Self-Invested Personal Pension
Rose-ann De Villa, an IRS Enrolled Agent and CPA with 14 years of expat tax experience, specializes in US tax preparation, tax planning, and tax advice for US citizens and Green Card holders living and working in the UK.
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Table of Contents
What is a Self-Invested Personal Pension? A US expat’s guide to the UK pension wrapper
A SIPP (Self-Invested Personal Pension) is a type of UK retirement account that gives you a lot more control over how your pension money is invested. Unlike traditional UK pensions where the provider chooses the investments, with a Self-Invested Personal Pension, you’re the one in charge.
Why do Self-Invested Personal Pensions matter for US expats?
Thanks to the US–UK tax treaty, the US generally agrees to treat UK pensions like retirement accounts, meaning you aren’t taxed on the growth until you actually withdraw funds. So, your Self-Invested Personal Pension investments can grow tax-deferred in both countries, at least in theory.
For the UK tax year 25/26 you can contribute up to £60,000 to your Self-Invested Personal Pension tax-free, so it’s a big advantage if you have income you can spare.
That said, because your Self-Invested Personal Pension is a foreign financial account, you’ll probably have to report it on your FBAR (if the total value of your non-US accounts hits US$10,000) and on Form 8938, depending on your overall foreign asset balance.
Also, the IRS considers a Self-Invested Personal Pension to be a type of foreign trust. That means you’ll have to file Forms 3520 and 3520-A, which are mostly informational but still very important to file on time to avoid penalties.
Should US expats open a Self-Invested Personal Pension?
A few things to keep in mind:
- You’ll need to stay on top of IRS forms, like FBARs, Form 8938, and likely Forms 3520/3520-A.
- Withdrawals in retirement will be taxed as ordinary income by the IRS.
- Get professional advice. Self-Invested Personal Pensions can work well for US citizens in the UK, but go in with full knowledge of your obligations and make the most of it.
Many US expats end up using a dual approach, contributing to a Self-Invested Personal Pension for the UK tax benefits while also maintaining a Roth IRA or traditional IRA in the US for cleaner US-side tax treatment.
It all depends on your income level, how long you’re staying abroad, and whether you plan to retire in the UK or move back.
If you’re not sure how your specific Self-Invested Personal Pension fits into the bigger tax picture, it’s worth talking to a cross-border tax advisor who understands both systems. The rules aren’t impossible to manage, but you definitely don’t want to miss something that could lead to a penalty down the road.
Can US expats open or transfer into a Self-Invested Personal Pension? Eligibility and process
Yes, US expats can usually open or keep a SIPP, but it depends on a few things, mostly where you’re living and which provider you’re working with.
Most UK-based providers are fine letting you maintain an existing SIPP while you live abroad. Some even let you open a new one, but they might ask for proof of past UK residency or UK-sourced income.
If you’ve got other pensions in the UK (like from a job you used to have), it’s often possible to transfer them into a SIPP even if you’re no longer in the country. Providers will walk you through it; it’s mostly paperwork and identity checks. You won’t need to fly back to the UK or anything.
Just a heads-up: while the UK sees SIPPs as tax-friendly retirement accounts, the US doesn’t always treat them the same way. That’s where things get a bit trickier on the IRS side, especially when it comes to reporting.
Should you open a SIPP?
Our tax specialists can provide personalized advice.
Reporting a Self-Invested Personal Pension to the IRS: FBAR, FATCA, PFICs, and trust filings
This is where most US expats with a Self-Invested Personal Pension start running into confusion. From a US tax perspective, Self-Invested Personal Pensions often come with a decent-sized reporting checklist, even if you’re not withdrawing anything yet.
FBAR (FinCEN Form 114)
If the value of your Self-Invested Personal Pension, combined with other foreign accounts, goes over US$10,000 at any point in the year, you’ll need to file an FBAR. That applies even if the account hasn’t earned much or you never took anything out.
FATCA (Form 8938)
This is similar to the FBAR but with different thresholds. You file Form 8938 with your tax return if your total foreign financial assets hit a certain level. For expats filing solo, it’s US$200,000 at the end of the year or US$300,000 at any time. If you’re filing jointly, those limits are higher.
Foreign Trust Reporting (Forms 3520 and 3520-A)
The IRS often treats Self-Invested Personal Pensions as foreign trusts. That means you will need to file Form 3520 (your side) and Form 3520-A (the “trust’s” side). Even though the UK doesn’t call it a trust, the IRS does. There is some relief under IRS Rev. Proc. 2020-17 depending on your interpretation, but it doesn’t apply to every Self-Invested Personal Pension. When in doubt, it’s safest to report.
PFICs (Passive Foreign Investment Companies)
If your Self-Invested Personal Pension holds foreign mutual funds or certain types of investment trusts, the IRS might classify them as PFICs. That usually triggers Form 8621, which is one of the more complex tax forms out there. Thankfully, most Self-Invested Personal Pensions qualify for an exemption if they’re treated as pensions under the US-UK tax treaty. That’s something a tax pro familiar with cross-border rules can help confirm for you. The far majority of Self-Invested Personal Pension account holders do not need to report investment holdings on Form 8621 (PFIC).
FAQ'S
Can I contribute to a Self-Invested Personal Pension while living in the US?
Yes, but only if you have relevant UK earnings. Even if you’re a US tax resident, UK rules let you contribute to a SIPP if you have UK employment or self-employment income.
Do SIPP withdrawals count as taxable income in the US?
Does a SIPP affect my US Social Security benefits?
Will my SIPP be taxed twice in the US and UK when I withdraw it?
Can I roll my SIPP into a US IRA?
