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Lump-sum 25% tax free UK pension distributions

Lump-sum 25% tax free UK pension distributions

Old Dec 9th 2017, 12:39 pm
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Default Lump-sum 25% tax free UK pension distributions

I have argued in the past that a US resident could take something other than 100% (in a year) of their UK pension and get the 25% tax free element extended to US taxation via the treaty and the fact the treaty says lump-sum definition should be taken from the IRC. Lump-sum in US law is 100% of the pension while it's defined differently in UK law.
Well now the professionals are using the same argument and coming to the same conclusion. That's nice because I am 53 and need only wait a few years to take advantage of it.

“Lump-Sum” Distributions From U.K. Pensions - International Tax Blog
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Old Dec 11th 2017, 11:32 am
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Default Re: Lump-sum 25% tax free UK pension distributions

Originally Posted by Neillc37 View Post
I have argued in the past that a US resident could take something other than 100% (in a year) of their UK pension and get the 25% tax free element extended to US taxation via the treaty and the fact the treaty says lump-sum definition should be taken from the IRC. Lump-sum in US law is 100% of the pension while it's defined differently in UK law.
Well now the professionals are using the same argument and coming to the same conclusion. That's nice because I am 53 and need only wait a few years to take advantage of it.

“Lump-Sum” Distributions From U.K. Pensions - International Tax Blog
Interesting and helpful information. Thank you.
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Old Dec 11th 2017, 3:02 pm
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Default Re: Lump-sum 25% tax free UK pension distributions

Thanks for sharing this info. i'm still slightly confused being a dual national for the past 20 years. Moved here to Florida 15 years ago and have my small personnel pension on hold/frozen. I never mention this on any tax returns that i have filed here and not because i have tried to hide or deceive just did not think i needed to. Now is the time i'm considering cashing in the policy, so could there be any problems?
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Old Dec 16th 2017, 10:43 pm
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Default Re: Lump-sum 25% tax free UK pension distributions

Has that ever actually been the issue though, would the pension provider/trustee in the UK let you do it?
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Old Dec 16th 2017, 11:40 pm
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Default Re: Lump-sum 25% tax free UK pension distributions

Thanks Steve for your input,but i'm guessing your responding more to the original poster. After calling UK pension about my concerns it appears a third of my private 'on hold' pension will be withheld for taxes. My ongoing concern/worry is that in 15 years Stateside i've not mentioned this when filing taxes and not sure if i needed to.
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Old Dec 17th 2017, 9:04 am
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Default Re: Lump-sum 25% tax free UK pension distributions

Originally Posted by Floridablues View Post
Thanks Steve for your input,but i'm guessing your responding more to the original poster. After calling UK pension about my concerns it appears a third of my private 'on hold' pension will be withheld for taxes. My ongoing concern/worry is that in 15 years Stateside i've not mentioned this when filing taxes and not sure if i needed to.
Although not a tax return, it has always been FBAR reportable and will have been Form 8938 reportable since 2011 if you meet the filing threshold.
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