NS&I direct saver account/cash ISA and reporting

Hi everyone

I am a USA/UK dual citizen.  We bought one house here in the UK and paid off the mortgage and aren’t selling, so no capital gains.

For many years, I had a small cash ISA (not stocks and shares) that made less than 1500 dollars a year in interest.  I reported this on the FBAR, but I didn’t meet the 50K dollars threshold for the form 8938

Now rather happily my husband received an inheritance, and he gave me 50K in pounds which I’ve put into an NS&I direct saver account today.

The cash ISA also now has reached the 50K threshold for reporting.

So, I am going to report all of this on the FBAR, the 8938, and the interest on Schedule B for the cash ISA and the direct saver.

Some of the rest of my money is in a UK employer pension which I think is kosher for US tax purposes. I won’t take any lump sums so I’m not taxed by the US.
The rest is in a USA TIAA CREF guaranteed account which I cannot draw down from until I am 59.5 (I’m 57)

Is this OK for US tax purposes.  I am trying to determine if the NS&I  direct saver account won’t attract penalties as a foreign entity.  I also am trying to determine if premium bonds are OK, as my husband wants to give me more cash and I thought that might be an alright place for it.  I’ve seen things about gambling as being a no-no, but looking at the 2013 tax treaty, premium bonds seem to be all right
https://home.treasury.gov/system/files/131/RelatedAgreement-UK.pdf [nofollow]

Thanks for answering my questions.  An accountant wanted £500 to answer these queries which seemed excessive.  I’m not looking to make loads of interest on my money, just have it somewhere safe, and basically keep up with inflation, and avoid problems with the iRS

As a UK resident you are able to hold premium bonds if you wish. Prizes are US taxable. FBARs report all accounts, including for example current accounts, ISAs, NS&I accounts and most UK pension plans. Form 8938 reports all non-US financial assets once the filing threshold is reached.

Thanks.  Am I allowed to have an NS&I direct saver, or should I transfer that money into premium bonds.

Thanks.  Am I allowed to have an NS&I direct saver, or should I transfer that money into premium bonds.

There are no prohibitions in US or UK law to holding any NS&I account. Historically NS&I refused to accept US person customers into some (but not all) of their accounts. From what I recall, HM Treasury said when I asked the Minister that this was a choice to save NS&I the costs of becoming FATCA compliant. This discussion was roughly a dozen years ago so may have no relevance today, the only way to be certain which accounts accept US persons currently is to read the current terms & conditions. These are all on the NS&I website.

We have held NS&I direct saver accounts and Premium Bonds for several years and report the interest and prizes in schedule B.

We also report the accounts on our FBAR filings. We are below the limit for FATCA reporting on our IRS return.

That’s really helpful.  Thanks to you both for the steer.