STOP Taking US Pension Lump Sums PCLS in UK (US Tax Bombshell) 💥

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💥 Did you know? Over 250,000 Americans now live in the UK (source: ONS), and many are withdrawing from their US 401(k) retirement accounts — only to discover both the IRS and HMRC want a cut.
Here’s what most US/UK tax advisers miss:
A 401(k) pension “arises” in the US, so Article 17(2) of the US–UK Tax Treaty says it should be taxed only in the US. However, the US treats that rule as anti-avoidance and uses its domestic law to tax its citizens on worldwide income anyway.
Then comes the Saving Clause (Article 1(4)) — the IRS’s secret weapon. It lets the US ignore the treaty for its citizens and tax you as if the treaty didn’t exist. Meanwhile, HMRC also taxes you because you’re UK resident. The result? Tax in both countries. Only foreign tax credit relief prevents true double taxation.
👎 The external problem: Confusing laws, conflicting treaty clauses, and painful IRS/HMRC penalties.
😰 The internal problem: Clients feel overwhelmed and betrayed — they saved for years and still get taxed twice.
⚖️ The philosophical problem: Everyone deserves a fair, clear system — not one stacked against expats.
At Optimise Accountants, we guide US–UK families and professionals through these grey areas every day. Simon Misiewicz FCCA ATT EA MBA — a rare triple-qualified tax expert in both countries — helps clients build a clear, compliant plan to minimise tax drag on their retirement funds.
✅ Our 3-step plan:
1️⃣ Book your cross-border tax consultation.
2️⃣ Get a bespoke tax strategy and foreign tax credit calculation.
3️⃣ Stay compliant with both IRS and HMRC and protect your wealth.
🎯 The stakes:
Ignore this and you risk being taxed at up to 45% in the UK plus up to 37% in the US — potentially losing half your retirement fund. Get it right and you’ll secure treaty relief, claim credits, and sleep soundly knowing you won’t be penalised.
🚀 Act now:
👉 Direct CTA: Book a US–UK Tax Consultation at www.optimiseaccountants.co.uk/book-call
👉 Transitional CTA: Register for our next webinar “US 401(k) and UK Tax — Avoid Double Tax” on 10 December 2025 at 8 PM UK time.

3. Legislation & Official References
• UK/US Double Taxation Agreement (Article 17 & Article 1)
• HMRC International Manual INTM163160 (“Pensions and Lump Sums”)
• Finance Act 2024 (UK)
• Income Tax (Trading and Other Income) Act 2005 (UK)
• IRS Publication 575 (Pension and Annuity Income)
• Internal Revenue Code §61 and §402
• IRS Form 1116 (Foreign Tax Credit)

4. Hashtags
#UKTax #USTax #CrossBorderTax #HMRC #IRS #401kTax