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Posted Mon, 22 May 2023 21:02:10 GMT by Anna_M
Hello, I recently inherited money from an inherited IRA distribution from America. I paid 10% tax on this in America, will I need to pay further tax on this in the UK? Many thanks
Posted Thu, 25 May 2023 10:59:34 GMT by HMRC Admin 32

UK/US citizens resident in the UK are taxable on their IRA interest in the UK. IRA's are treated differently from Roth IRA's, in that they are taxable in the UK under foreign interest. The gross interest would be declared in the Self Assessment Tax Return, using the supplementary page SA106. The interest would be treated in the same way as UK interest and attract that starting rate of £5000.00.  

Have a look at:

Tax on savings interest

DT19852 implies that tax is not payable in the USA on this interest. 

Thank you.
Posted Fri, 26 May 2023 05:31:50 GMT by Anna_M
Thank you for your reply. Please could you clarify if the lump sum I received from the inherited IRA will be taxed in the UK? I have been given a variety of different advice. All of the money from the IRA has been distributed to all the beneficiaries.
Posted Fri, 26 May 2023 16:54:27 GMT by HMRC Admin 10
Yes the lump sum will be taxable.
Posted Fri, 11 Aug 2023 06:53:48 GMT by dperry
Hello, I am following this thread. I am planning on returning to the UK as a dual citizen (USA-UK), so I would be considered a UK domiciled resident for tax purposes. I have my 401Ks , IRAs, and Annuity set up so that when I pass, my inheritance in part will go to relatives in England (cousins and aunt). From what I am reading in this thread, a 40% inheritance tax won't be required by the HMRC, but my relatives in the UK would be required to pay tax on the distribution amount within their income band. Is that correct? Thank you.
Posted Tue, 15 Aug 2023 13:58:14 GMT by HMRC Admin 17

Yes.  They will be receiving foreign penson income which would be taxable .

Thank you.

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