UK charities are generally exempt from reporting obligations under the US Foreign Account Tax Compliance Act, thanks to their Deemed-Compliant Financial Institution status under the UK–US Intergovernmental Agreement. However, charities operating internationally should plan ahead, as foreign banks may be unfamiliar with UK charitable status and could apply withholding to US-sourced payments.
What is FATCA?
The US Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions (FFIs), including UK banks, to identify and report accounts with a US connection to the US’s Internal Revenue Service (IRS).
Non‑compliance risks punitive withholding and penalties for the financial institutions, so as a result (unsurprisingly) UK banks comply and generally pass requirements down to customers.
The UK manages FATCA locally through a UK–US Intergovernmental Agreement (IGA), which is designed to reduce burden on UK organisations, including charities.
Here’s some of the technical aspects.
Are UK charities caught by FATCA?
- Under the US Regulations, charities are classed as 'non‑profit organisations'.
- Under the UK–US IGA, UK charities are treated as Deemed‑Compliant Financial Institutions, listed in Annex II of the IGA.
- UK charities generally have no reporting obligations under FATCA.
What this means in practice
For UK charities that do not operate or transfer funds overseas:
- UK banks will usually verify a charity’s status using existing data:
- Charity Commission number (England and Wales)
- OSCR number (Scotland)
- HMRC charitable tax recognition (for non‑company/excepted cases)
- Some banks may still ask for self‑certification, typically via an IRS form (sometimes referred to as W-8BEN-E) or a bank’s own FATCA classification form. This confirms the charity’s deemed‑compliant status under the UK–US IGA.
- You may be asked to complete a FATCA declaration when opening or updating a bank account for your charity.
International operations, or ‘where it gets harder’
For charities sending/receiving funds to or from overseas:
- Non‑UK banks may be unfamiliar with UK charity registration and the UK–US IGA.
- You may be asked to prove deemed‑compliant status. In practice, that usually means:
- Completing W‑8BEN‑E showing a UK address and selecting the Deemed‑Compliant category under the UK–US IGA.
- Providing evidence of UK charitable status (registration extract, HMRC letter).
- What is the risk that needs to be managed? If a non‑UK bank/withholding agent cannot verify your status, they may apply FATCA withholding to US‑sourced payments. Plan ahead to avoid delays and withholding.
Checklist for UK Charities
For all UK accounts
Keep your UK charity registration details up to date and to hand (CC/OSCR number, HMRC recognition).
Maintain a standard FATCA self‑certification pack:
- W‑8BEN‑E (latest completed version)
- Proof of UK address
- Copy/printout of public register entry (CC/OSCR) or HMRC recognition letter
- One‑page explainer on your charity (see template below)
For international activity
- Map where you bank and receive funds internationally.
- Make and maintain a list of counterpart banks/FFIs and whether their country has a US IGA.
- Ask partners and local banks in advance what they need in order to recognise UK deemed‑compliant status.
- For US‑sourced income, confirm the withholding posture of any non‑UK intermediary bank; ensure your W‑8BEN‑E is on file before funds are sent.
- Keep records of all certifications and correspondence — expiry/refresh cycles for W‑8BEN‑E are typically every 3 years or when details change.
- Add a pre‑award compliance step to grant/funding workflows for US‑sourced income.
Template: One‑Paragraph Explanation for Banks/FFIs
[Charity legal name] is a UK charity with registered address [address] and registration [Charity Commission/OSCR number or HMRC charitable recognition ref]. Under the UK–US Intergovernmental Agreement implementing FATCA, UK charities are treated as Deemed‑Compliant Financial Institutions (see Annex II of the UK–US IGA). We therefore have no FATCA reporting obligations. We have provided a completed Form W‑8BEN‑E reflecting our UK address and deemed‑compliant status, alongside evidence of our UK charitable registration.
W‑8BEN‑E: what to prepare
- Legal name of your organisation, as stated in your governing document.
- The country of incorporation/organisation (United Kingdom).
- Permanent address for your organisation. NB this needs to be a physical address, not a PPO Box.
- FATCA status, which is likely Deemed‑Compliant Financial Institution under UK–US IGA (typically the specific deemed‑compliant category for Non‑Profit Organisation; wording and line numbers vary by form revision).
- GIIN – you can answer ‘not applicable’ for deemed‑compliant UK charities under the IGA.
- Chapter 4 status claim – you can cite UK–US IGA Annex II recognition.
- Capacity and signature – the name of your authorised signatory, date of signature, and contact details.
Tip! Keep a clean, signed PDF of your W‑8BEN‑E and refresh it every three years or whenever your organisation’s details change.
Common mistakes
- Assuming UK proof is understood abroad: non‑UK banks may not recognise UK registers without context.
- Letting W‑8BEN‑E lapse: expired forms can trigger withholding on US‑sourced funds.
- Inconsistent names/addresses: mismatches between the form, bank records, and public registers can cause re‑checks and delays.
- Not documenting the IGA basis — explicitly reference the UK–US IGA and Annex II in correspondence.
As stated, UK charities generally have no reporting obligations under FATCA. For domestic banking, keeping charity registration details up to date and maintaining a standard FATCA self‑certification pack is usually more than sufficient. Where international transfers are involved, planning ahead (providing W‑8BEN‑E forms, proof of UK charitable status, and liaising with foreign banks) helps avoid delays. We are interested in whether your charity has faced any challenges with FATCA compliance, do fill out our Banking Survey (which includes a question on FATCA) and/ or reach out to us at policy@cfg.org.uk.