US pension and UK Tax

Hi R Erskine,
There is no legislative definition of a Lump Sum but HMRC regards these as being any non-periodic payment of a pension - That is, any non-regular payment that decreases the value of the remaining pension pot after such payment is made.
For example, the first (IRA) withdrawal is taken in year 1, the next withdrawal was made in year 5, and another withdrawal in year 7; such payments will not be regarded as periodic and will be treated as Lump Sum’s under the UK/USA DTA.
Whereas any amount withdrawn in set, periodic, frequent intervals (.g. weekly, monthly, annually etc.) would not be a Lump Sum, but rather periodic payments.                                                  Periodic, frequent, payments or withdrawals (e.g. weekly, monthly, annually etc.), then those payments would have been taxable within the UK and ‘maybe’ exempt from US tax. This is in accordance with Article 17(1)(a) of the DTA
Article 17(2) of the UK/USA DTA provides the US with the right to tax any Lump Sum payment which is made from a US sourced pension scheme (including IRAs).
However, the UK is also permitted to tax the same lump sum payment(s), which is in accordance with Article 1(4) of the DTA 
Thank you.

A separate issue I have is receiving both US Social Security and UK state pension. I am US citizen and UK Permanent resident. Article 17(1)(b) Tax agreement between US and UK states "Distributions in one country are exempt from taxation in another. The country of residence at time of distribution has sole right to tax the distribution." I therefore include my SS pension on my UK tax return. It gets slightly complicated on US tax return and I will get back to the forum on whether and how I include my US and UK pensions on my f1040 tax return. Passive and Earned Foreign income is reported on f1116 and tax credits are determined whilst allocating standard deduction between incomes. However, the instructions for f1116 do not require the form for any income that is re-sourced due to taxation treaties. Furthermore f8833 also is waived on the instructions for where "a treaty reduces or modified the taxation of income derived by an individual from dependent personal services, PENSIONS, annuities, social security, and other public pensions, as well as income derived by artists..." SO...I am waiting to speak with US IRS about my UK and US pensions and hopefully both can be exempt on the front page of f1040 and no need for tax credits etc. it is interesting how different the tax rates are between the two countries (US lower) but standard deduction is much higher in UK. I'm trying not to be forced into f1116 as the tax credit limited to US tax rates which for me are lower. I think the whole US/UK tax scenario is a nightmare because ultimately Article 1(4) reserves the right to tax it's citizens as if the convention had not come into effect and for long-term residents in UK if you are deemed to have left the US, you can lose US citizenship for tax purposes and all assets revalued and taxed. Also I will need to fill out Alternative Minimum Tax form in US. My hair is thinning.

Hi Rob,
Article 17(2) of the UK/USA DTA provides the US with the right to tax any Lump Sum payment which is made from a US sourced pension scheme (including IRAs). However, the UK is also permitted to tax the same lump sum payment(s), which is in accordance with Article 1(4) of the DTA. A UK resident, Article 1(4) above permits the UK to tax any US sourced Lump Sum payment received, as if Article 17(2) of the DTA was not in force or applicable – Article 1(4) effectively ‘overrides’ the provision at Article 17(2), and the consequence is that both the UK and USA can tax any Lump Sum payment received from a US sourced pension scheme. 
In these situations, double taxation will occur since both the UK and the USA can tax the same income. However, that double taxation will be eliminated in accordance with Article 24(4)(a) of the DTA which requires the UK (as the country of residence) to provide FTCR to offset the US tax correctly paid against the UK tax charged on the same the IRA withdrawal.                            Periodic, frequent, payments or withdrawals (e.g. weekly, monthly, annually etc.), then those payments would have been taxable within the UK and ‘maybe’ exempt from US tax. This is in accordance with Article 17(1)(a) of the DTA     If you are not a US citizen, then periodic pension payments will be fully exempt from US tax and you should claim a full repayment from the US IRS. However, if you are a US Citizen, you will only be permitted to claim the US version of FTCR, which will offset the UK tax paid against a US tax charge. This is because the US taxes its citizens worldwide income, regardless of where they are resident. So, if you are a US citizen, then Article 1(4) (as outline above) would kick in again and, this time, allow the US to tax any periodic payment received, despite Article 17(1) providing the UK with the sole right to tax. Again, Article 1(4) effectively ‘overrides’ Article 17(1), and the consequence is that both the UK and USA can tax any periodic payments received. 
In these situations, double taxation will occur since both the UK and the USA can tax the same income. However, this time, it is for the US to eliminate that double taxation, since they are the ones invoking Article 1(4).
Thank you.

Hi Sidney,
This would be under the foreign income section. If filing by paper it is the SA106 that you need.
Thank you.