Retire US to UK

I am just starting the process of figuring out the tax rules (probably never really get there). Just wondering if it is more costly....but smarter to just get in contact with a tax person/company who has dealt with these moves. Moved to the US with my UK wife in June 2011(took early retirement at 54). I wouldn't be surprised that we move back to the UK within 3-5 years but a lot of that has to do with how much of a hit I would take in taxes. If we moved back....it would be for good and the UK would be my permanent home.
1. Getting US Govt pension (not big)
2. Would eventually get SS.....and possibly wife SS with spousal 50% (if she picks up US citizenship). I need to check more on this. She evidently would get it here even without citizenship.
3. Retirement money in TSP account and in Vanguard.
4. Wife would have a small UK pension kicking in at 60, and then her UK pension at 67.
5. We would sell our US house and buy something really small in the Harrogate/Otley/Scarborough areas.

Any place that has a reasonably easy to understand place to figure things out? Or do I just keep stumbling around on the IRS/ UK tax sites (and forums like this)trying to figure out the pitfalls? If our taxes would be noticeably higher....then that could kill the move before we get going too far.  

Your taxes may well be higher but you won't have to pay for medical insurance, so you could factor that in when working out your financials. Also you might find that the cost of living, if for example you own your own home, only run 1 car, live somewhere walkable, is lower than in the US.

I think you need to look at more than taxes to decide whether or not to make the move. Quality of life isn't financially quantifiable.

One major hurdle now is qualifying for a UK visa now.  Did you obtain UK citizenship prior to the move to the US?  If not, make sure to factor the new process into your plans (although likely to continue to change dramatically in the next 3-5 years).

I am 60 , on SSD I get my money on a US debit card and on erd of every month every month go to bank and get my money(just in case I go back I have it on a us debit card and can access it ) it costs to exchange every month  I hate that.. BUT I find it more expensive over here for everything !!!!

I would hope that I would get into the UK without toooo much trouble.....certainly think a lot easier than getting my UK wife in the US. THAT was a pain. I have lived in the UK twice for about 7 years each time so am comfortable living there (7 years in the South, 7 years in the North). Although I have lived in town and well out of town....we were planning on living in a reasonably sized place (Harrogate/Otley or Scarborough) that can be walked and has access to decent medical as well (wife's daughter is a nurse in Harrogate). Housing much cheaper in Scarborough since Harrogate is a bit pricey. Our living expenses are pretty low....not sure whether to drop my Govt health insurance since I only pay a little over $300 a month for both of us, but it is something I have considered if we needed the money. I have had pretty good luck with Nat Health on a couple of issues. I also need to stop in at the SS office soon to see whether there is a way for my wife to get the spousal coverage like she would if we stay in the US. We will be here for a minimum of 3 more years I would think. She is likely to try for citizenship this next summer which will be 3 years....makes it easier for her if we do decide to stay here....and easier if I die as well. Wife is happy enough here at this time, but is scared with our medical system if I go ga-ga in the future. Her family is over there, and mine I am not that close to. I am comfortable living either place so....

you're very wise to start early.
just off the top of my head, here are some issues:
- if you have a foreign pension, the SSA will lower your SS payments (this is called WEP). You'd be wise to look into the SS sitution in detail. If your local office isn't much help, get in tough with headquarters in Baltimore. You might want to do something similar for the UK state pension if your wife is going to get that.
- If you drop out of medicare B when you move to the UK, but then at some point move back to the US, and want medicare B again, there will be a penalty. Medigap would also be very tricky.
- your taxes will be higher in the uk. The UK will tax you and your wife on any US income as well as UK income, including all private pensions and SS.
- as a USC, you will have to file a US return every year, and all the IRS rules will apply to you. If you're in the lower tax bands, because of tax credits, you won't owe the US anything. However if you were to buy a house in the UK, then sell it you'd be liable for US capital gains tax, just as if you lived in the US
-you might have to file annual reports on your foreign accounts and foreign assets (FBAR and FACTA) - no tax involved, just a pain.
-UK inheritance tax is hefty, in case that's an issue
-pensions are very tricky. I would learn about the double taxation treaty and consider tax efficient ways to manage your pensions, e.g., Roth IRAs.
- it would be lovely to turn this kind of thing to an advisior. Problem is that good ones are very hard to find and are mainly for high net worth individuals, i.e., very very costly. In my experience, even that doesn't guarantee really good advice.
- you'll have to figure monthly local tax ('rates') - not exactly property tax but something like it.
- I find the cost of living higher here and quality not always good. I buy as much as I can in annual trips the US
-you might also want to see what happens to the NHS and to 'social care' after the current reforms kick in - especially for the old and the ga-ga.

