US Beneficiary IRA Distribution

Hi, Looking for confirmation of how Distributions from a US Beneficiary IRA (Not Roth), should reported on SA. We understand that interest earned while in the account and subsequently needs to reported as Overseas interest, but can't find any guidance on how to declare the actual Distribution from the account? If at all. The IRS withheld tax at time of payment, and a small amount extra as part of US tax return. I assume we can claim this as credit on SA?

For clarity. Dual Citizen, residing in UK.  

 

Hi BritishAl23,
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. 
UK/US citizens resident in the UK are taxable on their IRA interest in the UK.
IRA's are treated differently from Roth IRA's, in that they are taxable in the UK under foreign interest.
The gross interest would be declared in the Self Assessment Tax return, using the supplementary page SA106.  
The interest would be treated in the same way as UK interest and attract that starting rate of £5000.00.
Have a look at:
Tax on savings interest.
DT19852 implies that tax is not payable in the USA on this interest. 
Thank you. 

 

Hi, Thanks, just to be clear, your saying we would need to declare the actual capital distribution AND the interest earned as foreign interest? Or am I misinterpreting that.

Hi BritishAl23,

Just the interest 

Thank you.
 

Thanks. Just to be 100% clear, this is a non-Roth Inherited Beneficiary IRA, and based on your guidance we would need to declare the interest earned while in the account (a few pounds), but would not need to declare the actual distribution (withdrawal) of funds (15k) to ourselves?

Hi BritishAl23,
That is correct.
Thank you. 
 

Hi, I'm still getting conflicting advise on this. My question is in respect the RMD that we have taken from this non-roth inherited Beneficiary IRA. I understand that we need to report the few dollars of interest earned, but can you confirm if and how we should declare the RMD? (Required Minimum Distribution)

Hi
You would report the interest (converted to sterling) as foreign interest on the SA106 foreign page, or if filing online answer yes to having foreign income.
This then opens up further boxes for you to show this under interest.

Can I ask the original poster how you found out the interest amount on the RMD of your inherited IRA?

Dear HMRC, An IRA is a a recognised pension plan in the US. It is also recognised under the US/UK treaty as a pension scheme as it meet the definition in article 3 o). Under article 17 1 (a) the UK would have the taxing right on distributions to a beneficiary resident in the UK (let's ignore para 2 for now). Under article 24 the US would be required to give double tax relief for UK tax paid on the distribution as the US only has a taxing right due to the savings clause. Could you please elaborate on how you conclude that income within the plan is subject to tax as interest income? Thank you

Hi Adam,
This has been determined by legislation.
Thank you.

Dear HMRC You seem to have ignored the points I raise in my post. In addition to the points I raise, article 18 of the tax treaty protects the income within the US pension plan until there is a distribution. What UK domestic legislation overrides the tax treaty? (clue..... it doesn't, it's actually the other way round). See INTM152060