Pensions that cross the Atlantic without losing their tax shelter.
A pension built in one country and drawn in the other is where the two systems disagree most. The 25% tax-free lump sum, employer contributions, Roth conversions — each is treated differently depending on which side is asking.
Figures on this page are stated for tax year 2025/26 UK · 2025 US. Thresholds change annually.
Two rulebooks, one retirement
The treaty's pension article protects growth inside UK schemes from annual US tax — properly claimed. But the UK tax-free lump sum is not automatically tax-free to the IRS, employer contributions can be currently taxable, and SIPP investments can raise PFIC questions of their own.
In the other direction, 401(k) and IRA withdrawals land in HMRC's net once you are UK-resident, and Roth treatment needs a treaty position, not an assumption.
- Treaty claims for pension growth, and contributions where the claimant is not a US citizen
- Lump-sum planning before anything is drawn
- US treatment of SIPPs, workplace schemes and transfers
- UK treatment of 401(k), IRA and Roth withdrawals
Timing is most of the tax
The same withdrawal can cost wildly different amounts depending on residence, timing and order of operations. We plan drawdowns before they happen — the year after is too late to fix.
Transfers and consolidation, done carefully
Consolidating scattered pots feels tidy, but across a border it is a minefield: a UK-to-UK transfer is usually fine, a US 401(k) rollover to an IRA is routine — while moving money across the Atlantic in either direction can trigger tax on the whole pot.
We review every proposed transfer against both codes and the treaty before anything moves, and coordinate with your IFA or US adviser so the investment decision and the tax decision are made together.
- Transfer feasibility reviewed under both systems
- Rollovers and consolidations sequenced safely
- Coordination with your existing financial advisers
What the fixed fee includes
- Scheme-by-scheme treaty analysis
- Contribution treatment on both returns
- Lump-sum planning before withdrawal
- Drawdown order and timing modelling
- Roth and IRA treaty positions for UK residents
- FBAR / 8938 treatment of each scheme
- Withholding certificates to stop double deduction
- Transfer analysis where consolidation tempts
How the engagement runs
Often handled together
Questions we get about this
Frequently yes. Many foreign pensions are reportable even where the income inside them is not currently taxed.
The reporting question and the taxation question are separate, and people often assume treaty protection covers both.
A transfer that is entirely neutral in the UK can be a taxable event to the IRS depending on the schemes involved.
Overseas transfers in particular are worth checking before initiating rather than after.
Usually, but the relief may not follow you. Contributions that reduce UK tax do not automatically reduce US tax, and vice versa.
The treaty's contribution relief sits in Article 18(2), and the saving clause carve-out for it reaches only non-citizens - so it does not help a US passport holder against the IRS. Where it is available, it still has to be claimed.
Generally not. The treaty does real work here, and growth inside a recognised scheme is usually not taxed by the US as it accrues.
That is not something to take for granted with foreign retirement accounts in general - it is specific to how the treaty handles pensions.
Not reliably. That relief is a feature of UK law rather than the treaty, and the US does not simply follow it.
Taking a lump sum while US-resident without modelling it first is one of the more expensive unforced errors in this area.
Employer and personal contributions are looked at differently, and relief on the US side does not automatically mirror the UK treatment.
Getting this wrong quietly builds a mismatch that only surfaces years later.
The same question runs in reverse: HMRC has its own view of contributions, growth and withdrawals, and it is not identical to the US one.
Timing withdrawals relative to a change of residence can change the outcome substantially.
Related pages
- Service
Property & capital gains
Cross-border property and capital gains: selling a home, rental income, currency gains and the 60-day UK reporting deadline, handled on both returns.
- Pillar guide
Accountants for US and UK
How to choose accountants for US and UK tax: what each credential permits, how to verify it, what drives the fee, and when you do not need a specialist.
- Pillar guide
Tax specialists for US and UK
What US and UK tax specialists handle that a general accountant does not: residence tests, treaty relief, FBAR, PFICs, pensions, property and catch-up filings.
- Who we help
Retirees & pensioners
Retiring across the Atlantic: pensions drawn cross-border, Social Security, state pension and lump sums under the treaty.
- Who we help
Planning a move
Moving between the US and UK: pre-move planning, split-year treatment, and the decisions that are far cheaper made before departure than unwound afterwards.
- Service
Trusts & estates
Cross-border trusts, gifts and inheritance: US-UK estate planning, foreign trust reporting and the forms that catch families out.
Further reading
- UK pensions under US rules: where the treaty helps and where it does not
A UK pension is usually fine to hold. The tax-free lump sum is where assumptions get expensive.
- Treaty Article 17: how the US and UK tax your pension income
Periodic pensions, lump sums and social security each follow a different rule in Article 17 - and the saving clause rewrites two of them for US citizens.
- The totalization agreement: which country gets your social security
Income tax treaties do nothing for social security. A separate agreement handles it - and it decides whether you pay National Insurance or US payroll taxes.
Last reviewed · Figures stated for tax year 2025/26 UK · 2025 US. Thresholds and rates change annually — check figures against the current tax year before relying on them.
Thinking about drawing on a pension?
Model it before you take it. A lump sum that is tax-free on one side can be fully taxable on the other.