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Posted Tue, 20 May 2025 18:03:27 GMT by Philippa Lorbiecki
I am potentially going to receive a Lump Sum from a US 401kpension scheme as a named beneficiary. The Pension holder as 67 when he passed away 1. Do I need to declare it and pay income tax 2. Is it subject to inheritance tax? Thank you
Posted Wed, 21 May 2025 10:34:49 GMT by HMRC Admin 21 Response
Hi,
Traditional 401Ks are taxable.  
Roth 401Ks are not.
 Article 17(2) of the UK/USA Double Taxation Treaty (USA: tax treaties) 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.
You will need to contact the inheritance tax helpline on 0300 123 1072, as this is a different tax to income tax.
Thank you.

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