Cook_County

A LSD from a pension plan owned by a US resident is (under the treaty) solely taxed by the UK. If the tax withheld under PAYE is too high, you will in due course file a UK tax return to give you the benefit of a personal allowance and graduated tax rates.

Steve_

I'm not sure the information you got further up the thread is right, my understanding is that withdrawals from the SIPP are taxed in the UK at the marginal rate of income tax in the UK because it's a trust that is resident in the UK. You also get taxed in your country of residence and then you claim a foreign tax credit. As the UK tax is likely higher, you effectively pay the UK rate.

Nun said something about keeping it as a pension, my understanding is that you can't, as soon as you take control of it, it is no longer a pension, it is a foreign trust and has to be reported on Forms 3520-A and 3520 and is subject to US taxes on things that happen within the trust so basically you're compelled to withdraw all the money unless you want a monstrous headache on your hands.

When I say "I have an understanding", this was based on advice I got from PWC and my own understanding of UK and US tax law, which may have faded with time. Maybe I should look it up but I haven't got all the paperwork to hand.

One thing I remember them saying was about converting it into a discretionary gift trust but under US law that is just a nightmare.

potfish

To close the loop, I ended up asking HL to assign my UK-resident mother as beneficiary instead of me. I truly believe that my father would have assigned his beneficiaries differently if he'd known that by assigning me it was unavoidable a large lump would go to HMRC immediately. The trustees accepted this and made the change.

Thanks all for the advice.