KBahn

Hi all,

Looking for some confirmation on my thinking on UK tax liability. I've been a PR in the US for over 12 years with all earned income sourced in the US except for some property rental income in the UK (collected gross via an NLR6) which always fell below the HMRC personal allowance level. All my tax liability has therefore been reported and paid in the US with a standard 'nil return' sent to HMRC each year as required. From 2014 I started to receive a pension from my old UK employer paid in GBP in the UK - also paid gross through an approved US-2002. On completing my 2014-15 UK tax return the total UK earned income is over the personal allowance limit and I therefore show an outstanding tax liability. The way I read the DT treaty, I should pay the UK liability to HMRC and deduct on my 2015 US 1040 - however I was seperately advised that I should continue to exclude all UK earned income completely from my UK return and just handle in total via the US return (given I have HMRC approval for tax exemption in UK). Any comments from folks in a similar position / with experience appreciated! KB.

Pulaski

Why are you sending a nil return to the UK each year? Is it because of the rental income?

Any UK pension should be paid gross in the UK (with only a very few exceptions) and taxed in the US where you live.

KBahn

Yes, due to the rental income (and now the UK pension I guess!) I get a letter every year from HMRC informing me that I need to submit a tax return.

livinginUSA

I've never heard of a nil return. Are there other reasons someone would file one of those other than rental property? I have no UK sourced income, so there would be no need for me to file one of these, right?

(PS, just became a US citizen too! )

KBahn

Only relevant if you have generated income in the UK (and HMRC request you to complete a return!).

livinginUSA

Alright! I'll go back to not filing anything then as I have no UK sourced income. I filed a P85 years ago. I guess the US is only one of a few countries that tax citizens regardless of residency. Glad the UK doesn't do that

I hope you find your answers

Pulaski

Incorrect. Your pension should be paid gross in the UK, and taxed in the US (where you live).

KBahn

Thanks - now found the relevant information (HS304 Claim Form & Notes) where I can enter the relevant pension information (and exemption reference number) and then exclude the pension payments from the tax return. I then will only need to enter the property rental income (which is still below personal allowance) and my UK liability becomes nil again...

durham_lad

I've never had to file a UK tax return since moving to the USA. While I had a house in the UK rented out I was taxed on the profit or loss in the USA not the UK. (I sold the house some years back and reported the capital gain in the US, not the UK).

I also receive a UK private pension which is paid gross in the UK and I pay tax on it in the US.