return; FinCEN Form 114 goes to FinCEN through the BSA E-Filing System.
Thresholds abroad: 200,000 US dollars at year end or 300,000 US dollars at any time for a single filer, and 400,000 or 600,000 US dollars respectively on a joint return.
Thresholds in the US: 50,000 US dollars at year end or 75,000 US dollars at any time for a single filer, and 100,000 or 150,000 US dollars respectively on a joint return.
Timing: Form 8938 follows the return and its extensions; the FBAR is due 15 April with automatic extension to 15 October.
Penalties: the Form 8938 penalty per the IRS comparison is up to 10,000 US dollars, plus 10,000 US dollars for each 30 days after notice, to a maximum of 60,000 US dollars.

For the high net worth clients we prepare for, the Form 8938 thresholds are usually crossed comfortably, so a share account is not just an FBAR line. It is also a specified foreign financial asset to be scheduled with its maximum value. An account missing from the FBAR has almost always been missing from Form 8938 too, and fixing one and not the other leaves a different inconsistency in the file.

How is the interest reported on the US return, and where does the personal savings allowance fit?

Interest credited to a share account is ordinary interest income for US purposes, taxable regardless of how the UK treats it, and reported gross in US dollars. The Schedule B instructions require Schedule B where taxable interest or ordinary dividends exceed 1,500 US dollars, and separately where you have a financial interest in or signature authority over a financial account in a foreign country. Part III then asks whether such an account existed, whether FinCEN Form 114 is required, and in which country the account is located.

That Part III question is the quiet trap. A client with a forgotten share account has usually been answering it untruthfully, year after year, alongside an FBAR that omits the same account. Correcting the reports without correcting the return leaves the file half repaired.

On the UK side, GOV.UK sets the personal savings allowance at 1,000 pounds for basic rate taxpayers, 500 pounds for higher rate taxpayers and nil for additional rate taxpayers. There is also a starting rate for savings of up to 5,000 pounds, reduced by one pound for every pound of other income above the personal allowance and unavailable once other income reaches 17,570 pounds. Banks and building societies report the interest they pay to HMRC, which collects any tax due through a tax code adjustment or Self Assessment.

The interaction is where cross border preparation earns its keep. A basic rate taxpayer whose share account interest sits inside the personal savings allowance pays no UK tax on it, so there is no foreign tax to credit against the US liability on the same income and the US tax is unsheltered, however small the amount. An additional rate taxpayer, with a nil allowance, is in the opposite position. Either way the UK treatment does not remove the US reporting obligation, and clients who assume tax free in the UK means invisible to the US are the ones who arrive with eight years of gaps.

What happens to the reporting when a society demutualises?

A demutualisation converts the society into a company and pays members for the membership rights they give up, typically as free shares in the successor or as a cash bonus. HMRC guidance on incentive payments from financial institutions treats shares received without payment as having no acquisition cost, so on a later sale the whole of the proceeds is the gain. A cash bonus on a deposit account is not chargeable, because the deposit is a simple debt, whereas a share account is a chargeable asset because the holder is a member. The label that felt cosmetic for twenty years suddenly decides the UK answer.

The US consequence is the reason a demutualisation is so often the year a missed FBAR surfaces. Three things happen at once. The cash bonus is credited to the account, pushing its maximum value up in exactly the year the client stops thinking about it. The free shares turn part of the relationship into a real securities holding, separately reportable and producing dividends that belong on the return. And the asset changes character mid year, so one reporting period contains both a deposit account and a shareholding disclosed on different bases. The US basis of those successor shares does not follow the UK nil cost answer and should be documented at the time rather than assumed years later.

How do you determine the maximum value of a share account?

FinCEN requires the maximum value during the calendar year, not the closing balance. The filing instructions direct filers to use periodic account statements, and where statements are unavailable to make a reasonable determination from the information they do have. Conversion uses the Treasury rate for the last day of the calendar year, so the same sterling peak converts differently across the years you are remediating.

Work from the passbook itself where one exists, as the stamped entries are often the only surviving ledger for a pre digital account.
Request annual interest certificates, which societies often retain longer than full statement runs, and reconstruct from a known opening balance plus interest credited where they cannot.
Record the method used, the source relied on and the date of the request, so that the reasonable determination is evidenced rather than asserted.
Apply the Treasury year end rate for each separate year rather than one rate across the whole remediation period.
Retain the working papers, since IRS.gov states that FBAR records must generally be kept for five years from the due date of the report.

