Tax ? about income from IRA/401k for US/UK dual citizen living in UK

How is income and capital gains from US IRAs and 401ks taxed for a dual UK/US citizen living in the UK.
If I was in the US I'd simply pay income and capital gains tax to the IRS, but what if I'm living in the UK.
Does anyone know how the UK/US tax treaty handles this?

Part of the answer depends on your domicile and residence.  For example, an American who moved to the UK and acquired British citizenship may have a different answer than a Brit who moved to American, acquired US citizenship, and then returned to the UK.

Generally, the treaty says that you are to be taxed on pensions first in your country of residence.  If the pension is from the non-residence country, it may be allowed the same tax breaks in the residence country.

An IRA and a 401k are generally taxed in the US as income, though some 401k distributions can be taxed as capital gains.  If it is a regular IRA/401k, it is taxed upon taking it out.  If it is a Roth IRA/401k, it can be tax-free when you take it out, if you take it out under the right circumstances.  That same taxable or tax-free status would also be allowed in the UK.

You will also have to report the income on your US return.  You can take a deduction for any UK tax paid, using a treaty claim.

If the treaty is not applicable in your situation, then the US taxes the income and it's the UK that gives a tax credit for the US taxes paid.  You may also be exempt from tax on the pension in the UK if you do not remit the funds to the UK.  All these questions depend on personal circumstances regarding domicile, residence, and citizenship.

As your personal circumstances determine whether the US or the UK has the first "bite" of taxes, you should consider speaking with a qualified UK tax expert to see whether the treaty applies in your case; ideally you should also arrange for co-ordinated US advice.

Thanks. Well the fog is slowly clearing,  but I'm still a little confused. Here are the particulars.
Can you explain the general tax situation for me if I do the following and let me know if
my understanding is correct.

I'm a UK citizen born in the UK. I moved to the US for work 18 years ago and I've been
a US citizen for about 5 years. I now intend to move back to the UK to retire. I'll
move all my regular investments back to the UK and leave my tax deferred retirement
investments in the US until I can make withdrawls without penalties. My income will
be less than $80k.

What I think I understand from your answer is that prior to age 59 1/2 I'll be taxed
by the UK on income and captial gains that I get from working and my regular accounts in the
UK. If this is less than some allowance (is it $80k?) I'll have no tax liability in the US.
When I start taking allowed distributions from 401k/IRAs and remit the funds to the UK
I'll pay tax on the income in the UK and when I do my 1040 I'll indicate this and won't be
taxed again in the US.

Your situation is that you are taxed in the UK whether the pension is remitted to the UK or not.  So the UK has first bite of all your pensions, with the US having a complicated treaty-based tax position. 

Every year, you will report all your income in the US (wages, interest, dividends, cap gains, and pensions), and reduce the US tax through a complex series of exclusions, tax credits, deductions, and treaty claims.  If you pay tax in the UK, the UK rates are higher than the US; so it is likely you will only have a small or nil US tax liability each year.  But if you have some income that happens to be UK-tax-free, you may end up paying a US tax bill.

Thanks very much. I get the general picture. I'll probably employ a US/UK tax professional
to fill out my forms for the UK and US authorities to make sure I get things right.