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I am thinking of cashing out my IRA in the US and think I understand

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the US tax implications, but...
I am thinking of cashing out my IRA in the US and think I understand the US tax implications, but I am not clear on the UK tax implications. I am resident in the UK don't think it matters whether or not I remit the funds to the UK, but will the income be exempt from UK income tax because I am already paying taxes on it in the US? Can you please help me understand specifically how to compute what (if any) UK income tax implications I will have if I do this?
Submitted: 4 years ago.Category: Tax
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Answered in 2 minutes by:
11/9/2013
Tax Professional: Robin D., Senior Tax Advisor 4 replied 4 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,192
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
The US UK tax treaty has been updated foe certain distributions from pensions (IRAs included).


Under the old Agreement, a lump-sum payment from a pension scheme was taxable only in the country of residence. So if an individual moved from the US to the UK before receiving a lump sum from a US pension scheme, they would be taxable on the lump sum neither in the US (because of the treaty) nor in the UK (which does not tax lump sums anyway).


The new provision prevents this occurring by providing that a lump-sum payment derived by a resident of one State from a pension scheme established in the other State shall be taxable only in that other State.

Robin D. :

SO you will be taxed in the US on the distribution but not in the UK if it is a lumpsum distribution.

Robin D. :

If you are a US citizen you are taxed on the amount anyway (because you are US citizen). The residency in UK would cover you for the lumpsum distribution from taxation in the UK.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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