How the US taxes your UK SIPP
Last checked 25 June 2026The treaty generally lets a UK SIPP grow tax-deferred for US purposes, but the protection has edges. Contributions, growth and drawdown are each treated differently, and the kind protection rests on the treaty surviving the saving clause.
A SIPP is the rare UK wrapper the US treats with some respect, because the US-UK treaty carves pensions out of the saving clause. That carve-out is what lets the fund grow without the US taxing the gains year by year, the way it would in an ordinary foreign account or an ISA.
Growth
This is the strong part. Under the treaty, investment growth inside a UK pension is generally not taxed by the US until it is drawn, mirroring how the UK treats it. That deferral is the whole reason a SIPP can make sense for an American when an ISA does not.
Contributions
More nuanced. Employer contributions to a UK pension are often treated kindly, while the US treatment of your own contributions and any tax relief on them is less settled and depends on the structure. This is the area where a cross-border adviser earns their fee, because the answer turns on details of your specific scheme.
Drawdown
When you take the pension, the US taxes the income, with credit for UK tax paid so the same money is not taxed twice. The UK 25% tax-free lump sum is the classic trap: tax-free in the UK, it is not clearly tax-free to the US, and many treat it as US-taxable to be safe. Plan the timing of any lump sum with US tax in mind.
The protection depends on the treaty
All of this rests on the pension qualifying for treaty treatment. Where it does not, the holdings can fall back into ordinary, and PFIC, treatment. Read the treaty and saving clause for what the carve-out covers, and the SIPP eligibility page for who opens one.
Accounts this affects
SIPPs
A self-invested personal pension can work for a US citizen, but most providers restrict the holdings. Which SIPPs accept you, and how the treaty protects the wrapper.
TaxUS-UK tax treaty
The US-UK treaty stops most double taxation, but the saving clause lets the US tax its citizens almost as if the treaty were not there. What survives the clause.