We are both retired and have accepted that for us it will have to be the UK (DH has just undergone a kidney transplant here and there are no deductibles, no co-pays, etc. with the NHS -- hoping nothing too radical happens to the health services in future). 
It is true that you are liable to a reduction to your SS payment if you have income from UK state pension.  Although I did officially notify my local SS office I have never heard anything back from them -- perhaps they regard my pension as peanuts 
Things are more expensive here -- they always were -- but somehow it seems easier to live a simpler life here.  Having a hard time finding a small house (similar to the one I left behind in the US).  Not many bungalows where we are. They often seem to be on the outskirts of towns which is a nuisance if you've also gone car-less.  Clothing seems very expensive, unless you shop in charity shops. We qualify for OAP bus passes and senior fares on the railway which helps.  Haven't noticed too much else in the way of senior discounts.

Just getting in touch with a lady I used to work with years ago....she still lives next to Hyde Park in London. Hopefully she will be able to clue me in on some more of the things to look for.

I don't think WEP would get us....need to look up more of that. My wife's pension would only be about $8000 a year. She has another strange pension from her previous husband that might bring in another $1500 a year when she hits 60. My US Govt pension is only about $15k a year. Inheritance tax is nasty if you have more than 325k(Pounds). I can live with that.....my wife's kids would still get a nice chunk of money. No idea how they would treat my Vanguard funds and my TSP retirement account.

The advantage that we have is that we both already live cheaply.....except for my occasional "toy" buying (would like a new octave mandolin). We don't travel much. We LIKE being at home. If you know anything about N Yorkshire.....if you can't find something to do outside living there, there's not much hope for you.

After living in the UK for 7 years (80-87) and another 7 years (2004-2011)....I understand the basic costs of living there. Basic food items are about the same. Cars.....gas....electricity etc etc.....ouch. Wife is from Harrogate (expensive) and would be lucky to afford a 200K (pounds) house there. Looking at Scarborough since that same 200k house is 160k there. We only have one car here in the US. Even though we live about 20 minutes from Spokane we still only have a little over 20k on our car after 2+ years.

Even though we live about 20 minutes from Spokane we still only have a little over 20k on our car after 2+ years.

Nothing to contribute here, but hello from a fellow Washingtonian (unless you're 20 minutes east of Spokane.... then hello from a fellow PNW-er)! 

TravelingFrog- NW of Spokane...in WA. Grew up in SW WA.
Just got hold of tax guy in the UK that I kind of knew through another guy. He thinks my taxes might go up a tiny bit.....but no big deal if we move back to N Yorkshire.

TravelingFrog- NW of Spokane...in WA. Grew up in SW WA.

Cool.    I'm from NW WA but lived a year on Lake Chelan.

I plan to return to North Yorks. with a bunch of US based investments too.

How you are taxed is going to greatly depend on your circumstances. You are a US citizen married to a UK citizen so in the UK you'll file separately and for the US you'll have the choice to file married jointly or married separately and your non-US spouse might or might not have to file a US return.

You also have to deal with taxable and tax deferred accounts. The many of the tax deferred accounts will be covered in the pensions section of the treaty and so you can get continued tax deferral in the US and UK and avoid UK non-distributing fund issues. Any taxable investments you own will have to be carefully managed to avoid US PFIC and UK non-distributing funds rules.

Broad brush things to do would be the following.

Decide on how you will file your taxes and whether you will separate your finances from your spouse to make here tax life a bit simpler.

Think about inheritance and wills.

Realize US capital gains before moving to the UK and then plan how to invest any money in a tax efficient way. FYI Vanguard EFTs are both US and UK tax efficient.

Rationalize your US retirement accounts ie roll them over to and IRA unless there is some compelling reason to stay in a 401k, 403b etc.

Set up a ROTH IRA and make sure your US brokerage and banks will work with you if you have a foreign address.

Look for some professional advice.

Technically, I am also retiring US to UK  I have a government pension and a Deferred Compensation 457 Plan & a Roth IRA.

Decide on how you will file your taxes and whether you will separate your finances from your spouse to make here tax life a bit simpler.

I plan to always file separately, DH & I will always keep our finances separate so as far as the IRS is concerned, he doesn't exist!

Think about inheritance and wills.

I have a will, but never really thought of how my living in the UK would affect any inheritance for my US based son?? For instance, would a US life insurance policy in my name & would be paid out in the USA to my son be taxed in the UK? Or would a UK life insurance policy paid out in the US, would that be heavily taxed? I honestly have no idea & never even thought of it until now...

Realize US capital gains before moving to the UK and then plan how to invest any money in a tax efficient way. FYI Vanguard EFTs are both US and UK tax efficient.

Rationalize your US retirement accounts ie roll them over to and IRA unless there is some compelling reason to stay in a 401k, 403b etc.

