US Social Security

Probably posted before but here is my question,  Is US social security taxable in the UK?  Is US military pension taxable in the UK?

Probably posted before but here is my question,  Is US social security taxable in the UK?  Is US military pension taxable in the UK?

Not sure about US military pension, but I believe that if you live permanently in the UK then US SS is not taxed at all in the US but is taxed fully in the UK.

I worked as a civilian school teacher for the US military/Govt.......supposedly my pension is only taxable in the US.....the treaty supposedly keeps the UK's hands off US Govt pensions (big discussion about this here a month or two ago). The SS is only taxable in the UK. This kind of works out better for me I think and is one thing that would stop me from getting UK citizenship.

IRS Publication 915 contains worksheets for calculating tax on a portion of your Social Security Benefits if you receive additional income (e.g. from dividends, capital gains, IRA distributions).  On page 5, there is a note that US citizens who are residents of the UK are exempt from US tax on their  benefits.

Does this mean that UK-resident US-citizens do not need to use the worksheets -- because none of their Social Security benefits are taxable? If so, must this be indicated somewhere on the 1040 or another form? Or is having a foreign address sufficient?

Thank you.
 

From a US perspective one elects into the treaty by making a valid treaty claim on a US income tax return. For someone paying UK tax on the arising basis, US social security pension would be free of UK tax.

For an arising basis taxpayer, the UK would charge tax on 90% of a US social security pension.

For an arising basis taxpayer, the UK would charge tax on 90% of a US social security pension.

Thanks, I keep forgetting that the UK taxes on 90% of foreign pensions including US SS.  We plan on my wife starting her US SS in a couple of years and since 90% of this will fall well below her UK personal allowance then it will be completely tax free. (We are both dual UK/USC's)

Resurrecting this old post only because of my own research.

@durhamlad - I note your last post, but saw this today when trawling the HMRC website: https://www.gov.uk/government/publications/pension-tax-for-overseas-pensions/pension-tax-for-overseas-pensions

Changes to taxation of pension payments
Currently only 90% of a foreign pension or annuity payable to a UK resident (except those claiming the remittance basis) is chargeable to UK tax.

For individuals who aren’t UK domiciled and are claiming the remittance basis, the amount of foreign pension or annuity chargeable to tax is the amount remitted to the UK.

Guidance on the current tax treatment of foreign pensions can be found in the Employment Income Manual at EIM74500.

From 6 April 2017 the whole foreign pension or annuity payable to a UK resident will be chargeable to tax. This means that pensions paid to UK residents will be taxed in the same way whether the scheme is based in the UK or overseas.

This change doesn’t affect the taxation of:

foreign pensions or annuities paid to non-domiciled individuals claiming the remittance basis
certain pensions paid following the death of a member or a beneficiary aged under 75, which will remain tax free


I presume that on this basis 100% of US Social Security is taxable in the UK - irrespective of whether or not is is remitted to the UK?

While the same Social Security is non-taxable in the US (by virtue of the Treaty), are there alternative treatments available here? for example, declaring it as income and taking the FTC from the UK tax paid? Would this then allow an accumulation of c/fwd FTC's that could potentially be used in the future if the USC/UK citizen decides to move back to the US - and then applied against UK pensions received in the US?

Again......good timing for me. I'm about to do my first self assessment. I don't know without adding things up how much SS I had for this last UK tax year.....but if it was about £1200 a month (£14,400 yr).....and the personal allowance was £12,500?......and I'm only taxed on 90%? of that money......is that 90% of the total?, or 90% of the amount over the personal allowance?

I guess I need to get busy on this now since I haven't really looked into it yet, but I do have my tax number issued from the tax folks here in the UK just a couple of weeks ago......I've had a month break after mailing in my US taxes.....which I can't seem to track for some reason. Tried earlier today and the IRS didn't seem to like my computer address. If it is anything like last year, I think it was getting closer to 6 months before they got around to my taxes.

If I am reading and interpreting the HMRC website correctly, then the 90% has not applied since the tax year ending 5yth April 2017. i.e 100% of your SS is taxable in the UK.

Do others agree or disagree?

If I am reading and interpreting the HMRC website correctly, then the 90% has not applied since the tax year ending 5yth April 2017. i.e 100% of your SS is taxable in the UK.

Do others agree or disagree?

Fully agree. For those of us domiciled in the UK, paying on the arising basis then you pay UK tax on 100% of foreign pensions, including SS.

I had 1 year when I paid UK tax on 90% of my US pensions, having moved back in 2016.

IRS Publication 915 contains worksheets for calculating tax on a portion of your Social Security Benefits if you receive additional income (e.g. from dividends, capital gains, IRA distributions).  On page 5, there is a note that US citizens who are residents of the UK are exempt from US tax on their  benefits.

Does this mean that UK-resident US-citizens do not need to use the worksheets -- because none of their Social Security benefits are taxable? If so, must this be indicated somewhere on the 1040 or another form? Or is having a foreign address sufficient?

Thank you.
 

On our 1040 the Social Security benefits are listed but the taxable amount is listed as 0 no other worksheet is needed. Hope this helps