Is a UK AVC pot reported separately from my main workplace pension on the FBAR?

Usually yes. If the AVC fund is held with a different provider, has its own policy or member number, or is a free-standing arrangement, it is a separate foreign financial account and should be listed as its own entry on FinCEN Form 114 with that provider's details and its maximum value for the year. An AVC recorded inside the same account as the main scheme may be reported with it, but the documents should confirm that.

Does the US-UK treaty make my AVC contributions tax-free in the US?

Partly. Article 18, paragraph 5 lets a US citizen resident in the UK exclude or deduct contributions to a UK employer pension scheme where the employment cost is borne by a UK employer. The relief is limited to the lesser of the UK relief and the relief a generally corresponding US scheme would allow, so contributions above the US-equivalent limit can be taxable US compensation.

Is investment growth inside my UK AVC fund taxed by the IRS each year?

Generally not while you are UK resident. Article 18, paragraph 1 of the US-UK treaty provides that the country of residence will not tax a pension scheme's income for a participant until a distribution is made, and the US Treasury Technical Explanation confirms that US citizens resident in the UK can use this paragraph despite the saving clause. Distributions are dealt with under the pensions article when paid.

How is a UK pension valued on Form 8938?

The Form 8938 instructions say to report the fair market value of your beneficial interest in the pension plan's assets on the last day of the tax year. If you do not know that value from readily available information, you may use the value of distributions received during the year, or zero if there were none. Values are converted at the US Treasury Bureau of the Fiscal Service year-end rate.

Does salary sacrifice into AVCs change my UK annual allowance or HMRC reporting?

Salary sacrifice turns the AVC into an employer contribution, which still counts toward your UK annual allowance alongside your own contributions and, for defined benefit members, benefit growth. If total pension input exceeds your available allowance, including any tapered reduction for high incomes and any carry forward, the excess is reported in the pension savings tax charges section of your Self Assessment return.

What is the best way to fix years where I missed reporting an AVC pension account?

It depends on what is missing. If returns were correct and only FBARs omitted the AVC pot, late or amended FBARs can be filed through FinCEN's BSA E-Filing System with a reason statement. If income or Form 8938 disclosures were wrong, amended returns are needed. For missed returns or wider non-willful gaps, the Streamlined Foreign Offshore Procedures cover 3 years of returns and 6 years of FBARs.

Missed Reporting a Pension Account: UK AVCs & FBAR

If you are a US citizen in the UK and you have missed reporting a pension account created by Additional Voluntary Contributions (AVCs), the gap is usually fixable: the AVC fund is normally a foreign financial account in its own right, so it belongs on the FBAR (FinCEN Form 114) and often on Form 8938, and the missed years can be corrected through late FBAR filings or the Streamlined Foreign Offshore Procedures. Separately, whether the contributions themselves escape US income tax depends on Article 18 of the US-UK income tax treaty, which gives US citizens resident in the UK real relief but only within defined limits. In the returns we prepare for bankers, partners and senior executives in London, the AVC pot is the account most often left off the FBAR, because it sits with a different provider from the main workplace scheme and nobody thinks of it as an account.

This guide walks through what AVCs are, how the UK gives tax relief on them, how the US side works under the treaty, how the AVC fund is reported and valued on FBAR and Form 8938, and exactly how to repair the missed years. It closes with a worked illustration and six frequently asked questions.

What are UK Additional Voluntary Contributions (AVCs)?

An Additional Voluntary Contribution is an extra payment you choose to make into a pension on top of the standard contributions your workplace scheme requires. AVCs come in three common shapes, and the shape matters for US reporting.

In-scheme AVCs to a defined benefit scheme: your employer runs a final salary or career-average scheme, and alongside it offers a money-purchase AVC facility, usually invested through an insurer or platform the scheme appoints. The AVC fund is a separate pot with its own value and statements.
In-scheme AVCs to a defined contribution scheme: extra contributions go into the same money-purchase arrangement as your regular contributions, sometimes recorded under the same member number and sometimes as a distinct sub-account.
Free-standing AVCs (FSAVCs) and similar personal top-ups: a separate arrangement you hold with a provider of your own choosing, outside the employer scheme entirely. These are less common today but still sit on many long-tenure balance sheets.

High earners typically use AVCs to absorb unused UK annual allowance, often through salary sacrifice, where you give up part of your contractual pay and your employer pays the equivalent amount into the pension. Salary sacrifice can also save National Insurance, which is why it is so common in financial services pay structures. The catch for US citizens is that every one of these shapes can create a separate reportable pension account, and salary sacrifice changes the character of the payment from an employee contribution to an employer contribution.

