Retiring in the UK: a bad idea?

I have been resident here for 6 years, will take up UK citizenship this week, and plan to retire in a year, when my res-non-dom status reaches 7 years and runs out.  Means not sufficient to justify paying £30K per annum.  We hope to live on passive income, mostly interest, 401-K distributions and rental income, in the US, all of which will of course be taxable by US and UK starting in 2010.

Question: will the net tax burden be a lot higher than if we were int he US?  we will try to find a reasonable tax advisor who can do both returns and work the US-UK Tax Treaty to the max.  But I have a sinking feeling we will end up with a much higher net tax burden and might be forced back to the States, whereas children and house and lifestyle are all over here.

Does anyone have an idea how this is likely to play out?  very grateful for any thoughts.

Your non-dom status does not run out after 7 UK tax years of residence - but the way you are subject to tax will change.

In a practical sense if you are planning to bring the US rental income pension income & interest income to the UK you would be subject to UK tax in any case so effectively you may owe UK tax at slightly higher rates than US rates and so end up paying more UK ans less US tax.

The tricky parts are the remittance tax calculations and the impact on your US return.  Your existing UK accountant should be familiar with UK law which is probably your biggest concern.

Thanks for your insight, Guya.  It would indeed have been more accurate to say that after 7 years (in 1 more year) we will have to choose between paying £30K per year each to continue to be taxed on the remittance basis, and being taxed on world-wide income and gains.  which is the same thing in our case as saying that our Res-non-Dom status ends, since we cannot afford to pay £30K X 2 annually to Mr D.

to date we have only remitted capital to the UK, to supplement my local earnings which were of course subject to UK tax.  as of April 2010 we will be subject to UK and US tax on worldwide passive income and gains, remitted or not.  What I was interested in was to know whether anyone with experience of this situation could advise as to the likely net increase in overall tax burden once the UK and US returns are prepared taking advantage of the US-UK Tax Treaty.  my UK accountant does not seem to be that familiar with it  (nor does my US-based CPA who does our US return); if anyone has a recommendation of a savvy UK-based tax person who can do both returns, I would be very grateful.