Holly Payling

Retirement can be an exciting moment in many people's lives. As a US person planning to retire in the UK, with a mixture of US and UK pensions, it's important for you to make a plan to prevent double taxation and minimise the US/UK tax burden as much as possible. The case study below shows how one of our clients benefited from tax reliefs, distributions at lower tax rates, and avoiding double taxation when withdrawing from US and UK pensions.

Withdrawing pensions For a dual US and UK taxpayer, the US-UK double taxation treaty can be used to prevent double taxation, but firstly we will want to review the domestic US and UK tax rules to make a tax-efficient plan. There are a number of factors to take into account if you want to minimise the tax you have to pay upon withdrawing your pensions. The following table is a useful overview of how pension distributions are taxed for US citizens: Plan location What received?

US Estate Tax for non-US domiciliaries If you’re a non-US domiciliary, you’re subject to US estate and gift taxation on certain types of US assets at up to 40%. However, your exemption at only $60,000 is much lower than that of US domiciliaries. This exception is not indexed for inflation and the exemption is only available for transfers at death.