US 401(k) & IRA Tax in the UK

An exhaustive legal and treaty analysis of HMRC UK Income Tax rules on US 401(k), Traditional IRA, and Roth IRA distributions under Article 17 of the US-UK Tax Treaty.

Treaty Structure & HMRC Rules (Article 17)

Treaty Protection for US Pension Plans

Taxation of US pension plans received by UK tax residents is governed by Article 17 of the 2001 US-UK Income Tax Treaty.

Under Article 17(1)(a), periodic payments from Traditional 401(k) and Traditional IRAs are taxable in the country of residence (the UK). However, under Article 17(1)(b), distributions from a Roth IRA that are tax-free in the US are 100% tax-free in the UK.

Statutory Key Rules:

Treaty Clause	US-UK DTAA Article 17
Traditional 401(k)	Taxable in UK as Pension
Roth IRA Status	100% UK Tax-Free (Art 17)
IRS 10% Penalty	Applies if Under Age 59½
HMRC Foreign Pension	ITEPA 2003 Part 9

US Pension UK Taxability Evaluator

US Pension Tax Evaluator

Select your US pension type to evaluate UK taxability under the US-UK Tax Treaty Article 17.

Frequently Asked Questions (FAQ)

No. Under Article 17(1)(b) of the 2001 US-UK Income Tax Treaty, distributions from a Roth IRA or Roth 401(k) that are exempt from US federal tax remain completely exempt from UK Income Tax for UK tax residents.

Under Article 17(1)(a) of the US-UK Tax Treaty, periodic distributions from a Traditional 401(k) or Traditional IRA to a UK resident are taxable in the UK as foreign pension income, with 10% foreign pension deduction where applicable.

No. The IRS does not recognize UK SIPPs as qualified US pension plans. Direct transfers trigger a taxable distribution and 10% early withdrawal penalty in the US if under age 59½.