Hi,
A lump sum payment derived by a resident of the USA from a pension scheme established in the UK, shall be taxable only in thet UK. The provision preserves the exemption from Income Tax of a lump sum relevant benefit where it is paid by a UK approved pension scheme to a beneficial owner who is a US resident. However, Article 1(4) will apply in respect of US citizens as the provisions of Article 17(2) are not amongst those listed at Article 1(5). So, the US can tax lump sums received by US citizens from UK schemes.
USA: tax treaties
Thank you.