Tax on usa inherited IRA withdrawal

I have just inherited my ex spouse’s IRA in the USA. I have an inherited IRA account in my name. The money is invested in stocks and shares with Fidelity. When I make withdrawals, I will pay tax in the USA. I am a UK resident for tax living and working in the UK. Is the IRA in the UK considered a pension or savings for tax purposes? As the money is in stocks and shares, when I make a withdrawal, do I pay capital gains tax ? Do I fill in a self assessment form even if there is no tax to pay on the foreign income? Many thanks

Hi,

Roth Individual Retirement Accounts payments to a UK resident that are not taxable in the United States are not taxable in  the United Kingdom. You can see guidance in relation to other pensions at Note 2 below:

DT19852 - Double Taxation Relief Manual: Guidance by country: United States of America

Thank you.

Thank you for your reply. It is not a Roth IRA and is taxable in the US. Do I need to declare any withdrawals to HMRC?

Hi Juliet Oliver,
Roth Individual Retirement Accounts payments to a UK resident that are not taxable in the United States are not taxable in  the United Kingdom.  Have a look at:
DT19852 - Double Taxation Relief Manual: Guidance by country: United States of America: Treaty summary
Note 2 in relation to other pensions 
Thank you. 

Hi Juliet Oliver,
Payments made by the individual into an IRA, are made after tax relief is given to the individual by the employer.
Payments from this pension are taxable in the USA.
HMRC do not recognise IRA schemes as pensions, so for UK residents, they are taxed as income under the interest and declared as foreign interest on a tax return (SA106).
There is no US taxation if the pension is subject and liable to UK tax.
If US tax is withheld, then the individual, should seek a refund of this tax (file a form 1040NR).
HMRC will not give a credit for this tax against any UK tax charged on this income.   
Thank you. 

Thank you, that’s very helpful

Feedback .

My client has an Inherited IRA from her mother's estate. The client is UK resident. Can you confirm that my client is only liable to UK tax on distributions received from the IRA i.e. she is not liable to UK tax on income arising to the IRA until such time as she receives a distribution. The distribution should be declared as foreign interest on the tax return. If tax has been deducted from the distribution, this is not available for credit against UK tax - rather she should seek a refund of that tax on form 1040NR.

Hi Gavin,
Article 17 provides for the taxation of pensions and other similar remuneration only in the state of residence of the beneficial owner.
For this purpose, a payment is treated as a pension or other similar remuneration if it is a payment under a pension scheme, as defined at Article 3(1)(o).
Contrary to this general rule, the residence state, under paragraph 1(b), must exempt from tax any amount of such pensions or other similar remuneration that would be exempt from tax in the State in which the pension scheme is established if the recipient were a resident of that State. Thus, for example, a distribution from a US Individual Retirement Arrangement or ""IRA"" to a UK resident will be exempt from tax in the UK to the same extent that the distribution would be exempt from tax in the US.
(DT19853 - Double Taxation Relief Manual: Guidance by country: United States of America: Notes).
Thank you.