Published 19 June 2026 · Updated 7 November 2026 · 3 min read
A self-invested personal pension is the most flexible UK pension wrapper, and for a US person it is also the one that needs the most care, because you choose what goes inside it.
The SIPP under UK rules
Contributions attract UK tax relief at your marginal rate within the annual allowance (£60,000 or 100% of UK relevant earnings, whichever is lower, tapered for high earners). Growth is UK tax-free. From the normal minimum pension age (55, rising to 57 in April 2028) up to 25% can be taken as a tax-free lump sum within the lump sum allowance, with the rest taxed as income when drawn.
Two US treatments
Without the treaty position
US domestic law does not defer a foreign pension. Employer contributions can be current compensation, growth can be taxable year by year under the section 402(b) rules, and the funds inside are PFICs with Form 8621 reporting. This is the default if the return simply ignores the treaty.
With the treaty position
Articles 17 and 18 of the US–UK treaty let a US person treat an HMRC-registered SIPP as a pension scheme: contributions receive favourable treatment within US-style limits, growth is deferred, and benefits are taxed under the pension article when paid. The position is claimed on the return and, where required, disclosed on Form 8833 (US$1,000 penalty if omitted). The claim should be consistent every year; switching treatments mid-stream creates problems.
Contributions
Relief for contributions is limited by reference to US qualified-plan limits and to UK-source earnings. For most employees the UK annual allowance is the binding constraint; for high earners and large employer contributions the US limit can bite.
Reporting
- FBAR: include the SIPP at its highest value in the year.
- Form 8938: include the SIPP in the value test when the abroad thresholds are met.
- Form 8833: where the treaty position requires disclosure.
- Form 8621: generally not required for funds inside a treaty-protected SIPP; required for UK funds held outside one.
- Form 3520: Rev. Proc. 2020-17 exempts most tax-favoured foreign retirement trusts from trust reporting; we confirm the scheme meets the conditions.
The 25% lump sum
Tax-free in the UK. In the US, the treatment depends on the treaty's lump sum rules, your residence at payment and how earlier contributions were treated. Take advice before the payment date, not after.
Fund choice
Inside a treaty-protected SIPP the PFIC rules are largely neutralised, but many US investors prefer US-listed ETFs within the SIPP to keep the position simple if circumstances change. SIPP providers vary in what they allow US persons to hold; some will not open a SIPP for a US person at all.
Moving back to the US
The SIPP remains reportable from the US and distributions are then taxed under the treaty rules for a US resident, with UK tax generally relieved. Transfers to an IRA or 401(k) are not possible; any payment out is a pension distribution.
Frequently asked questions
Is my SIPP covered by the treaty?
An HMRC-registered SIPP is generally a pension scheme for treaty purposes. The protection follows from claiming and disclosing the position correctly each year, which is where returns go wrong.
I have a workplace pension and a SIPP. Anything different?
Each is analysed and reported separately, and both count towards FBAR and Form 8938 values.
Written by the US UK Expat Tax advisory team. Last reviewed 7 November 2026 · Figures relate to the 2025 / 2025-26 tax year unless stated.
Primary sources checked
General information, not personal tax advice. Rules and thresholds change; we confirm the position for your facts before any work.