How much can you put in? The UK annual allowance and taper

The annual allowance is the ceiling on pension savings that attract UK tax relief in a tax year before a tax charge applies. GOV.UK states the annual allowance is 60,000 pounds for the current tax year (https://www.gov.uk/tax-on-your-private-pension/annual-allowance). Unused allowance from the previous three tax years can be carried forward, provided you have used up the current year's allowance first.

For the client group reading this, the tapered annual allowance is the critical rule. GOV.UK explains that a reduced allowance applies when your threshold income is over 200,000 pounds and your adjusted income is over 260,000 pounds. The taper reduces the allowance progressively as adjusted income rises, down to a floor, so a senior banker or equity partner may have far less headroom than the headline figure suggests. Because the size of the reduction depends on each person's income computation, we calculate it individually rather than relying on a rule of thumb. If savings exceed the available allowance, the excess is subject to the annual allowance charge, reported in the pension savings tax charges section of the Self Assessment return, and in some cases paid by the scheme instead of the member.

Both parts of the pension input count toward the allowance: your own contributions, employer contributions (including salary sacrifice amounts), and, for defined benefit members, the growth in the value of the promised benefit. AVCs therefore stack on top of whatever the main scheme already uses.

How does UK tax relief work on AVCs: net pay or relief at source?

UK relief is delivered in one of two ways, and knowing which one applies helps us reconcile UK payslips and P60s with the US return.

Net pay arrangement: GOV.UK describes this as your employer taking workplace pension contributions out of your pay before deducting Income Tax (https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief). Relief is immediate at your marginal rate, and the UK taxable pay on your P60 is already reduced.
Relief at source: your provider claims basic rate relief of 20 percent from the government and adds it to your pot. Higher and additional rate taxpayers then claim the extra relief through Self Assessment. Many free-standing and personal arrangements work this way.
Salary sacrifice: technically neither of the above for the sacrificed amount, because your contractual salary falls and the employer pays in directly. UK taxable pay is lower from the outset, and the contribution is an employer contribution.

GOV.UK also caps relief on personal contributions at 100 percent of your annual earnings. For US purposes, the relief-at-source top-up paid by HMRC into the pot is part of what the pension fund receives, and it needs the same treaty analysis as the contribution it relates to.

Are UK AVC contributions and growth taxable in the US?

Without the treaty, a US citizen's contributions to a UK pension would generally get no US deduction or exclusion, employer contributions could be taxable compensation, and the fund's income could be taxed as it accrues. Article 18 of the US-UK income tax treaty changes that in two separate ways, and the US Treasury's Technical Explanation of the Convention sets out the mechanics (https://home.treasury.gov/system/files/131/Treaty-UK-Protocol-TE-7-22-2002.pdf).

First, paragraph 1 of Article 18 provides that where a resident of one country participates in a pension scheme established in the other, the country of residence will not tax the scheme's income with respect to that person until a distribution is made. The Technical Explanation confirms this paragraph is excepted from the saving clause, so a US citizen resident in the UK is not taxed in the US on the earnings and accretions of a UK pension fund. For an AVC pot, that means dividends, interest and gains inside the fund are generally deferred for US purposes while you remain UK resident.

Second, paragraph 5 of Article 18 gives US citizens resident in the UK a US exclusion or deduction for certain contributions to UK pension schemes. According to the Technical Explanation, qualifying contributions are generally those made while the US citizen works in the UK and the costs of the employment are borne by a UK employer or a UK permanent establishment. Accrued benefits and contributions during that period are generally not treated as taxable income in the US. Paragraph 5 is also excepted from the saving clause, which is what allows a US citizen to use it at all.

Where does the treaty relief stop for large AVCs?

This is the gap that matters most for high earners. The Technical Explanation states that the US benefit under paragraph 5 is limited to the lesser of the relief allowed in the UK for contributions and benefits under the UK scheme and the relief that would be allowed for contributions and benefits under a generally corresponding pension scheme established in the United States. In plain terms, the treaty imports US contribution limits. A UK annual allowance with carry forward can permit contributions well beyond what a comparable US employer plan would allow in a year, and the excess above the US-equivalent limit is not sheltered by paragraph 5.

The employment condition: relief under paragraph 5 is tied to UK employment borne by a UK employer or UK permanent establishment. A US citizen seconded to London but paid and charged by a US entity needs a closer look.
The US-limit ceiling: the treaty compares the UK scheme with US employer plans generally, so contributions above the corresponding US limit, including carry-forward catch-up payments, can fall outside the exclusion.
The corresponding-scheme condition: paragraph 5 applies only where the US competent authority has agreed that the UK scheme generally corresponds to a US scheme. The Technical Explanation links this to UK employer retirement benefit schemes, which is why a free-standing arrangement held entirely outside the employer scheme needs a separate analysis before anyone assumes it qualifies.
Salary sacrifice: because the payment becomes an employer contribution, it is tested against the employer-contribution side of the US limits rather than the employee elective-deferral side.

