Reporting 401K and IRA on UK tax return

I'm wondering if someone can help me.  My husband is a US citizen resident in the UK.  He has an IRA and 401K in the US.  He has not taken any distributions from them, but I'm wondering if he needs to declare them on his UK tax return, and if so how?  (He has to do the self assessment tax return anyway for other reasons)

Thanks

If you are not taking income from the 401k or IRA there is no US tax liability and you can use the treaty to exclude the gains from UK taxation. There is no specific HMRC form to claim a tax treaty exemption, but you could write a note on your Self Assessment form describing the accounts and the reason you are not including gains in them on your UK taxes e.g. "gains in US qualified retirement scheme not taxable under US/UK DTT".

If you are not taking income from the 401k or IRA there is no US tax liability and you can use the treaty to exclude the gains from UK taxation. There is no specific HMRC form to claim a tax treaty exemption, but you could write a note on your Self Assessment form describing the accounts and the reason you are not including gains in them on your UK taxes e.g. "gains in US qualified retirement scheme not taxable under US/UK DTT".

This is exactly what I do and I normally put the note in the "any other information" section of the SA109 form (residence, remittance basis, etc.)

I would not suggest extemporising. Assuming one wishes to elect into the Treaty each year, HMRC explain exactly their required wording in their manuals: http://www.hmrc.gov.uk/manuals/rpsmmanual/rpsm00500600.htm

This will also help

http://www.hmrc.gov.uk/helpsheets/hs344.pdf

To exclude any gains and income earned by the 401k and IRA  from UK tax before you start taking retirement income you would reference the US/UK DTC,  Article 18.1. You could also note that 401k and IRAs are included in the definition of pension funds in the Technical Explanation of DTC Article 3.1

This brings up a question in my mind. Once you start taking income from the retirement funds and apply Article 17 to work out the income tax, do you still have to invoke Article 18 to shelter gains from taxation? Obviously the funds in a 401k or IRA will still be reinvesting gains and dividends even as you take out income.

The links above all seem to refer to recognized pension schemes where contributions are being made, and I don't see any requirement or wording to the effect that the pension pot is making gains but one is not taking distributions or making contributions.  (The OP says he is a UK resident and didn't say he was making contributions).  Making a note as Nun suggests seems to CYA quite nicely.

If you are a UK resident and own an ISA, but don't make any contributions or withdrawals, do you have to declare this on your UK tax return?  (Just curious as I haven't yet had to file in the UK)

This brings up a question in my mind. Once you start taking income from the retirement funds and apply Article 17 to work out the income tax, do you still have to invoke Article 18 to shelter gains from taxation? Obviously the funds in a 401k or IRA will still be reinvesting gains and dividends even as you take out income.

I would think that you only have to report distributions from a pension scheme such as a 401k.  I don't see any reference to gains within a pension scheme in article 17 or 18, but of course I could easily be wrong.

If you had a taxable HMRC reporting fund, such as Vanguard Total Stock Index, VTI, and you take no distributions or sell any shares, then would you report any unrealized gains which have increased the value of the fund? True, if the fund distributes some gains or dividends then you are subject to taxation even if you reinvest them in the same fund.

If you are a UK resident and own an ISA, but don't make any contributions or withdrawals, do you have to declare this on your UK tax return?  (Just curious as I haven't yet had to file in the UK)

If it's a cash ISA, and interest is paid during the year, you do not have to declare it (it's tax free) anywhere on a self assessment return. But when you take the ISA out, it's registered with HMRC. If it remains inactive during the year (no additions), you may have to sign papers again if you want to make additions in following years.

Since you're a USC, I trust you will not be enrolling in a stocks and shares ISA.

If it's a cash ISA, and interest is paid during the year, you do not have to declare it (it's tax free) anywhere on a self assessment return. But when you take the ISA out, it's registered with HMRC. If it remains inactive during the year (no additions), you may have to sign papers again if you want to make additions in following years.

Since you're a USC, I trust you will not be enrolling in a stocks and shares ISA.

Perfect - thanks.

Definitely not considering a stocks and bonds ISA, but once resident in the UK would definitely consider a Cash ISA.

I would think that you only have to report distributions from a pension scheme such as a 401k.  I don't see any reference to gains within a pension scheme in article 17 or 18, but of course I could easily be wrong.

Article 18 is all about sheltering gains in pension funds from current taxation. Read Article 17 and 18 carefully to distinguish between retirement income paid out to you and income the funds earn that is reinvested.

If you had a taxable HMRC reporting fund, such as Vanguard Total Stock Index, VTI, and you take no distributions or sell any shares, then would you report any unrealized gains which have increased the value of the fund? True, if the fund distributes some gains or dividends then you are subject to taxation even if you reinvest them in the same fund.

This is the whole point of reporting funds. A fund must pay out dividends rather than trying to hide the income from the tax man. Even if you sell no shares of VTI there will be taxable dividends and capital gains paid. The tricky bit then becomes resourcing those different payments correctly and paying the appropriate amounts of tax to UK and US.

Article 18 is all about sheltering gains in pension funds from current taxation. Read Article 17 and 18 carefully to distinguish between retirement income paid out to you and income the funds earn that is reinvested.

I read article 18 para 1 as saying that all gains within the pension fund not paid out are not taxable by the UK, just as they are not taxable by the USA.

I read article 18 para 1 as saying that all gains within the pension fund not paid out are not taxable by the UK, just as they are not taxable by the USA.

Exactly

I read article 18 para 1 as saying that all gains within the pension fund not paid out are not taxable by the UK, just as they are not taxable by the USA.

Exactly

So, my original question was, where does it say you have to report pension funds to HMRC such as an IRA if you are not making contributions and not taking distributions? (the links provided above are about exempting contributions from UK taxation)

Thanks all, although I am slightly more confused now!  There are no contributions or distributions to the IRA and 401K, but I assume there are dividends being paid, and possibly my husband may have sold some mutual funds and reinvested in others (but all within the IRA/401K account with no money entering or leaving the account.)

I guess we will just write a statement and leave it at that.