Dodger64

I've lived in the USA for 30 years and planning to move back to the UK in April 2021.

I have an IRA in the USA that I am planning on converting to a Roth IRA, I want to convert this IRA to a Roth IRA on January 1st 2021 so that I can take the tax hit in a year when I won't have any USA earnings, other than the obvious conversion which will be earned income for 2021

My 1st question is as follows:
Am I correct in assuming that if I wait until April 6th 2021 ( beginning of UK tax year ) to return to the UK permanently, I won't pay UK taxes on the IRA (earned income in USA for 2021 tax year) because my first tax return filed in UK will be April 5th 2022 and my UK Tax year will be April 6th 2021 through April 5th 2022.

2nd question:
Looking over the SRT form briefly, it looks like because I have been out of the country for 30+ years I won't be classed as a resident until well into the 2022 tax year.

Thank's in advance for any guidance, I'm sure there are plenty of people on the forum that have dealt with similar issues.

Roger

durham_lad

My take on this is as follows,

a) You become resident on day 1 you arrive when you arrive back with an intent to stay. Full access to NHS from day 1.

b) You only become liable to UK tax from the day you arrive, so as long as you do your Roth conversion before arriving back then it definitely will only be subject to US taxes.

We arrived back in the UK in 2016 after 29 years in the USA. We had mutual funds outside of our IRAs in a brokerage account so before we came home we converted them to ETFs listed on the HMRC Reporting Funds list so that their dividends and capital gains are treated favorably by HMRC.

https://www.gov.uk/government/public...eporting-funds

Dodger64

Thanks very much Durham Lad,

I appreciate the response, I'll take a look at the list of reporting funds to make sure I'm positioned properly before I leave the USA. I currently own stocks & mutual funds over four different types of accounts so might have to move a few things around to be in compliance with HMRC.


Have you had any regrets about moving back? I see you were away for a similar time frame to myself, I'm pretty sure I'm doing the right thing, and I know it's different for everyone but I'm curious on your take.

thanks again
Roger

durham_lad

Happy to help. Just to reiterate, you can have any type of fund in your IRA or Roth accounts as they have a “pension wrapper” around them and just like in the USA IRA distributions are taxed as regular income and Roth distributions are tax free in the UK. Otherwise they grow tax deferred (IRA) or tax free (Roth).

in 2016 our plan was to spend summers here and winters in the USA (Texas). After 6 weeks back here we realized that this is where we wanted to be so we went back in November as planned but then spent the next couple of months selling up. We had a rental apartment in Texas so that was easy.

We are really, really happy after 4 years back here. Our son moved back about a year after us, our daughter still lives in LA. Where we live is where we were most happy, having lived in many places in England and Scotland plus Louisiana and Texas. It is where our children were born and 7 years ago my sister and her family moved here as well.

Dodger64

I've thought about living in both places too, summer in England and winters in the US, who knows I might end up doing that, at this point though I'm just going to move back and then see how I feel. I was young when I moved to the states and didn't really appreciate all the UK had to offer, I think as I've grown older and perhaps I'd like to think somewhat wiser, I now see things about England that I didn't see before.
My daughter who was born in Oregon decided to go to University in London, that was eight years ago and she's still there, she has a great career/home etc. I waited for a while thinking she might move back over to the USA but she seems to have settled there now, which is obviously made my decision easier to move back.

Where did you end up living in England/Scotland? Back in Durham or somewhere else? i'm undecided about whether I really want to move back to my hometown, there are so many more beautiful places in the UK.

durham_lad

We moved back to N Yorkshire. Neither of us are from here originally, my wife is from Manchester, but we fell in love with this particular spot on the edge of the N York Moors National Park when we moved here in 1979. We lived here for 6 years before job opportunities took us away. We retired in 2010 and in 2011 we rented a house here for 7 months and it was like we had never been away. We did a load more traveling before coming back in 2016.

Dodger64

Great choice, I've been looking at properties up there too.