Where a treaty position reduces US tax, the return may need to disclose it on Form 8833 (https://www.irs.gov/forms-pubs/about-form-8833). Any contribution that falls outside Article 18 is generally taxable US compensation in the year it is made, which in turn gives you US basis in the pension that matters when benefits are eventually paid. Foreign tax credits on UK tax paid on salary can often absorb much of the resulting US tax, but that depends on the full return, not the pension in isolation.

Missed reporting a pension account: is the AVC pot a separate FBAR account?

Yes, in most cases. The FBAR requires a US person to report foreign financial accounts when the aggregate value of those accounts exceeds 10,000 dollars at any time during the calendar year, as the IRS confirms in its comparison of Form 8938 and FBAR requirements (https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements). UK pension arrangements are generally treated as reportable foreign financial accounts. The FBAR exception for retirement plan participants is framed around US tax-qualified plans, as the FinCEN filing instructions explain (https://www.fincen.gov/system/files/shared/FBAR%20Line%20Item%20Filing%20Instructions.pdf), and does not remove a UK scheme from the report.

The AVC pot is the account most commonly missed, for three reasons we see again and again. It is often administered by a different insurer or platform from the main scheme, so it produces separate statements that arrive at a different time of year. It may have its own policy or member number. And clients tend to think of it as part of the main pension rather than as its own account. A separately identifiable pot with its own provider, account number and value should be listed as its own line on the FBAR, with the provider's name and address. A free-standing arrangement is always a separate account.

The FBAR reports the maximum value during the year. The IRS comparison page explains that filers use periodic statements to establish the maximum value in the account's original currency and then convert to US dollars using the end of the calendar year exchange rate. The FBAR is filed electronically through FinCEN's BSA E-Filing System (https://bsaefiling.fincen.treas.gov) and is not filed with the tax return. For a defined contribution AVC pot, the statement value is usually a sound basis. For the defined benefit element of a main scheme, which has no account balance, practitioners take different approaches to value, and we document the method used.

Does the AVC fund also go on Form 8938?

Form 8938 applies when your specified foreign financial assets exceed the thresholds for taxpayers living abroad. The IRS instructions set these at more than 200,000 dollars on the last day of the tax year or more than 300,000 dollars at any time during the year for unmarried filers, and more than 400,000 dollars at year end or more than 600,000 dollars at any time for married couples filing jointly (https://www.irs.gov/instructions/i8938). For most readers of this article, the combination of a main pension, an AVC pot, ISAs and bank accounts crosses those lines easily.

The Form 8938 instructions give a specific valuation rule for an interest in a foreign pension or deferred compensation plan: report the fair market value of your beneficial interest in the plan's assets as of the last day of the tax year. If you do not know or have reason to know that value based on readily available information, you may use the fair market value of cash and other property distributed to you during the year, and if there were no distributions, the value may be reported as zero. For an AVC pot with an annual statement, the value is usually known, so the zero-value route rarely fits. Conversion uses the US Treasury Bureau of the Fiscal Service rate on the last day of the tax year. Form 8938 penalties can reach 10,000 dollars for failure to disclose, with additional amounts for continued failure after IRS notice, up to a maximum of 60,000 dollars, per the IRS comparison page.

How do you fix missed AVC reporting and missed US tax returns?

The right route depends on what is actually missing. There are three common patterns in the files we take on.

Returns filed and tax correct, only FBARs missing or incomplete: file the delinquent or amended FBARs through the BSA E-Filing System with a statement explaining the reason for late filing. The IRS withdrew its separate delinquent FBAR submission page in 2026, so this is done directly through FinCEN's system rather than under a named IRS programme.
Returns filed but the AVC contributions above the treaty limit were not included in income, or Form 8938 omitted the pot: amended returns on Form 1040-X for the open years, with Form 8938 and Form 8833 attached where needed, plus any FBAR corrections.
Missed US tax returns altogether, or broader non-compliance: the Streamlined Foreign Offshore Procedures are usually the cleanest route for a non-willful US citizen living in the UK.

