Is that fund a PFIC? Here's how to tell.
If it is a pooled, non-US investment — an OEIC, unit trust, investment trust or non-US ETF — the answer is almost certainly yes, and the US tax treatment is the worst in the code.
Figures on this page are stated for tax year 2025/26 UK · 2025 US. Thresholds change annually.
The test is mechanical, and merciless
A non-US company is a PFIC if 75% of its income is passive or 50% of its assets produce passive income. Investment funds pass by construction. Where the fund is domiciled decides everything: a US-domiciled ETF holding UK shares is fine; a UK-domiciled ETF holding US shares is a PFIC.
Check the fund's ISIN — starting 'US' is generally safe, 'GB', 'IE' or 'LU' generally isn't. The wrapper (ISA, GIA, even some pensions) doesn't change the answer.
- Fund domicile, not underlying holdings, decides status
- ISIN prefix is the quickest first check
- Pooled funds are PFICs; shares in an operating company are not, unless the company is itself mostly passive
Three questions about the holding
A quick orientation, not advice — real positions have edges this cannot see.
Answer all three questions to see the verdict.
Questions we get about this
Below the de minimis exception - $25,000 of PFIC stock, or $50,000 filing jointly, with no distribution or disposal that year - no Form 8621 is required at all. Above it, a small holding generates the same annual form as a large one.
It only affects the tax at stake, which is why small legacy holdings are often worth disposing of on administrative grounds alone.
Treat it as a starting point. If it says an obligation applies, the next question is what the filing actually involves and whether earlier years are affected.
If it says nothing applies, it is worth re-running whenever your circumstances change - a move, a property, a new account.
Broadly, a non-US company whose income or assets are mostly passive. In practice that captures most UK unit trusts, OEICs and investment trusts.
It is the fund's structure that matters, not the wrapper it sits in, so an ISA offers no protection.
Elections such as mark-to-market usually improve the outcome substantially compared with default treatment.
Timing matters, because elections generally have to be made in the right year rather than retrospectively.
It covers the common cases and will tell you reliably whether the basics apply to you. It is a guide, not a filing position.
Edge cases - trusts, business ownership, unusual residence patterns - can change the answer, which is why the result flags when a position is worth checking properly.
Last reviewed · Figures stated for tax year 2025/26 UK · 2025 US. Thresholds and rates change annually — check figures against the current tax year before relying on them.
Got your answer and it looks complicated?
These tools are deliberately simple, and real positions rarely are. Send us what you found and we will confirm it properly.