ZeeGee

Hi, I've been reading and nothing seems to directly apply to our situation. We live in the US and my UK husband now has dual citizenship. He started collecting his pension from RBS last month. We have been told opposite advice and can't seem to get to the bottom of this. Is the UK supposed to be collecting tax on this amount since we are not residents there? And if not, how do we stop it? You would think RBS would be well versed in this as I'm sure they have many pensioners who live abroad, however, no one seems to have a clue and the advice we get frequently contradicts previous advice.

quiltman

Hi Zeegee,
If your husband is tax resident in the US and pays US taxes, then you can apply to HMRC to have private pensions paid gross. I forget the form but go on the HMRC website and search for "double taxation agreement USA".
YOU have to initiate this request, otherwise HMRC will just tax the RBS pension as normal.

the question I have hovering in my mind is that due to the bailout of RBS by the UK government , the RBS pension may have been put into the category of "government pensions". If so then the UK usually has sole taxing rights on these type of pensions. Again ,ask HMRC , they are very helpful and it's worth a phone call to find out.
I have a feeling that there is a special agreement between UK and US Inland Revenue that means in certain circumstances you can get ALL UK pensions paid gross. I need to search my files to try and find the link, so don't get your hopes up yet!
At the worst, due to the double taxation agreement, your husband should be able to offset the UK tax paid against his US tax bill.

quiltman

Hi again,
Here's a starting point;
Pensions: double taxation agreements

and;
HMRC Search

and here's the UK/USA specific one;
HMRC Search

Have fun plodding through the gobbledegook!

quiltman

Bingo!
found it!

Form US/Individual 2002 - Application for relief at source from UK Income Tax/Claim to repayment of UK Income Tax

Some work needed on your behalf to ensure you claim correctly.

ZeeGee

Oh my goodness, thank you so much!

ZeeGee

I had seen the double taxation agreements but you would not BELIEVE how that was explained to me by a supposed tax professional. I just knew that what he said couldn't be right.

quiltman

you're very welcome!