US based & newly dual resident – Please review treaty assumptions and strategy

New here and this looks like a great forum!
I realize most people on this forum have UK treaty residence  vs US but I would appreciate any informed critique of my assumptions and strategy below.
I have found the dual taxation treaty really hard to read - made even harder by their using the word  ‘resident’ to mean two different things! I will not repeat that mistake and will use “TreatyResident” or TR when referring to the ONE country of residence decided by the treaty.

Background
I am 62 yrs old dual citizen born in UK but spent my entire working life in US. Now retired, I spent half of last year in the UK (establishing residency) and intend to do so every year. However, Covid19 has me stuck in US now and I will likely NOT be resident in UK for 2020-2021. Have applied for UTR for self-assessment for 2019-2020 but have not got it yet.
All my income is currently from US investments – mutual funds, Trad IRA and ROTH IRA but I may lease out empty property(s) and will probably start taking Social Security late (age70).

Assumptions
1.   Per Article 4, 4a.  As US homeowner, citizen and resident with US home being my ‘centre of vital interests’ I am a US TreatyResident’  or US TR.

2.   As US TR my US taxes will generally be unchanged other than possibly more foreign tax credits

3.   For any year I am a UK resident too, as US TR I can exclude any US Interest income from UK taxes by using form HS302 and claiming full relief per Article 11, 1.

4.   For any year I am a UK resident too, as US TR I can exclude any US Social Security  income deposited to US account from UK taxes by using form HS302 and claiming full relief per Article 17, 1.

5.   For any year I am a UK resident too, as US TR I can exclude any US Roth sales from UK taxes by using form HS302 and claiming full relief per Article 17, 1b – or do I just omit/ignore it because it is not taxable?

6.   For any year I am a UK resident too, as US TR I can exclude any US income generated by a Trad IRA to ROTH conversion from UK taxes by using form HS302 and claiming full relief per Article 18, 1.  NOT SURE about his one because  the treaty language is not very clear. Is it covered separately using the concept of ‘lump sum conversion’?

7.   For any year I am a UK resident too, as US TR I CANNOT exclude any US Dividend income from UK taxes. No idea how this is resolved re double taxation.

8.   For any year I am a UK resident too, as US TR I CANNOT exclude any US capital gains  from Taxable fund or Trad IRA sales from UK taxes. No idea how this is resolved re double taxation.

9.   For any year I am NOT UK resident too I can realize capital gains from my US investments without paying tax to UK because they were acquired before I was a UK resident and are thus not subject to any UK  5 year CG rules. But I still may have to notify HMRC within 30 days of gain?


Strategy & Discussion
10.   Convert All my Trad IRA to ROTH before I reach age 70 ½ where required distribution ( RMD) + social Security will push me deep into 40% UK tax territory
For a US only person, holding Trad vs ROTH IRA has arguments for both but when UK tax comes into play Conversion to ROTH makes sense because distributions are tax free in both countries. Conversions are counted as US income and I am still on ACA (Obamacare) so will wait until I am 65 and on Medicare before starting with the goal of converting all $300k within 5 years at $60k yr after which my Trad IRA required distributions start.  Could I do one per year or is that too risky for ‘lump sum’?

11.   Convert Taxable Mutual funds to UK friendly funds so they are taxable in UK as CG instead of income
I have been learning about the pitfalls of selling US funds without “UK Reporting Status” which causes them to be taxed in UK at Income rate vs Capital Gains. None of my 4 taxable funds have this!  But, according to Vanguard 3 of my 4 Mutual funds have associated ETF’s that DO have UK reporting status AND I can convert them without paying any US taxes (presumably because the conversion is not a sale so no CG). Since I find myself stuck in the US this year and won’t be resident in UK for 2020-2021, if my assumption #9 is correct then I can and should convert 3 funds for free and sell the fourth fund and reinvest proceeds in one of those reporting ETF’s without paying any UK tax.
An interesting associated question for most of you UK TR’s is whether the US tax free fund conversion described above is taxable in UK at all since it is not really a  ‘sale’.

I have other questions but don’t want to make my first post any longer than it already is!
Any comments or suggestions would be much appreciated.

I think your strategy outlined in your last 2 points is a good one. My wife and I were in a similar situation, having spent 29 years in the USA, dual citizens, and planned to spend time in both countries starting in 2016.  However, after 6 weeks back in England we decided to make it permanent.

We did convert 2 of our mutual funds to HMRC reporting ETF equivalents with zero tax implications. The other mutual fund did not have an ETF equivalent so we sold all the shares before we returned to the UK, paid CG tax in the USA and reinvested them in an ETF fund that is HMRC Reporting.

We both retired at age 55 and had been doing IRA to Roth conversions so when we returned for good in 2016 we were half way there. Over the last 4 years we have continued to make a one-off lump sum conversion from IRA to Roth and only paid tax in the USA. Next year will be the last year for such a conversion then we will be 100% Roth IRAs at age 66.  We are both eligible for UK and US SS having 31 years of NI contributions due to voluntary NI contributions.

I have been taking dividends out by my Roth IRA as a withdrawal each year and don't even report it on my HMRC return as it is tax free in both countries.

Before moving back, and after we had converted our mutual funds to ETFs I took my name off the accounts since in the UK you are taxed as individuals so the dividends and the capital gains from the shares we sell attract very little tax, if any at all, as my wife as no other income. (I have US and UK private pensions).  Personal tax free allowance of ~£12k plus ~£12k cap gain  allowance and £2k dividend allowance means she/we only pay US taxes on them, but do report the income fully on my wife's HMRC return.

We did convert 2 of our mutual funds to HMRC reporting ETF equivalents with zero tax implications. The other mutual fund did not have an ETF equivalent so we sold all the shares before we returned to the UK, paid CG tax in the USA and reinvested them in an ETF fund that is HMRC Reporting.

We both retired at age 55 and had been doing IRA to Roth conversions so when we returned for good in 2016 we were half way there. Over the last 4 years we have continued to make a one-off lump sum conversion from IRA to Roth and only paid tax in the USA. Next year will be the last year for such a conversion then we will be 100% Roth IRAs at age 66.

Durhamlad,
Did you make the ETF conversion before resuming UK residency or after? My concern is that since I was UK resident last year I may be subject to new 5 year CG rule even though I am not UK resident this year. I don't think so since new rules  appear to only be for UK assets but a mistake would be catastrophic if I was assessed UK tax for conversion. Can  (or should) I contact HMRC for a ruling?

Regarding Roth conversions, how often did you do them while UK resident? Is it safe to do one per year as a UK exempt 'lump sum '?

I did my ETF conversions before moving back, while we were still US residents.

I have been doing 1 lump sum Roth conversion per year while we have been in the UK.

I don’t know anything about the 5 year CG rule you mention.

The 5 year rule came up in Googling but is essentially that temporary non-residence does not exclude you from UK CG taxation unless you are non-resident for 5 years.
Good news is that according to HMRC the definition of temporary non-resident requires
They had ‘sole UK residence’ for either the whole or a part of at least 4 out of the 7 tax years preceding the year of departure.

So my one year of UK residence, will not trigger this and I can safely convert and sell my US based assets while I am stuck in USA all year.
I am seriously considering selling everything - not just a conversion,  and reinvesting to lock in my Capital gains at US 15% tax -ie tax gains harvesting