Taxation of UK Pension for USA Residents

Published / Last Updated on 14/02/2018

What tax is payable on a UK pension in the US? Video explores the taxation of UK pension income and lump sums for USA residents with UK pension.

We are UK authorised advisers and not authorised to give US tax or financial planning advice.  We handle the UK pension and Tax side but you will need to take advice locally in the US before any actions with your pensions are taken.

US/UK Tax Treaty

  • Article 17.1.(a) states that pensions and other similar remuneration for a resident of a Contracting State shall be taxable only in that State.
  • Article 17.1.(b) states that any such pension or remuneration paid from a pension scheme established in the other Contracting State that would be exempt from taxation in that other State if the beneficial owner were a resident thereof shall be exempt from taxation in the first-mentioned State. (i.e. 25% lump sum is tax free in UK so should be tax free in US).

Forms

  • HMRC Form US-Individual 2002 - to be completed and sent by you to IRS together with
  • IRS Form 8802 and sent (with fee) to IRS Philadelphia (for IRS to certify that you are US tax resident).
  • IRS then send IRS Form 6166 to HMRC certifying your US tax residency status and no UK tax deduction under Article 17.1.(a)

HMRC will then issue any tax refunds (for tax already paid or withheld) and issue an NT tax code to your UK pension i.e. NO TAX to be deducted in UK.



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