The dormant and passbook accounts clients forget

The accounts that go missing are rarely the ones anyone would hide. They are the account a grandparent opened for a child, the balance left behind when the client moved to New York, the mortgage linked savings account that stayed open after redemption. None is doing anything except crediting interest, and that interest quietly grows the balance every year, which is how an account nobody thinks about ends up contributing to a threshold breach.

Long inactive balances can also move into the UK dormant assets scheme, with the customer retaining the right to reclaim. That does not extinguish the account for reporting purposes. If the balance existed during a year, that year is a reportable year, and reclaiming the money later does not repair reports filed without it.

A worked example: eight years of a forgotten share account

Take an illustrative client, a US citizen working in corporate finance in London, taxed at the UK additional rate. She holds a UK current account peaking at 6,200 pounds, a cash ISA peaking at 9,400 pounds, and a building society share account opened for her by a grandparent in 1997 with a passbook balance of 4,850 pounds. She has filed FBARs covering the current account and the ISA for eight years and never listed the share account, because the passbook says share and she assumed it was a legacy investment her US preparer did not need.

The aggregate peak across her accounts is roughly 20,450 pounds, so the FBAR obligation was already triggered and she was already filing. Her problem is not a missing report. It is eight accurate looking reports that are each incomplete, and an incomplete report is itself a reporting failure. The share account also credited around 180 pounds of interest a year, taxable in the UK because her personal savings allowance is nil, and omitted from her US returns and her Schedule B answers.

In year six the society converted to a company. She received a cash bonus of 1,900 pounds credited to the share account, lifting its peak that year to about 6,750 pounds, plus free shares in the successor. From that point she also held a securities holding paying dividends, none of which appeared on a US return. The year that made her UK position more valuable is the year that made her US reporting history demonstrably wrong on three separate forms, and because income was omitted the returns must be corrected before anything is filed.

How do you remediate a missed FBAR UK building society account?

The first question is always whether the US returns were also wrong. If every pound of interest was reported and only the report was incomplete, the correction is an amended or late FinCEN Form 114 for each affected year, filed through the BSA E-Filing System with a reason for filing late recorded on the report. Note that the IRS removed its standalone delinquent FBAR submission procedures page from IRS.gov in mid 2026, so that should not be relied on as a live named programme. The mechanism of e-filing late reports with an explanation remains, and reasonable cause remains the substantive defence.

Where income was omitted, as in the example above, the route for a client living outside the US is usually the Streamlined Foreign Offshore Procedures. IRS.gov sets out the requirements: three years of delinquent or amended returns, six years of FBARs, and a certification on Form 14653 that the failure was due to non willful conduct, meaning negligence, inadvertence, mistake or a good faith misunderstanding. The non residency requirement asks that the individual had no US abode and was physically outside the United States for at least 330 full days in one of the three years. The FBARs are e-filed selecting Other as the late filing reason, with Streamlined Filing Compliance Procedures in the explanation box. A US resident uses the domestic version, which carries a miscellaneous offshore penalty.

Build the full account inventory first, including passbook only accounts, joint accounts, merged societies and reclaimed dormant balances.
Establish the maximum value year by year and document the evidence trail behind each figure.
Decide whether the original returns were correct, because that decision determines the route and cannot be revisited halfway through.
Correct the returns and the Schedule B Part III answers, and schedule the account on Form 8938 for every year the thresholds were met.
File the reports last, so the certification of what has been filed is accurate on the day it is signed, and retain the working papers for at least five years from each report due date.

What penalties are realistically in play?

The IRS comparison of the two reports states the FBAR penalty structure as up to 10,000 US dollars for a non willful violation and, for a willful violation, the greater of 100,000 US dollars or 50 percent of the account balances, with the amounts adjusted annually for inflation. Criminal penalties exist for the most serious cases. In February 2023 the Supreme Court held in Bittner v United States that the non willful penalty applies per report rather than per account, which matters directly here: omitting one small share account is not multiplied by the number of accounts on the report, although each year remains its own potential violation.

In practice, a modest deposit account left off otherwise complete reports by a filer who was paying UK tax on the interest and had no idea the product was a bank account is a documentation failure, not a concealment case. That is the position we prepare and evidence, which is why the certification is written from the actual file rather than a template, and why the account inventory comes before the filings. A remediation that is accurate and internally consistent across FinCEN Form 114, Form 8938 and the return is the outcome worth paying for; a fast filing that contradicts itself is not.