My client is British, but has lived and worked in the US for many years. She has now retired and returned to the UK - probably permanently. She wants to remain a US citizen at least for now, so my understanding is that the saving clause in the double tax treaty will be triggered in the US, which basically means she remains taxable in her worldwide income in the US.
SO if she were not a US citizen, her US (non social security) pension would be taxable in the UK from the point at which she became UK resident. I assume it still is, but can we claim double tax relief of the US tax paid? The UK US double tax treaty gives the UK taxing rights on this income, but the saving clause apparently negates that....
I assume all UK income remains taxable in the UK in the usual way aqnd she will get tax credit relief in the US for any UK tax paid..........
Thank you for your help
Replies (3)
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Because the client is a US citizen, she will continue to report worldwide income and gains in the US and file US information returns each year - including FBARs.
Under Article 17(3) of the treaty, US social security pension income is completely exempt from US tax for a UK resident. There is no double taxation and consequently no double tax relief to be considered in the UK.
David Treitel | Managing Director | American Tax Returns Ltd
The Old Exchange, 12 Compton Road, London, SW19 7QD
Tel: 020 3542 6330
Email: [email protected]
Are you sure your client is a US citizen as well as being a UK citizen (as opposed to resident)?