Advice for British Expats

Advice for British Expats

This week I did a Skype call with a US-based British expat.  This person had a number of  UK-based pension funds, which had not had contributions for about 20 years.  The purpose of the call was to gain an understanding the options available for accessing the UK pensions and any potential tax implications under US and UK rules.

The main decision was whether to take the money from the UK pensions or leave it where it was.  Taking the money out would potentially create a tax liability in the UK and US.  Leaving the money where it was would also not meet the medium term financial objectives mainly because the person had UK earnings.

Part of the solution was to take some of the money from the pensions under the small pots commutation rules.  The other part of the solution was to transfer the rest of the pension money to a new arrangement in the UK, which could accept further contributions from UK income.

The proposed solution meant that any UK and US tax liabilities and reliefs were considered.  UK citizens retain many of their tax allowances under UK law even if they have been away for theUK for a number of years.  The Double taxation treaty between the US and UK means that US tax authorities recognise many UK based tax allowances.  For example, the double taxation treat between the US and Uk specifically recognises the tax status of UK pensions.

You can find the taxation agreement between the US and UK here.  The most relevant section in this case is Article 18.

If you are a British expat looking for pension or investment advice please fill in the form on the Contact Us page.

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