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Drawing down UK pensions and tax residency form

Drawing down UK pensions and tax residency form

Old May 29th 2019, 2:30 pm
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Default Drawing down UK pensions and tax residency form

Toward the end of the year I will be 55 and can start drawing down my UK private pensions. I finally want to be rid of my UK accounts and their hassles with the IRS.
If anyone has done this did you pay the IRS for that tax residency letter? I feel bad about giving them $185 unless I really have to. I want to avoid the UK withholding tax on my payments if I can as of course the treaty gives taxation rights only to the US for a resident of the US who is not taking a lump sum payment.
Thanks.
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Old May 29th 2019, 2:44 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by Neillc37 View Post
Toward the end of the year I will be 55 and can start drawing down my UK private pensions. I finally want to be rid of my UK accounts and their hassles with the IRS.
If anyone has done this did you pay the IRS for that tax residency letter? I feel bad about giving them $185 unless I really have to. I want to avoid the UK withholding tax on my payments if I can as of course the treaty gives taxation rights only to the US for a resident of the US who is not taking a lump sum payment.
Thanks.
If you want to avoid UK tax deductions you must fill out Form 8802.

This does not mean that you will be "rid of your UK accounts" does it? The pensions will still be in the UK and potentially require Form 8938 and FBAR.
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Old May 29th 2019, 2:56 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by Neillc37 View Post
Toward the end of the year I will be 55 and can start drawing down my UK private pensions. I finally want to be rid of my UK accounts and their hassles with the IRS.
If anyone has done this did you pay the IRS for that tax residency letter? I feel bad about giving them $185 unless I really have to. I want to avoid the UK withholding tax on my payments if I can as of course the treaty gives taxation rights only to the US for a resident of the US who is not taking a lump sum payment.
Thanks.
Yes, been there, done that,

Twice.

Awaiting the end of the process for the second time.

Note it is not $185 but only $85. Assuming you are being dealt with as an individual.

Also, take note...do not try and do this too early. My paperwork reached the UK Inland Revenue before the pension started paying and was rejected by them because of that. Despite the wording on the UK form. That's why I'm on the second go at this.
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Old May 29th 2019, 4:04 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by celticgrid View Post
Yes, been there, done that,

Also, take note...do not try and do this too early. My paperwork reached the UK Inland Revenue before the pension started paying and was rejected by them because of that. Despite the wording on the UK form. That's why I'm on the second go at this.
Good point. I did mine after my first payment, so tax was deducted on a few payments, then refunded on a later payment so I ended the UK tax year with no tax paid.
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Old May 29th 2019, 4:25 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by MidAtlantic View Post
This does not mean that you will be "rid of your UK accounts" does it? The pensions will still be in the UK and potentially require Form 8938 and FBAR.
By saying I want to be rid of the accounts I am saying we will empty them. Our biggest UK pension has a pitiful 28k in it. I plan to run them all down in a couple of years.
Thanks for the information everyone. Looks like I have to start all the pensions at once. What a pain.
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Old May 29th 2019, 4:27 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by Neillc37 View Post
By saying I want to be rid of the accounts I am saying we will empty them. Our biggest UK pension has a pitiful 28k in it. I plan to run them all down in a couple of years.
Thanks for the information everyone. Looks like I have to start all the pensions at once. What a pain.
OK got it! There's nothing in this process that means you have to start all your pensions at once. It's your choice.

I started my two pensions at different times, but only ever filled out one Form 8802.

Last edited by MidAtlantic; May 29th 2019 at 4:30 pm.
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Old May 29th 2019, 8:42 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by MidAtlantic View Post
OK got it! There's nothing in this process that means you have to start all your pensions at once. It's your choice.

I started my two pensions at different times, but only ever filled out one Form 8802.
Same here, once HMRC have received notice that you are a US resident tax payer then they set all your present and future income streams to no tax.
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Old May 29th 2019, 8:50 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by durham_lad View Post

Same here, once HMRC have received notice that you are a US resident tax payer then they set all your present and future income streams to no tax.
That's not what a tax specialist form HMRC told me. They rang me back earlier much to my surprise and told me they only change currently active pension streams mentioned in the forms. You have to do it multiple times if you start other pensions later and hence I guess you pay your fee again. That for me is a very clear reason to start them all at once.
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Old May 29th 2019, 9:20 pm
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Default Re: Drawing down UK pensions and tax residency form

Originally Posted by Neillc37 View Post
That's not what a tax specialist form HMRC told me. They rang me back earlier much to my surprise and told me they only change currently active pension streams mentioned in the forms. You have to do it multiple times if you start other pensions later and hence I guess you pay your fee again. That for me is a very clear reason to start them all at once.
Back in 2007 when I filed my form to the IRS it was about the first year they started charging and I felt hard done by then. Now it’s $85 per pension? Boy, that sucks. In your situation I would also try to time the pensions to start in the same year and save $85. It seems bizarre to have one pension with an NT tax code and when you start another for it to be assessed as something different.
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