05.01 – Threshold Exemptions that apply to Pre-existing Individual Accounts

Under the UK legislation, a Financial Institution is required to identify and report all Reportable Accounts. The Agreement is written to provide for exemptions to apply to certain accounts based on thresholds subject to an election to remove them. The UK legislation reverses this requirement meaning that no thresholds apply unless a Financial Institution elects to apply the appropriate threshold exemptions set out in the Agreement when reviewing and identifying Pre-existingIndividual Accounts.

The election can apply to all Financial Accounts or to a clearly identifiable group of accounts, such as by a line of business or by reference to the location where the account is maintained.
The form the election will take and the rules governing such elections are yet to be finalised, and HMRC will consult with business on the most suitable approach.

If an election is made by the Financial Institution, then the following accounts do not need to be reviewed, identified or reported to HMRC.

  • Any Depository Accounts with a balance or value of $50,000 or less.
  • Pre-existing Individual Accounts with a balance not exceeding $50,000 at the 30 June 2014, unless the account becomes a High Value Account as of 31 December 2015 or any subsequent year.
  • Pre-existing Individual Accounts that qualify as Cash Value Insurance Contracts or Annuity Contracts with a balance or value of $250,000 or less at the 30 June 2014, unless the account becomes a High Value Account as of 31 December 2015 or any subsequent year

If a Financial Institution does not make an election to apply the threshold exemptions, then it will need to review all Pre-existing Individual Accounts.