# UK Tax Question From Future US Expats



## Pastaboy52 (Feb 3, 2012)

First, let me begin by apologizing if this issue has been addressed in an earlier thread. My husband and I are planning to retire to UK this summer (I am a dual US/UK National, and he is US, and should qualify for UK Spousal Visa). Our sole income will be US sourced, and will consist of Social Security, pension, IRAs (both Roth and regular), savings, an eventual inheritance, and proceeds from the sale of our primary residence in the US (no capital gains involved). Our intent is to purchase a flat, from which we hope to retain $90k - $120k of the proceeds as a financial cushion. We have no difficulty understanding the US taxes due, but we are confused about how HMRC will tax us. If I understand correctly, the UK will be the one responsible for taxing our Social Security, but will exclude the portion that would ordinarily be exempted in the US, but after taking this into consideration, what happens with the remainder? Will the UK tax our pension, non-Roth IRA distributions, eventual inheritance (250-350K), savings? We intend to reside permanently in the UK, where we will have our sole and primary residence, though we would both be considered to be US domiciled, US citizens by definition, as far as I can determine. We shall be seeking ILR and eventual UK citizenship for my hubby. I think I have all the details to address the factors involved in determining the correct taxing authorities. Can anyone shed some light on this situation. We are waiting to set up a consultation with a CPA specialized in expat tax preparation. Thank you one and all for any advice you can share.


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## Bevdeforges (Nov 16, 2007)

> though we would both be considered to be US domiciled, US citizens by definition, as far as I can determine.


This is the part I don't understand.

Basically, as US citizens resident overseas, you will be required to continue filing US tax returns, subject to the tax treaty provisions. As UK residents, you'll be subject to UK tax laws - again, subject to the treaty provisions (which does include UK taxation of your Social Security benefits).

You should be spared double taxation by the usual sorts of things - in your case, mainly the Foreign Tax Credit (FTC) on your US returns. 

I'll have to let someone familiar with UK taxes comment on how the UK taxes things, but generally there is no income tax on savings, inheritances and other capital transfers, unless based on a wealth tax (which I don't believe the UK has). But let's see if we can find some folks familiar with the UK system of taxation.
Cheers,
Bev


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## Pastaboy52 (Feb 3, 2012)

Thank you, Bev! I must admit to being confused by the "domicile" versus "residency" issue in determining who is the taxing authority. What I solely wish to communicate is that Alan and I will be resident in the UK, with the goal of becoming permanently resident, with no ties to the US, other than it being the source of our income, and that we shall also retain our US citizenship. I hope that makes things clearer. We are being referred to a CPA in the UK who specializes in expat taxes from both a UK/US perspective. We are just being cautious about selling our home in the US, moving abroad, and then finding that we can't afford the move from a taxation perspective. It will be a lot easier if we can ever get the US taxing authorities to consider "residency based taxation!"


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