holly_1948

I view my situation as simple, and perhaps not all that odd or atypical, for a long-ago emigrant.

But it is maddeningly complex to find information that deals with those who have relatively uncomplicated lives. Can anyone offer pointers or information please?

So here is my situation.

A 64 year old female born and raised in England, I lived in England for my first 33 years, working 12 of them in a white collar job. I then emigrated to the USA, in 1983, age 33 and worked there obtaining a "green card" permanent residency within a year and citizenship 20+ years later (in 2004). Thus I have British citizenship by birth, USA citizenship by naturalization (sic). I am divorced many years and presently unmarried.

Now 64 I am retired and live in Florida because it is cheap here. I own a cheap house here in Florida and still have brother and sister, nephews and nieces in England that I visit when I can. I don't want to be spending any more summers here, it is too hot, humid and the mosquitoes seem to like the taste of my blood!

My income is just retirement pensions, US Social Security, and UK OAP, because I paid voluntary Class 3 contributions (N.I. stamps) to the UK overseas (DHSS or whatever they call it today) for many years while working in the USA. And a very small British private pension. In total this gives me about 20,000 pounds a year to live on.

If/when I return to the UK I expect to stay with relatives moving around England and Wales (including Holiday homes that belong to my relatives) but I don't expect they will want to charge me rent.

I would like, but it is not crucial, to return to Florida for the season each year (about four months Dec-Mar) when the weather is good in Florida and very cold elsewhere. So I would be spending perhaps eight months each year in England and Wales but moving from town to every few months. It's very common here in Florida to be present only for the season, a lot of Canadians do exactly that.

My financial situation is surely as uncomplicated as it gets? And spending eight months in the UK is surely much the same as being there year-round from a UK perspective?

But on matters like UK resident's benefits (do they still have Christmas fuel supplement?), NHS entitlement and so on I find all the information published confusing at best. For example Ordinary Residence and Domicile rules are completely unclear and baffling for someone in my situation with a life expectancy of no more than 5 to 10 years.

Surely I'm not so special, there must be thousands of people like me? Or am I kidding myself?

nun

You are not out of the ordinary.....I plan to be in a similar situation sometime.

First we need to get the citizenship and residency stuff sorted out.

You are a US/UK dual citizen. So as a US citizen you will be taxed on your worldwide income by IRS wherever you live. So when you return to the UK you will still have to file a 1040 each year.

If you return to the UK with the intent to stay there permanently, have close family there, were born in the UK and spend 8 months of the year in the UK, I think you will become ordinarily resident and domiciled in the UK. In that case you will be taxable on your worldwide income as it arises by HMRC.

Also as soon as you return to the UK and become resident ie on your first day you are eligible for NHS coverage. Your Class 3 NI record will also give you access to many UK benefits.

The complications will arise when you come to pay tax to the IRS and HMRC on your pensions, but it's not terribly complicated and your situation will be easy for a professional to handle if you need one.

So let's assume you move to the UK and become domiciled and ordinarily resident there.

US SS.

Because of the US/UK tax treaty you US SS is only taxable in the UK. You should make sure SSA pays it to you with no tax withholding and you'll have to claim the tax treaty exemption on your US tax return.

UK OAP

If you are living in the UK this is taxable in the UK. There is some argument was to whether a UK OAP paid to a US citizen resident in the UK is taxable by the IRS....the exact wording of the US/UK tax treaty indicates that it is, but some say that is not the spirit or intent of the treaty. The safest thing is to include it on your US taxes and take a UK tax credit.

In your current circumstances, living in the USA, you UK OAP is not taxable in the UK and with no tax should be being withheld, you use a US/Individual 2002 form to arrange this.

UK private pension
This will be taxable in the UK and taxable in the US. How exactly it is taxed will depend on the type of the pension.

Finally any UK OAP and pensions that are from NI or payments you made out of wages you earned while i the UK should be declared to the SSA so they can calculate the Windfall Elimination Provision. This will reduce your SS if you have fewer than 30 years of payments.

robin1234

holly_1948, thanks for writing this up. Just for the record, this is similar to how I see my life in retirement (I'm similar age to you, retiring in a few months' time.) In my case my wife & I hope to buy a small place in England, and have our US "pied a terre" at our daughter's house on Cape Cod.

I think there was a thread a few months ago on these topics.. practicalities of dividing your time between US and UK in retirement, but I'm having trouble thinking of how to search for it...

holly_1948

Thank you.

Is that 30 years of US payments or 30 years of UK payments (or both)?

nun

30 years of US SS payments.

holly_1948

Thank you. I truly appreciate your post. And I pose the following question to the forum members in general:

I can see how the above is true (resident and NHS qualified on day one) given my genuine intent to spend a full 8 months a year in the UK in my retirement. But if I maintain a holiday home in Florida (for the four month winter season each year) and live with relatives in the UK -
well won't they look askance to my wanting to register with a NHS GP?
I don't suppose it matters that some of my relatives "snowbird" with me in Florida as well?!

