Tax on pension lump sums paid to UK residents

OK so does HMRC tax lump sum distributions (whatever they are) paid to UK tax residents from US qualified retirement accounts.

For example Mrs. USExpat has $100k in a 401k account. She is 60 years old and takes out the entire balance in one withdrawal......I think we all agree that's a lump sum payment as it couldn't be any lumpier.....Article 17.2 give the US the sole taxation authority over the payment and Mrs. USExpat duly enters the distribution on her 1040 and pays US tax on it. However, does HMRC apply the saving clause and tax the lump sum, Yes or No?

If No then Mrs. US Expat does nothing more than rejoice at the current exchange rate.

If Yes should she have filed a self assessment, paid the UK first and resourced the lump sum payment to the UK so that a FTC could be claimed on the 1040?

I get the feeling that the answer is no, but is that just current HMRC policy and could it change?

Nun raises an interesting set of questions.

The following is a link to a recent HMRC announcement entitled “Pension tax for overseas pensions”.
https://www.gov.uk/government/publications/pension-tax-for-overseas-pensions/pension-tax-for-overseas-pensions#chapter-2---taxation-of-payments-from-foreign-pension-schemes-or-annuities
This deals with numerous changes to take effect from 6 April 2017.

Chapter 2 is of particular relevance. There is a section on the taxation of lump sum payments. Within that section, part deals with “other foreign pension schemes”. The broad thrust of the points would appear to be that lump sums will be taxable to the same extent that they would have been from standard UK pension arrangements, with 25% tax free and the balance taxable. However, there is a considerable amount of detail here, and the document is far from clear unless you are already a pension specialist.

There is also the separate question of the extent to which any of these rules would be modified by the terms of the UK US double tax treaty.

Perhaps other contributors could offer insight into these issues.

Nun raises an interesting set of questions.

The following is a link to a recent HMRC announcement entitled “Pension tax for overseas pensions”.
https://www.gov.uk/government/publications/pension-tax-for-overseas-pensions/pension-tax-for-overseas-pensions#chapter-2---taxation-of-payments-from-foreign-pension-schemes-or-annuities
This deals with numerous changes to take effect from 6 April 2017.

Chapter 2 is of particular relevance. There is a section on the taxation of lump sum payments. Within that section, part deals with “other foreign pension schemes”. The broad thrust of the points would appear to be that lump sums will be taxable to the same extent that they would have been from standard UK pension arrangements, with 25% tax free and the balance taxable. However, there is a considerable amount of detail here, and the document is far from clear unless you are already a pension specialist.

There is also the separate question of the extent to which any of these rules would be modified by the terms of the UK US double tax treaty.

Perhaps other contributors could offer insight into these issues.

I wish (fingers crossed).