Treatment of private US company pension for UK taxes?

An old friend, and actually my manager for 4 years in the early 2000s, was stationed at Lakenheath in the 80s as part of the US Air Force and married a lovely lady from Norwich. She moved to the US with him in 1992.

Since he has retired, he keeps thinking of moving back to the UK but keeps worrying about the cost and taxes.

I have been able to give him some ideas of the cost and to provide references/links to the US-UK Tax Treaty explaining how US SS is only taxed in the UK and 401k/IRA withdrawls are only taxed in the US.

Because of the length of time he worked at Boeing, he receives a pension from that company which I guess is a substantial part of his retirement income.
He keeps worrying that this pension would be taxed too much for him to move back.

My partner and I only have US SS, 401k withdrawls and her state pension as income.
So I can't say how a pension from a private US company is treated by HMRC.

I think his wife would really love to be close to her family in East Anglia.
So I have been trying to convince him to disregard taxes and look at some of the more important points.

But if I can offer information regarding his concern:

Is it the case that his Boeing pension will be taxed in both the US and in the UK?
And that he will then have the "joy" filling out the dual-taxation portions of the forms?

To me, paying taxes in both countries would be a minor cost if moving to the UK brings joy to his partner.
But any information more solid than my feelings would be useful.

Many thanks.
Terry

I have 2 US private pensions and they are both taxed in the UK but I take tax credits when filing my us taxes.

The lack of healthcare costs more than compensates for the extra UK taxes, but he may have cheap healthcare costs compared to what I had

Not having to worry about medical bills is priceless!

Not having to worry about medical bills is priceless!

I couldn't get married in the US, or I would have lost my (100%, zero co-pay/deductible) healthcare coverage.  I really think I can't afford to go back.  Thank goodness for NHS!

I really think I can't afford to go back.  Thank goodness for NHS!

Same here. 

Thank goodness for NHS!

Same here. 

Amen!

Hi Durhamlad,

Many thanks.
As usual, your response to a Forum question is spot on and enlightening.
I will tell my friend to get a copy of IRS Pub 54 and Form 1116 with instructions and closely review them.

When we first moved over 9 years ago, we kept our US Accountant firm for handling our US taxes.
A quick review of their work shows that they have been including Form 1116 each year.
I have simply been lazy and not paid much attention.

At some point in the near future, I will need to tap into my UK defined-benefit pension pot.
So I will definitely need to pay attention at that point.
Note to self: Pay f***ing attention!

Again, thanks for the quick response.
And thank you for your many answers over the years to the Forum.

And thanks to everyone else who have pointed out the cost of medical coverage needs to be considered.
While he and his wife have US Medicare, that still requires deductibles + co-pays (up to annual caps of several thousand USD) along with a yearly enrollment fee.