Set up a ROTH IRA and make sure your US brokerage and banks will work with you if you have a foreign address.

I have a Roth IRA & a Deferred Compensation 457 Plan, which can be converted to a Roth IRA.
I am wondering if it is worth it for me to do, as I can do an early withdrawal, if needed, from Deferred Comp, with no penalty, only have to pay in the US as well as the UK. 
Versus the Roth IRA, I would have to pay a penalty, along with paying tax, if I had to do an early withdrawal.

Look for some professional advice.

Should I seek a professional? I don't think my finances are too complicated, but I would like to not have my little pension & or my deferred comp. or eventually my SS hammered with taxes from both sides of the Atlantic if I can avoid it!

Also, I am in the midst of moving in the US, (to my mothers house in preparation for the move to the UK) so I have my long list of things I need to change my address on. I had been planning to pretty much keep a US address on most everything, as I will still be a US resident in New York state along with being a UK resident...
Will keeping a US address on the Deferred Comp/IRA complicate things in the US or UK come tax time? 
Another question, I am sure my US pension will be taxed in the UK, I plan on keeping it as it is now, direct deposit into my US bank account, as trying to get this pension paid into a UK bank account will probably be next to impossible. 
So how will the UK tax my US pension?
 
Sorry for all the random questions, one seems  to lead to another and another and another   


 

I have a Roth IRA & a Deferred Compensation 457 Plan, which can be converted to a Roth IRA.
I am wondering if it is worth it for me to do, as I can do an early withdrawal, if needed, from Deferred Comp, with no penalty, only have to pay in the US as well as the UK. 

The 457b plan is useful as you can get to it before 59.5 without penalty. However, it is a non-qualified deferred compensation plan and it isn't explicitly covered in the tax treaty with US qualified retirement plans, so it might not be tax deferred for UK tax purposes, I have a 457b plan too, but I plan to roll it over to an IRA before I become UK tax resident so that I'm certain of its tax treatment. and continued tax deferral.

Versus the Roth IRA, I would have to pay a penalty, along with paying tax, if I had to do an early withdrawal.

FYI you can take out principal payments you made to the ROTH at any time without penalty and they are tax free in the US and the UK.

Should I seek a professional? I don't think my finances are too complicated, but I would like to not have my little pension & or my deferred comp. or eventually my SS hammered with taxes from both sides of the Atlantic if I can avoid it!

If you are uncertain seek professional advice.

Also, I am in the midst of moving in the US, (to my mothers house in preparation for the move to the UK) so I have my long list of things I need to change my address on. I had been planning to pretty much keep a US address on most everything, as I will still be a US resident in New York state along with being a UK resident...

Will keeping a US address on the Deferred Comp/IRA complicate things in the US or UK come tax time? 

Be careful as NY might want you to pay state tax.

Another question, I am sure my US pension will be taxed in the UK, I plan on keeping it as it is now, direct deposit into my US bank account, as trying to get this pension paid into a UK bank account will probably be next to impossible. 
So how will the UK tax my US pension?
 
Sorry for all the random questions, one seems  to lead to another and another and another   

It sounds as if you might have a Government pension and those are taxed differently from other pensions an it's also dependent on your citizenship and residency. If you describe your citizenship, residency and types of pension I can have a go at working out how they'll be taxed......but you won't ever be double taxed. By the way it's your responsibility to tell HMRC and IRS about your pensions/income and pay your taxes.


 

The 457b plan is useful as you can get to it before 59.5 without penalty. However, it is a non-qualified deferred compensation plan and it isn't explicitly covered in the tax treaty with US qualified retirement plans, so it might not be tax deferred for UK tax purposes, I have a 457b plan too, but I plan to roll it over to an IRA before I become UK tax resident so that I'm certain of its tax treatment. and continued tax deferral.

Yes, I will more than likely convert the 457 over to a Roth IRA, I have been following your posts on the Roth IRA & I plan to start working on that today

It sounds as if you might have a Government pension and those are taxed differently from other pensions an it's also dependent on your citizenship and residency. If you describe your citizenship, residency and types of pension I can have a go at working out how they'll be taxed......but you won't ever be double taxed. By the way it's your responsibility to tell HMRC and IRS about your pensions/income and pay your taxes.

I do have a government pension from the city of NY & I am a US citizen, living in NY state & awaiting my spouse visa to arrive....
Now this is a question that I probably should know the answer to, but how will I notify HMRC of a US pension that is a direct deposit into a US bank account?
I had planned to keep my pension address in the US, because it is set up with direct deposit already & to be honest, changing to a UK address would be a nightmare with them!  I would be receiving statements, W2's, etc... months & months down the line, or maybe never, if the pension had to mail the documents overseas to me!