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Posted Wed, 15 Mar 2023 16:57:55 GMT by lucyrf Ford
Good afternoon, I am posting on behalf of a family member who is considering returning to the UK. She is a UK citizen (US green card holder, which she would relinquish). She is in receipt of US SSDI (not SSI) due to disability. She also has a small amount of dividend income (perhaps 5000GBP). I am struggling to figure out whether her SSDI is taxable in the UK. The HMRC guidelines note that overseas disability is not reportable (and taxable) if equivalent to "Disability Living Allowance or Severe Disablement Allowance". But I have no idea how that determination is made. Is there settled precedent regarding whether SSDI is equivalent and non-reportable? Or is it case specific? Many thanks for any help that might be offered. She is not in the position financially to spend hundreds on a tax advisor to help her understand this.
Posted Wed, 22 Mar 2023 09:17:26 GMT by HMRC Admin 25
Hi lucyrf Ford,

The double taxation agreement between the UK and USA, advises that full relief is available for State Pension, Incapacity Benefit and ‘trivial commutation lump sum’.

 EIM76009 advises ""There is no liability to income tax in respect of the full amount of any other foreign benefit that is not a taxable foreign benefit if it is substantially similar in character to a UK social security benefit listed in Section 677 Table B ITEPA 2003

Please see EIM76100.

EIM76100 - Social security benefits: list of non-taxable social security benefits

 If social security disability insurance has an equivalent non taxable UK benefit, then it would not be taxable in the UK.  

The foreign dividends are taxable in the UK and would need to be reported on a self assessment tax return every year.

Thank you. 


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