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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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British and US citizen. Lived 45 years in USA. Now widowed

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British and US citizen. Lived 45 years in USA. Now widowed and retired and have returned to live in UK. Income consists of US gov pension and disbursement from US retirement account. Only UK income is interest on small Barclays savings account. Income tax already deducted by Barclays, leaving 971 GBP. Do I need to file a UK tax return?
***** *****
*****@******.***
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello and thank you for allowing me to assist you.
Yes you should file and show the US pension and retirement income you are receiving. You should also be filing your US tax return. The UK will allow a credit for the US taxes that were paid on that US sourced income.
There is a tax treaty between the 2 and Article 17 of the Treaty governs the payment and receipt of pension income to individuals who are residents of the one or the other treaty country. This Article provides a rule of "reciprocal exemption" whereby the country of residence of such individuals has the exclusive right to tax pension income and other similar remuneration. The Saving Clause applies to this provision, with the result that U.S. citizens and residents are subject to U.S. tax on pension income regardless of which country they are living in at the time, and which country the pension is paid from.
If the pension income would be exempt from taxation for residents in the country where the pension plan is established, then it will also be exempt in the country where the individual is resident, subject to applicable limitations. Thus, for example, a distribution from a U.S. Roth IRA account to a U.K. resident would be exempt from U.K. tax to the same extent it would be exempt from U.S. tax if distributed to a United States resident. This provision is exempt from the Saving Clause and the relief it affords is therefore equally available to U.S. citizens and residents.
It is still important that you file and report your payments. You will be afforded tax relief in the form of a tax credit by HMRC for the taxes paid to the US on your income.
I hope this information is helpful.
TaxRobin and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Thank you. This does answer my question.

***** *****

Expert:  TaxRobin replied 3 years ago.
You are most welcome.
Customer: replied 3 years ago.

Thank you. You have answered my question.

***** *****

Expert:  TaxRobin replied 3 years ago.
You are most welcome