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  • RE: US pension and UK Tax

    To paraphrase for anyone else who has the same questions about the online self-assessment form and how a UK national resident in the UK receiving a 401K lump sum pension from the USA is taxed by HMRC: 1) HMRC treats the whole USA pension lump sum as income and adds it to whatever else you receive in the UK - this means you can get pushed into a higher tax band. 2) The online self-assessment form is smart enough to record the total foreign income (before tax) and the tax paid in the USA and to properly deduct that USA tax from your total tax. 3) At the very end of all the inputting, the online form works out the tax for the total income before tax (including the USA income) then it deducts the tax paid in the USA from that total income tax bill. Many thanks
  • RE: US pension and UK Tax

    Many thanks, I am in danger of understanding it ! So, in simple terms: 1) If my USA pension lump sum is taxed in the USA at say 30% and my UK marginal rate is 40% then HMRC will tax the original amount at 10 % due to Article 24(4)(a) 2) What proportion of the original USA lump sum is used to determine whether I fall into the 45% tax bracket? 3) Is the HMRC self-assessment tax form smart enough to handle this tax situation - if so please tell me how to fill it in to avoid over/under paying tax? Many thanks
  • US pension and UK Tax

    I have a US 401K pension having spent time in the USA. UK and US have a double taxation treaty on pensions. Please confirm that the following self-assessment action will be correct for tax year 2024/24:- 1) If convert the whole 401K pension into a single lump sum and it is taxed in the US and I transfer it to my UK bank account, it will not be taxed again in the UK. 2) Specifically, I should not declare it as foreign income on my self-assessment (SA)t form, but leave a simple note in "further information" on the SA form confirming that US tax has been taken. I have yet to do this but want a clear understanding of how to proceed. Thanks