It's not that I want UK medical treatment as such, I just want a GP to write repeat prescriptions for my blood pressure pharmaceuticals as they are not over-the-counter in the UK so I need a UK prescription. To tell the truth my experiences with the NHS many years ago could hardly have been worse (incompetent doctors that made the condition a lot worse through wrong diagnosis) but I guess they are OK for repeat prescriptions.

Mummy in the foothills

Lots of Brits do that only they have their holiday home in Spain, they come back for summer and leave over Christmas new year so they are gone for the coldest weather. If you are resident for more than 6months of the year (8 is plenty) you are resident for tax purposes, so you'd be classed as a UK resident for everything. You shouldn't have a problem signing up with the local doctor, but what about insurance when you winter in Florida?
Are you a US citizen too?
You'd still file US taxes but seeing there's a treaty you'd file on paper (or efile turbo tax free federal edition, no state you aren't a resident)and chances are not owe anything unless you earn more than something like $98,000 a year. you have to file an FBAR if you have more than $10,000 in savings. Something like that.

holly_1948

Yes, I'm a US citizen. By naturalization, these last 8 years or so.

At 20,000 pounds/year less deductions I would not expect to pay much US tax. Probably would pay a little UK though.

That is probably the biggest nuisance, US Federal tax returns are very very time consuming to prepare. It can easily take an old fogey like me 250 hours to research everything and I can't afford to pay a professional to do it. And they make you pay for your inevitable mistakes.

Happily, Florida has no income state tax, one major reason why it is so popular with pensioners.

As to Florida health, US Medicare part A covers disasters (that need a hospital), and pay as you go for anything minor.

nun

As a UK resident all your pensions will be UK taxable and as a US citizen your private pension will be US taxable along with your UK state pension if you decide to follow the letter of the US/UK tax treaty. The item I see most potential tax issues with is the private pension, is it a SIPP etc or a defined benefit plan? If it's a defined benefit things will be pretty simple. Your US SS is not US taxable and after deductions, exemptions and UK tax credits your US tax bill will be negligible.

Given your 8 month residence in the UK and your intent to do this year after year you will be ordinarily resident in the UK. When you go to FL make sure you maintain connections to the UK and I would buy a return ticket so your intent to return can be proved so there will be no question about NHS eligibility. If you maintain a home in FL and you have bank accounts in FL you might have to file FL state taxes. Given that your income is from various pensions you will have to understand how they are treated by the UK/US tax treaty and make sure you keep up to date with FBAR and FATCA filing if required.

If you intend to live 4 months of the year in FL I assume you will keep paying for Medicare Part A (usually free) and Part B. If all you have is Part A costs could rack up quickly. You are taking a bit of a risk by not having a drug plan or a Medigap plan to pay out of pocket costs if you get seriously ill in FL, but hopefully you can fly back to the UK before costs get too high.

holly_1948

Thanks,
the good news in that is that there are no FL state taxes. Other than real estate ownership tax (similar to the old UK property Rates) and sales tax; but nothing that is income related.

My pharmaceuticals are cheap. And we are all going to die sometime; I'm pretty cynical about whether most doctors do more harm than good in general. There's a reason why most American households own firearms.

robin1234

For people who are Part A qualified, like me and I think the OP and nun...

I think there are compelling reasons to pay for Part B every year from age 65 on, even if one only plans to be in the US for a month or two each year. There is a penalty imposed on people who sign up for it later in life rather than paying it each year. I think the penalty is a progressive ten percent each year you do not take it up. If you belatedly decided to move back to the US many years later, and you hadn't been paying for Part B, it would add up to a much higher premium. As far as I know, you can take up Part D and a medigap policy at any stage of life without a penalty...

Then, for visits to the states, Part A plus Part B (Part B is currently about $1000 a year) would give adequate medical cover in case of illness etc. Yes, you could have some hefty out of pocket expenses but not mega $$$$. (I believe?)

holly_1948

Thank you.

I'm not actually Part A qualified today, but I will be by the end of the next Florida "snowbird" season (that ends late March or early April 2013). Which is basically when I plan to move to England (and/or Wales). It's no coincidence that is when mosquito season begins

nun

The 10% annual premium increase for late application to Part B is correct. I would definitely spend the $100 a month for Part B if you are going to be in FL for 4 months out of every year.

Right now my drugs cost are zero, but I would not do without health insurance that would cover me in case that changes drastically.......that's the whole point of insurance. It'll be a while before I can claim Medicare. The OP has it pretty well covered with NHS access, but I would not be in FL without at least Part A & Part B. The out of pocket expenses could quickly get up into the thousands of dollars without a Medigap plan, but as robin1234 says they won't be megabucks.

BritinFLUSA

Have to ask, wouldn't decent annual travel insurance be better from the UK - it's much more affordable. Before you say "travel insurance covers trips up to 90 days" you can get a 4 month policy, my Grandparents used to do just that to winter in FL from the UK.

At least that way you have "FULL COVERAGE" - some even have US billing addresses!

nun

That might be the case, do you have any quotes and idea of what's covered. But given you will be staying longer than 90 days and will be over 65 (I assume), I can't imagine the premium being inexpensive. You'll have to do some research, but a combo of Part A and Part B and some travel insurance that would help pay your potential US out of pocket costs might be a good combination.