Tax Accountant warns that HMRC’s Nudge Letters question foreign tax credits on US pensions, risking double taxation for Americans in the UK, requiring professional advice.
Birmingham, West Midlands, United Kingdom, 24th Jan 2025 – Tax Accountant, a leading advisory firm specializing in cross-border taxation, today raised concerns about the recent wave of “Nudge Letters” issued by HM Revenue & Customs (HMRC) to US citizens residing in the United Kingdom. These letters—sent as part of HMRC’s ongoing compliance efforts—question the foreign tax credits some taxpayers claim for US taxes paid on various pension distributions.
The firm warns that many individuals could face unexpected tax bills or double taxation if their claims for relief are denied. Under the UK-US Double Taxation Treaty, US citizens living in the UK may be entitled to offset UK tax on foreign income with credit for taxes already paid in the United States. However, confusion surrounding the classification and tax treatment of different US pension types seems to be driving the recent scrutiny.
While some pensions (e.g., qualifying Roth IRA distributions) may not incur a US tax charge, HMRC may still assess UK tax on those amounts, leading to complications in claiming foreign tax credits or relief.
“As HMRC ramps up its compliance campaign through ‘Nudge Letters,’ US citizens in the UK must revisit their ‘UK tax on Foreign Income’ calculations to ensure they’re applying for the correct foreign tax credits,” says Mr Aatif Malik, Managing Director at Tax Accountant. “We are witnessing a growing trend of individuals being incorrectly denied the opportunity to offset UK tax with the US tax already paid on their pensions. Taxpayers must seek professional advice to avoid double taxation and respond appropriately to these ‘Nudge Letters.’”
For further information or to schedule an interview with Mr. Malik, please contact:
Tax Accountant
Phone: 0800 135 7323
Email: info@taxaccountant.co.uk
About Tax Accountant
Tax Accountant is a premier tax advisory firm specializing in cross-border taxation and compliance. With decades of combined experience, our experts navigate complex international tax treaties to provide tailored solutions that help individuals and businesses meet their obligations across multiple jurisdictions.
Organization: Tax Accountant
Contact Person: Aatif Malik
Website: https://www.taxaccountant.co.uk/
Email: Send Email
Contact Number: +448001357323
Address: 3 Brindley Place
City: Birmingham
State: West Midlands
Country: United Kingdom
Release Id: 24012522911
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