Foreign Pension Scheme

Is an IRA (Individual Retirement Account} considered a Foreign Pension Scheme as asked in the initial questions starting  the Self Assessment?

To add to this question, I have so far only filed 1 HMRC return since coming back in 2016.  I do have 2 private US pensions which I reported as foreign pensions and entered the annual sum received.  I also have an IRA but did not take a distribution in 2016 or 2017. In future years if I did take one or more distributions would they be reported on the same foreign pensions page. (e.g. I may take the quarterly dividends as cash instead of reinvesting them so I would have a stream of income in the form of 4 distributions each year)

If I am reading this correctly my IRA is not a foreign pension scheme, my IRA was accumulated long before I had any thoughts of coming to the UK,  any comments welcome.
https://www.gov.uk/government/publications/foreign-pension-schemes/foreign-pension-schemes

If I am reading this correctly my IRA is not a foreign pension scheme, my IRA was accumulated long before I had any thoughts of coming to the UK,  any comments welcome.
https://www.gov.uk/government/publications/foreign-pension-schemes/foreign-pension-schemes

Where do you read that?

The following will be affected:

individuals with pension savings in a pension scheme based outside the UK or specialist pension schemes for those employed abroad (‘section 615’ scheme)

Does it matter when the pension savings were put into an IRA? (I think an IRA is a USA pension savings scheme, similar to a UK SIPP).

I think I am reading but am probably wrong,  I did not receive any tax advantages in the UK while contributing to my IRA, does that make sense to you, for that reason I would report as foreign income?? MAYBE!!!!

I think I am reading but am probably wrong,  I did not receive any tax advantages in the UK while contributing to my IRA, does that make sense to you, for that reason I would report as foreign income?? MAYBE!!!!

While you were working in the USA and contributing to your IRA from your US income you were not paying any tax to either the US or UK and that was the same for me paying into my US private pensions. Now that you are taking distributions from that untaxed income you have to pay tax and because you are resident in the UK they have first rights to tax it. It’s pretty simple in my view. 

There are provisions in the treaty for lump sums, and the interpretation of that as it applies to IRA’s has been debated here several times but I would think that regular distributions from your IRA will be taxable in the UK just as regular distributions from my US private pension are taxed.

I think I am reading but am probably wrong,  I did not receive any tax advantages in the UK while contributing to my IRA, does that make sense to you, for that reason I would report as foreign income?? MAYBE!!!!

If you report it as foreign income then it is fully taxed. If it is reported as pension income then I think for 2017 you still get a 10% tax break so you are better off if it is taxed as a foreign pension.

In summary, income payments for non-UK pension arrangements are disclosable as foreign income and are taxable in the UK for UK residents.

The position on lump sum payments is more complex. Cmoh, you linked to an HMRC webpage about their taxation. The UK domestic rules were changed from 6 April 2017. Excluding the (rare) types of non-UK pension arrangements where there was tax relief on contributions, lump sum payments from foreign pension arrangements are not taxed in the UK provided that the whole of the value relates to contributions made before 6 April 2017. Any post 6 April 2017 element of the lump sum (which will be increasingly important in future years) will be taxable. This would be purely under UK domestic tax rules, and if there is any taxable element a claim could be made under the UK US double tax treaty.

If you report it as foreign income then it is fully taxed. If it is reported as pension income then I think for 2017 you still get a 10% tax break so you are better off if it is taxed as a foreign pension.

I'm sure you are aware of this, but for other readers, for clarification, from the 2017/18 Notes to the Foreign Pages:
"From 6 April 2017 you will pay tax on 100% rather than 90% of your foreign pension, annuity or social security benefits regardless of when you started to take it. The 10% deduction has been abolished."

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/690703/sa106-notes-2018.pdf

Page FN7

I'm sure you are aware of this, but for other readers, for clarification, from the 2017/18 Notes to the Foreign Pages:
"From 6 April 2017 you will pay tax on 100% rather than 90% of your foreign pension, annuity or social security benefits regardless of when you started to take it. The 10% deduction has been abolished."

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/690703/sa106-notes-2018.pdf

Page FN7

That is what I thought I remembered. Thanks for the detailed reference.

I have a Roth IRA and a tiny retirement account (maybe $1500 in it) from a previous US job. Am I required to report those to HMRC if I'm not taking any money out of them?

I have a Roth IRA and a tiny retirement account (maybe $1500 in it) from a previous US job. Am I required to report those to HMRC if I'm not taking any money out of them?

As far as I know you have no need to report either. Even when you make withdrawals it is only the withdrawal amounts that are reported, not the value of the accounts.

I remember reading in the DTA that for 401K, IRA, etc., you don't report to HMRC until you have a disbursement. For once, my memory is clear on a fact!

Since 2008, I have had 3 pensions from Europe and a UK company pension. HMRC use the UK company pension, via my tax code, to pay tax on the PAYE system for the non-UK pensions (there are now others including the UK State pension and US SS).

All non-UK pensions are combined according to country of origin on the Foreign Pages (SA106, F 2) under Overseas pensions, social security benefits, etc., and the total declared in Box 9. None are IRAs, so I have no knowledge of how an IRA is handled, but I would warn KISS! Unless there are special HMRC considerations or the DTA is involved, KISS!

I KISS! So far, I've had absolutely no problems with HMRC regards how I report.

I do have other problems which Nan D. and durhamlad will not have. The constantly changing exchange rates make it impossible for the PAYE amount to be accurate (or even reasonably accurate). Therefore, I have PAYE and, depending on the exchange rates, additional or pre payments in January and July. If any one else has tax on foreign pensions paid via their tax code, I would issue a warning - I've just received my Tax Code for 2018/19. It does not take into consideration the now 100% taxation of foreign pensions. I'll issue one further warning. When I received my statement from the tax inspector (the normal letter after using the paper reporting method) for 2016/17 (due 01 Jan 2018) the tax on interest payments for bank/building societies was missing (multiple £thousands) even though the amounts of interest had been included properly on my filing (confirmed when I called to correct HMRCs error). BE CAREFULL OUT THERE, and check all correspondence carefully. 

Thanks for the warning.

I have 2 US private pensions and 2 much smaller UK pensions. The PAYE taken last year from one of the pensions only was no where close to covering what was owed in taxes to HMRC and I was surprised to see that this year’s PAYE coming out of my UK pension has been cut by a third. (This is the first pension payment of the 2018/19 tax year). Thinking about it I guess they must be happy with the up front amount I paid on January 31st for this coming tax year and assume I will pay the next payment due on July 31st.