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Where Taxpayers and Advisers Meet

Inherited IRA distribution and HMRC reporting

JR717
Posts: 2
Joined: Fri Dec 13, 2019 7:03 pm

Inherited IRA distribution and HMRC reporting

Postby JR717 » Fri Dec 13, 2019 7:10 pm

I have inherited an IRA from a parent. It is now an inherited IRA in my name. I will be taking yearly RMD's. When taking last year's RMD 30% was withheld for US tax. I reported the RMD on last year's US tax return. I am dual US UK citizen living in UK. I have not been filing a self assessment form for years since all my tax is paid through PAYE. I took the first RMD during the 18-19 UK tax year. Do I notify HMRC about the RMD on a self assessment form?

DavidTreitel
Posts: 229
Joined: Thu Aug 16, 2012 4:31 pm

Re: Inherited IRA distribution and HMRC reporting

Postby DavidTreitel » Sat Dec 14, 2019 11:56 am

The RMD is considered UK taxable income. The 30% withholding is simply that. The UK has the primary right to charge tax. The United States gives credit for UK tax paid under Article 24 of the US/UK tax treaty.

You will therefore want to make sure you have paid the UK tax for both 2018-19 and 2019-20 to HMRC no later than 31 December 2019. This is vital, because once you have filed the 2019 US return next year you can amend the 2018 US return to carry back excess foreign tax credit from the 2019 US return.

You will indeed need to file a self-assessment return with HMRC by 31 January 2020, but getting the tax paid to HMRC by the end of this month is the more urgent task.

JR717
Posts: 2
Joined: Fri Dec 13, 2019 7:03 pm

Re: Inherited IRA distribution and HMRC reporting

Postby JR717 » Sat Dec 14, 2019 6:05 pm

Thank you for your very helpful reply. Now I need to find out how to complete the self assessment form. I hope you might clarify one more thing. I had actually inherited 2 IRA funds. One is a traditional. The other is a Roth. 30% was withheld on both distributions. Do I treat the distributions differently when reporting to HMRC? Thank you again for your help.


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