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US-UK Tax

What happens to my UK pension if I move to the USA?

Answered by Jordan Onraet-Wells, Founder & Chartered Tax Adviser (CTA). Published 9 August 2026. Last reviewed 9 August 2026.

The short answer

You keep it. A SIPP or workplace pension stays a UK scheme, nothing is forced on you, and the UK-US treaty is broadly on your side: growth inside the scheme is protected from US tax until you draw it, regular withdrawals are taxable only in the US once you claim relief from HMRC, and the State Pension is taxable only in the US too, paid gross with its annual increases intact. Transferring the pot to a 401(k) or IRA is effectively impossible, since HMRC's recognised overseas scheme list contains no US schemes. The real planning points are the 25% tax-free lump sum, which the US may not respect, and UK inheritance tax, which follows a UK pension abroad from 6 April 2027.

  • Under Article 17(1) of the UK-US treaty, pension withdrawals paid to a US resident are taxable only in the US: you claim relief on Form US-Individual 2002 and HMRC issues an NT code so the provider pays gross.
  • Article 18 stops the US taxing growth inside the scheme until money is paid out, so the wrapper keeps working after you move.
  • The US treatment of the UK 25% tax-free lump sum is genuinely contested, so its timing against your US residency start date is a major pre-move decision.
  • A QROPS transfer to America does not exist in practice: HMRC's list contains no US schemes, and transferring to a non-QROPS overseas scheme triggers at least 40% UK tax.
  • The State Pension is taxable only in the US, is paid gross and still gets its annual increases in America; from 6 April 2027 unused UK pension funds count for UK inheritance tax even for non-residents.

Keeping and drawing the pension under the treaty

Becoming a US resident does not crystallise a tax charge or force a transfer; the friction is commercial, since some UK platforms restrict US-resident customers, so check your provider before you fly. Article 18 of the US-UK treaty defers US tax on growth inside a qualifying UK scheme until it is paid out. When you draw, Article 17(1) makes regular withdrawals taxable only in the US, but the relief is claimed, not automatic: until HMRC processes Form US-Individual 2002, certified through the IRS, your provider must operate PAYE, often on an emergency basis for a first withdrawal. Get the claim in before you start drawing so the NT code is in place and payments arrive gross. The State Pension is simpler still: taxable only in the US under Article 17(3), paid gross, and the USA is on GOV.UK's list of countries where the annual increase is paid, so it is not frozen.

The lump sum and the transfer question

On the UK side the 25% tax-free lump sum stays tax-free up to the £268,275 lump sum allowance for 2026/27. On the US side the position is genuinely unsettled: one treaty reading exempts it, another lets the US tax its residents on it via the saving clause, the IRS has issued no definitive guidance, and a treaty-exempt position is a disclosed Form 8833 position with real risk. Sequencing any lump sum against your US residency start date is therefore one of the biggest pre-move planning points. Transfers are the easy answer to rule out: HMRC's recognised overseas pension scheme list contains no US schemes, so a QROPS transfer to a 401(k) or IRA is not available, and a transfer to an overseas scheme not on the list is an unauthorised payment attracting at least 40% UK tax. The pension stays in the UK and is drawn under the treaty.

The 2027 inheritance tax change and the pre-move checklist

From 6 April 2027 unused funds in UK registered pensions count in your estate for UK inheritance tax, and HMRC has confirmed that schemes established in the UK stay in scope even when you are no longer a long-term UK resident, so moving to America does not take a SIPP out of the net. The spouse exemption is capped at £325,000 where the surviving spouse is not a long-term UK resident, which bites hard on couples in the US; see UK pensions and inheritance tax abroad. Before you fly, also review voluntary National Insurance: Class 2 for periods abroad was abolished from 6 April 2026, but Class 3 at £956.80 a year typically buys around £358 a year of extra State Pension for life, uprated in the USA. Horizon handles the UK side on fixed fees agreed upfront, with non-resident and expat returns from £550; book a free clarity call at /book before you set a moving date.

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Sources and further reading

This is general information for the 2026/27 UK tax year, not personal tax advice; speak to a Chartered Tax Adviser about your own position.

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