Tax help for retiring across the Atlantic

Your situation

You have retired — or are about to — with a working life split across two countries. Perhaps you are American, drawn to the UK by family, and your income arrives from Social Security and an IRA. Perhaps you are British, home again after a career in the States, with a 401(k) you have not looked at in years. Either way, every payment you receive now has to find its correct home on two countries' returns.

What each country expects from you

The United Kingdom, as your country of residence, taxes your worldwide retirement income: UK pensions, the State Pension, and — under the treaty — generally your US Social Security too, which becomes taxable only in the UK. Foreign pension income normally means Self Assessment, due online by 31 January.

The United States keeps its claim on citizens and Green Card holders, who file annually regardless of where they retire; the FBAR continues to apply to UK accounts above the $10,000 aggregate trigger. British retirees who are not US persons interact with the US mainly through withholding on their US accounts — where the treaty and the right certification forms decide how much, if anything, the US keeps.

Between the two sits the treaty's pension article: broadly, periodic pension income is taxed where you live, lump sums are treated differently, and Social Security has its own rule. Small wording differences — what counts as periodic, what counts as a lump sum — carry real money.

The classic traps

• The casual lump sum. Taking a large one-off withdrawal without checking how each country will characterise it is the most expensive common retiree mistake.
• Double-taxed Social Security. Paying US tax on benefits the treaty assigns to the UK alone, or omitting them from Self Assessment, are mirror-image errors we see constantly.
• Early or mistimed withdrawals. US retirement accounts penalise early access with an additional tax, and UK and US charges can stack when timing is careless.
• Withholding on autopilot. US custodians withhold according to whatever certification they hold on file; stale or missing forms mean tax taken at the wrong rate, recoverable only through filings that can lag the payment by a year or more.
• Invested drift. Retirement savings left in products the other country dislikes — PFIC-laden portfolios for US persons, non-reporting funds for UK residents — quietly worsen every year of drawdown.

One firm, both returns

Retirement income is recurring, which means a mismatch between your US and UK filings repeats every single year. We prepare both returns together, so each pension, withdrawal and benefit is characterised once, claimed under the treaty consistently, and credited correctly on the other side. Fixed fees are agreed before work begins.

When to get advice

The best moment is before your first withdrawal — the shape of drawdown is far easier to set than to reset. It matters again before any lump sum, any account consolidation, and any move between the countries. Estate exposure deserves a look at the same time: from April 2025 UK inheritance tax follows long-term residence, which changes the position of retirees settling here permanently. If retirement income is already flowing and the returns feel improvised, a consultation will establish quickly whether the treaty is working for you or against you.