Under the Streamlined Foreign Offshore Procedures (https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states), an eligible taxpayer files delinquent or amended returns for each of the most recent 3 years for which the return due date has passed, files delinquent FBARs for each of the most recent 6 years for which the FBAR due date has passed, and submits Form 14653 certifying that the failures resulted from non-willful conduct. The non-residency test requires that in at least one of the most recent three years you had no US abode and were physically outside the United States for at least 330 full days. The IRS states that eligible taxpayers will not be subject to failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties or FBAR penalties. Non-willful conduct means negligence, inadvertence, mistake or a good faith misunderstanding of the law, and the certification narrative should explain specifically why the AVC pot was overlooked.

A forgotten AVC pot is, in our experience, a classic non-willful fact pattern: the provider was chosen by the employer, the statements looked like part of the main pension, and the member reasonably believed the pension was covered. That does not make the narrative automatic. It has to be truthful, specific to you, and consistent with the documents.

Worked illustration: a London banker with a separate AVC provider

The following is an illustration only. All figures are assumed, and an exchange rate of 1.30 US dollars to the pound is assumed throughout for simplicity; real filings use the rates the IRS and FinCEN rules require for each year.

Maria is a US citizen who has lived in London for nine years and works as a director at a UK bank. She is a member of the bank's defined contribution scheme, administered by Provider A, where her pot is worth 420,000 pounds. Three years ago she began salary sacrificing 45,000 pounds a year into the scheme's AVC facility, which the bank placed with Provider B. Her AVC pot now stands at 150,000 pounds. She files US returns each year and reports her bank accounts and the Provider A pension on her FBAR, but she has never listed the Provider B account, and her preparer never tested the AVC against the treaty limits.

FBAR: the Provider B pot, at an assumed 150,000 pounds or about 195,000 dollars, is a separate account that should have appeared on each FBAR since it was opened. Her aggregate balances already exceeded the 10,000 dollar threshold, so each of those FBARs was incomplete.
Form 8938: her specified foreign financial assets were already above the abroad thresholds, so the AVC pot should also have been listed at year-end fair market value from the Provider B statement.
Treaty: the salary sacrifice payments are employer contributions. Assume, for illustration, that the US-equivalent employer limit for a generally corresponding plan would have covered only part of the combined main-scheme and AVC employer contributions in each year. The excess above that limit falls outside Article 18, paragraph 5 and is US taxable compensation for that year, even though it was fully relieved in the UK.
Growth: under Article 18, paragraph 1, the investment growth inside both pots is generally not taxed in the US while she remains UK resident, so no annual income inclusion is needed for fund returns.

Because Maria filed returns and the unreported item is a pension pot rather than unreported investment income, her route depends on the numbers. If the treaty excess creates little or no additional US tax after foreign tax credits, amended returns plus corrected FBARs filed through BSA E-Filing with a reason statement may be sufficient. If the tax effect is material across several years and her conduct was non-willful, the Streamlined Foreign Offshore Procedures give her a defined three-year and six-year window with the penalty protection the IRS describes. Either way, the corrected FBARs list Provider A and Provider B as two separate accounts.

What records should you gather before correcting AVC reporting?

The speed and accuracy of a correction depend almost entirely on documents. For each year being corrected we ask for the following.

Annual statements from every pension provider, including the AVC provider, showing the highest and year-end values.
Salary sacrifice agreements and payslips showing the sacrificed amounts and employer contributions by month.
P60s and Self Assessment returns, including any pension savings tax charges or annual allowance calculations.
Scheme booklets or member guides identifying whether the AVC sits inside the employer scheme or is a free-standing arrangement.
Previously filed US returns, Forms 8938 and FBAR confirmations, so we can see exactly what was omitted.

If an AVC provider was absorbed by another insurer over the years, the account may have changed name or number. Each provider that held the pot during a year is a separate line on that year's FBAR if it was a separate account in that year.

Key takeaways for US citizens making AVC top-ups

An AVC pot, especially one held with a different provider from the main scheme, is usually its own FBAR account and its own Form 8938 line.
Article 18 of the US-UK treaty generally defers US tax on the growth inside a UK pension for a US citizen resident in the UK.
Treaty relief for contributions is capped at the lesser of UK relief and the relief a corresponding US scheme would allow, so large AVCs using carry forward can create US taxable income.
Salary sacrifice turns the AVC into an employer contribution for both UK and US analysis.
Missed years are fixed through late FBARs filed on BSA E-Filing with a reason statement, amended returns, or the Streamlined Foreign Offshore Procedures, depending on what is missing and why.

If you have missed reporting a pension account in any year, the sooner it is corrected the more options remain open. We prepare the full package, from treaty computations and Form 8833 disclosures to corrected FBARs and Streamlined submissions, so the AVC pot is reported correctly going forward and the past years are closed off cleanly.