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Rakhi Vasavada
Rakhi Vasavada , Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4419
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Say someone has a retirement account in the USA and they need

Resolved Question:

Say someone has a retirement account in the USA and they need to file a UK tax return . And let's say the USA retirement account is partly in cash (say $30,000 pounds). Also, because in the USA one is allowed to hold own-to-let property in one of these "self directed retirement accounts" let's say there is a piece of own-to-let property worth 20,000 pounds held by the retirement account and it generates a small amount of cash flow (3,600 pounds per year). In this scenario the cash portion of the account just mentioned is not gaining any interest - in fact it is losing money due to management fees. In the USA nothing mentioned above is a taxable event because one only pays taxes upon WITHDRAWAL of the funds from the account - the beneficiary would pay severe penalties if they withdraw before the age of 59-1/2. Having said all that - would this overseas retirement account trigger any taxes on the self assessment tax process for the account owner in the UK? Technically the owner doesn't own the account per se - it is a retirement trust. Thank you.
Submitted: 3 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 3 years ago.
Dear Friend,

Hello and welcome and thank you for using Just Answer.

From what I understand from your question, NO .. he will not incur any tax back in UK as there has been no realized gain or income.

I hope this helps.

You may please leave a excellent rating if this helps. Alternatively, feel absolutely free to revert with queries if you have or if I have missed out on any aspect of your question and I would be more than happy to assist you again.

Warm Regards
Rakhi Vasavada and 2 other Finance Specialists are ready to help you
Customer: replied 3 years ago.

Thank you. So you are saying that even though the piece of let-to-own property is generating rental income that income is only going back into the retirement account and is therefore not creating any realized gain? I'm pretty sure that is what you mean and that is certainly how it would be handled from a tax perspective in the USA. I thought I'd double check though.


 


Also: I am assuming that when this retirement account finally does liquidate then any liquidated amount will be classed as income in the tax year of the liquidation and it will taxable at whatever tax band the account holder is in the tax year of the liquidation?

Expert:  Rakhi Vasavada replied 3 years ago.
Dear XXXXX,

Hello and welcome again and thank you for your follow up question.

Yes, you have got it right. I reconfirm it.

I hope this helps.

You may please leave a excellent rating if this helps. Alternatively, feel absolutely free to revert with queries if you have or if I have missed out on any aspect of your question and I would be more than happy to assist you again.

Warm Regards
Rakhi Vasavada and 2 other Finance Specialists are ready to help you