Tax rules for UK benficiary of US IRA and annuity

kiwibrit

Sadly, it looks as though I am soon to be the beneficiary of a US IRA passed on to me by a relative, who is a US resident, and now in hospice care. UBS, who hold the IRA have advised me that, under US government treaty arrangements with the UK, they are obliged to withhold 30% of the sum involved, pending any settlement of UK tax due. The same rules apply to an annuity, of which I am also the beneficiary.

The tax advisor whom I used to use thinks I am not liable to any tax - but seems unfamiliar with the situation. Could someone advise me what tax I might be liable for, and what documentation I would need to claim back any surplus?

xylophone

http://www.hmrc.gov.uk/cto/customerguide/page20.htm#15
http://search2.hmrc.gov.uk/kbroker/hmrc/contactus/search.ladv?raction=view&fl0=__dsid%3A&sm=0&ha=34&as=1&sf=&sp_scope=hmrc&cs=ISO-8859-1&tx0=49612
Contact HMRC and ask about your tax position - you'll almost certainly have to register for self assessment?

Cook_County

The answers will depend on whether or not you are a US person, whether or not you are domiciled within the UK and your interpretation of the US/UK tax treaty.

kiwibrit

To clarify a bit further, I am a British citizen resident in the UK. There is no inheritance tax tin the state of Louisiana. But in any case, although though I am the beneficiary for the quite large sums involved, they are not included in the estate, nor do they form part of the will. The nearest equivalent I can see, in UK terms, is being the beneficiary of life insurance.

xylophone

If I were in your position, I'd want the peace of mind of written confirmation from HMRC that no tax was due or payable, particularly on the annuity.http://www.hmrc.gov.uk/worksheets/sa150.pdf
TRG4 might be of interest.

Cook_County

HMRC do not give clearance rulings - given that the numbers are large I'd seek a legal opinion on both the current position and whether this can improved for example by negotiating lump sums.

kiwibrit

Thanks all. A good accountant will see me once the madness of Jan 31st is over. If need be, I'll speak to a lawyer as well. I'll post an update here as a reference for anyone else who has a similar problem in the future.