Relocating Back to UK
 

Hello,
After over 32 years in California, and happily retired. I'm seriously considering moving back to the UK, which does feel me with trepidation after so long away. I am US citizen now, with dual nationality. My question with regards to my SS payments into a UK bank account. I know about Fbar, etc. What am wondering is, would I have to pay taxes on that income in the UK? Or is it easier to maintain US banking and continue to pay taxes here? This would be a very big move for me, this is just one of the things I need to take into consideration.
Thanks
Peter D

Re: Relocating Back to UK
 

For a US citizen, resident in the UK, US SS can be paid directly into your UK bank account. The exchange rate is the average rate at the time of payment which will be a good rate. It would only be taxed in the UK by HMRC, and not the IRS, at your marginal UK rate (0, 20%, 40%, 45%). The gross amount of US SS is reported on your US 1040 return, but the amount taxable is $0. If you wish, you may have the US SS deposited into a US bank account, but the UK taxes on a worldwide basis (arising basis) so you would still pay tax (only) to the UK for the UK tax year in which the SS payment was made.

For a US citizen resident in the UK, the UK State Pension is taxed by both the UK and the US. To offset double taxation, form 1116 is used to report UK Foreign Tax credits which will usually, but not always, reduce the US tax on the UK SP to $0 in the US.

Added : Some deposit the US SS into a US bank account and hope that whatever the exchange rate on the day is, it will improve at a later time. See the many threads on transferwise.