uk self assessment

I am a U.S. citizen, 72 years old, and live in the U.S. I receive a small private pension from a U.K. company.The M.H.R.C. deducts their Paye, before payment is sent to me over here. I  suffer from M.S., and have been in and out of hospital for the past 7 years. My pension have gone by D.D., into my wife's account. Mail requests from revenue for self assessment have gotten lost in the health mess. In remission, I am now trying to sort through neglected issues, and have  found these revenue inquiries. I now have copies of all the correspondence, and forms, 7 years. I spoke with them. They are short on sympathy. In reading through the forms they really are for a U.K. citizen, and asking information from a U.K. citizen. It's all confusing, as the MHRC had already assigned a PAYE. IDoes anyone have any info on this?Is there a simple form for this, I can request? Any info is deeply appreciated.
Best Regards

As this UK pension is paid to someone resident in the US it should not have any tax withheld from it in the UK. You need to file a US-Individual 2002 form. This will adjust the UK tax code on the pension to NT so that no tax is taken out. You should also claim a refund of any tax that was withheld in the UK. When you talk to then again ensure they know that the pension is being paid to someone resident in the US and that under the US/UK tax treaty the pension is not taxable in the UK.

http://www.hmrc.gov.uk/cnr/us_individual_2002.pdf

Your pension is taxable in the US and you must include it on you 1040. The exact details of how it will be taxed by the IRS depend on the type of the UK pension.....ie defined benefit or SIPP etc.

On this issue, I suggest you want tax advice because the help you get will result probably in you paying less tax.
The bad news: HMRC are going to blindly apply a penalty for not sending back the completed returns, in fact they charge the £100 penalty on each form not returned even where different branches request a return for the same year. But there are mitigating circumstances on health grounds which you need to state with supporting letter from your doctor and then you'll have to negotiate.
The good news: As 'nun' says one can claim limited benefits under the US/UK treaty. But sometimes one does not want to. Going back in the history of how you acquired your UK private pension, if you did not elect for treatment under the treaty on Form 8833, then one is required under IR Code section 402(b) to include employer contributions as taxable income (for years of assessment now long gone). These contributions plus growth (if highly compensated) must have been declared as income on the US return. If employer contributions are not claimed under the treaty then these — plus employee contributions, plus reportable growth — form cost 'basis' when payments are made from the plan. To figure the amount of each withdrawal that is taxable one turns to IR Code section 72. Using this route, there is typically a reasonably large figure for 'basis' which means most of your UK pension will not be taxable in the US (for life).
Cross border tax is not a DIY sport. You don't have to use a tax preparer for life, but you might want one to set all this up for you.

On this issue, I suggest you want tax advice because the help you get will result probably in you paying less tax.
The bad news: HMRC are going to blindly apply a penalty for not sending back the completed returns, in fact they charge the £100 penalty on each form not returned even where different branches request a return for the same year. But there are mitigating circumstances on health grounds which you need to state with supporting letter from your doctor and then you'll have to negotiate.
The good news: As 'nun' says one can claim limited benefits under the US/UK treaty. But sometimes one does not want to. Going back in the history of how you acquired your UK private pension, if you did not elect for treatment under the treaty on Form 8833, then one is required under IR Code section 402(b) to include employer contributions as taxable income (for years of assessment now long gone). These contributions plus growth (if highly compensated) must have been declared as income on the US return. If employer contributions are not claimed under the treaty then these — plus employee contributions, plus reportable growth — form cost 'basis' when payments are made from the plan. To figure the amount of each withdrawal that is taxable one turns to IR Code section 72. Using this route, there is typically a reasonably large figure for 'basis' which means most of your UK pension will not be taxable in the US (for life).
Cross border tax is not a DIY sport. You don't have to use a tax preparer for life, but you might want one to set all this up for you.

The USIndividual-2002 should shut up HMRC for future years. I think there's a good argument to be made to mitigate any possible fines because of health issues, non-UK residency and that the pension is not even UK taxable. But you should file the USIndividual-2002 along with the required Certificate of Residency asap.

I would also suggest that you write to HMRC and explain that your situation and ask them to refund the tax that was withheld on your pension.

The address is

HMRC
Pay As You Earn and Self Assessment
P.O.Box 4000
Cardiff
CF14 8HR
United Kingdom.

Phone 0845 300 0627

How the UK pension is then taxed by the US is a separate issue and will depend on it's US tax basis, the nature of the pension, and the interpretation you (or your advisor) has of the tax treaty. But if you did not declare the contributions as US taxable income when they were made you will have to include any withdrawals as income on your 1040. If you did not declare the contributions to the IRS and you also did not claim the treaty exemption don't worry as in the case of pensions you don't need to explicitly claim the treaty exemption on an 8833 as explained in the "Exemptions" section below. There might be a wrinkle if your UK pension were to not be a pension under the terms of the treaty or you were contribution more than the IRS limits.

http://www.irs.gov/Individuals/International-Taxpayers/Claiming-Tax-Treaty-Benefits

Also make sure you comply with FBAR and FATCA is applicable.

The easiest type of pension to deal with will be an employer's defined benefit plan. So what type of pension do you have?

As the Paye was set in 1998, and I returned in 1999, and all deductions were taken from me. Also, I am not a U.K. citizen, why are they trying to self assesse me? I thought the deductions, that were being taken were a U..K. tax, on my old employer , but taken from my pension.
I declare the pension, here in the U.S.
Regards,
Bill

As the Paye was set in 1998, and I returned in 1999, and all deductions were taken from me. Also, I am not a U.K. citizen, why are they trying to self assesse me? I thought the deductions, that were being taken were a U..K. tax, on my old employer , but taken from my pension.
I declare the pension, here in the U.S.
Regards,
Bill

They are trying to assess you because you have not filed a USIndividual-2002. When you left the UK you became non-resident for UK tax purposes and you can use the US/UK tax treaty so that no UK tax is withheld from you UK pension payments made to you in the US. But until you do that UK tax will continue to be withheld and HMRC will ask you to do a self assessment because the pension is in the UK. This can be a complex tax area to navigate and if you are uncertain about it get help from a professional.