Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Mon, 05 Dec 2022 01:14:18 GMT by Alan Keeling
I recently returned to being UK based (UK citizen) after many years in the USA and receive regular income from my USA 401k Retirement Savings Plan, that I need to declare on my UK Self Assessment. Is this income source simply defined as Foreign Income? It is not a State Pension and nothing else seemed to fit the description. In the SA summary it classes the income as from Savings.
Posted Wed, 07 Dec 2022 16:26:17 GMT by HMRC Admin 2

Under the double taxastion agreement with the USA, the pension is not taxable in the UK and should not be declared.

UK/USA Double Taxation Agreement - 2002

Thank you.
Posted Mon, 12 Dec 2022 16:23:05 GMT by Alan Keeling
Thanks HMRC Admin 2. 401(k) income is taxable in the USA based on your general income taxation level, due to the contributions made by the employee & employer being pre-tax. The UK/USA DTA definitions assumes all pension income is tax free but this is not the case, hence the issue. Last year I discussed this scenario with HMRC by phone and the advice was to ensure I obtained a HMRC Certificate of Residence from my UK arrival date to give to the IRS. I did this. Any 401(k) income from my arrival date would be subject to UK tax as per Article 4 and my tax rate would be based on my overall income. I therefore did not pay IRS tax on that income on my US Tax return and incidentally I am revoking my USA Green Card so will not file US tax returns in future). The Pension policy holder still withheld a small portion for tax (as it was not sure what to do) and I was advised to inform HMRC how much was withheld and they would deduct that from my UK taxable amount. So under which income source on my Self Assessment should I declare this income?
Posted Wed, 14 Dec 2022 12:31:37 GMT by HMRC Admin 17

Any of your pension received after the date you arrived in the UK, should not be taxed in the USA. 

The amount the policy holder held back should cover the part of your pension taxable in the USA,
so that the IRS can refund any overpaid tax arising in the USA. 

Unfortunately, tax relief cannot be claimed for the tax witheld by the policy provider against tax payable in the UK .

Thank you.

You must be signed in to post in this forum.