Tax on IRA distributions for US citizens resident in UK?

I received a slew of traditional IRAs in investment (brokerage) accounts as an inheritance in early 2012 when my father died. They are all now beneficiary IRAs, still in the US, and I was allowed to exempt myself from US withholding tax with all four companies. Because my father was over 70 years old, I must take distributions each year from these accounts for the rest of my life.

Does anyone know whether, on the UK self-assessment, I report the distributions (1) on the Foreign Pages as dividends, (2) as pension payments, or (3) somewhere else? I've spoken with HMRC technical advisors and they have no idea.

Even with these payments I do not earn enough to pay tax in the US or the UK, but with luck my income may increase enough this year that this becomes a real issue.

Many thanks.

I received a slew of traditional IRAs in investment (brokerage) accounts as an inheritance in early 2012 when my father died. They are all now beneficiary IRAs, still in the US, and I was allowed to exempt myself from US withholding tax with all four companies. Because my father was over 70 years old, I must take distributions each year from these accounts for the rest of my life.

Does anyone know whether, on the UK self-assessment, I report the distributions (1) on the Foreign Pages as dividends, (2) as pension payments, or (3) somewhere else? I've spoken with HMRC technical advisors and they have no idea.

Even with these payments I do not earn enough to pay tax in the US or the UK, but with luck my income may increase enough this year that this becomes a real issue.

Many thanks.

I would enter the payments as income from foreign pensions.

From a UK domestic perspective, the payments you receive must represent a mixture of foreign income on non-US investments plus gains or losses on any disposals of the investments (the gains might be offshore income gains). From a UK perspective you'd have a step-up in basis to the date of the inheritance. 

If you are filing on the arising basis you would report US source income as it arises, plus gains or losses. 

Thank you Nun and Guya. I will report them as foreign pension income this year. The previous discussions in this thread were also extremely helpful.

From a UK domestic perspective, the payments you receive must represent a mixture of foreign income on non-US investments plus gains or losses on any disposals of the investments (the gains might be offshore income gains). From a UK perspective you'd have a step-up in basis to the date of the inheritance.  

If you are filing on the arising basis you would report US source income as it arises, plus gains or losses.  

Ahhh, so not invoking the treaty and applying the step-up basis minimizes tax.....even if you'd actually have to pay at income tax rates because of UK non-reporting regulations. To do this the OP will have to get detailed dividend and capital gains information from the IRA administrator and work out what fraction of her payment is due to each category. This might be difficult to do as the money is in an IRA and withdrawals are treated as income in the US. Having the withdrawals as income in the US and treating them as dividends/capital gains/principal and applying UK-non-reporting rules in the UK sounds complicated.

If the income is less than 2000 GBP the OP could leave it in the US and there would be no UK tax due, and if the amounts are small enough to be accounted for by her personal allowances it might not matter how she declares the money and invoking the treaty might be the simplest approach.