Dual UK/USA citizen, reside and work in US, UK rental income - tax efficient way to save rental income?

[eastsideeric]

I have a flat (Apartment) in the UK that I get rental income from. I will be living and working in the US permanentaly from this spring.
Is there a 'right' way to save the UK income in a tax efficient manner?
I was considering some kind of retirement account. But as far as I can tell, if I save into a US retirement account, the UK will tax the income at the normal rate. Similar if I switched it and saved into a UK retirement account, the UK would, I think, tax me less since it's a retirement account but the IRS won't recognise the UK retirement plan and will tax me as normal income.
Is there a best approach here? What is a tax effective way to save my UK rental income?

I've come across the idea of putting the UK flat into an LLC and having it taxed at 20%, which is lower than income tax. But I'm averse to this.

 

[tyler112]

@eastsideeric Assuming not UK tax resident.

Income and gains from non-UK sources (e.g., US-domiciled ETF) are not taxable by, or reportable to, HMRC. This is regardless of if it's in an IRA or not.

Income and gains ("accrued benefits") in a pre-existing UK pension continue to be tax-deferred by IRS (Art 18 par 2(b)).

As a non-resident of UK, you generally cannot make additional contributions to UK pensions. However, your UK-source rental income might qualify you as a UK-relevant individual to contribute to a pre-existing SIPP. Or if you converted to a QROPS, you could contribute to that.

However, if you're looking for tax-deductible retirement contributions, total contributions per year are still limited by your country of residence. It's generally more advantageous to contribute to pensions in your current country of residence.

So just contribute to your Roth IRA (or backdoor Roth if appropriate).

As for taxation of the UK-situs rental income, report to both sides (deducting expenses and depreciation as allowed according to each country's rules) and claim FTC/1116 with IRS. An LLC, passthrough for both countries, would not benefit you in taxes, only legal liability. A non-passthrough corporate structure might present complexities with both CFC/5471 and deemed non-UK resident company, as central management and control would be in the US.

 

[eastsideeric]

@tyler112

As a non-resident of UK, you generally cannot make additional contributions to UK pensions. However, your UK-source rental income might qualify you as a UK-relevant individual to contribute to a pre-existing SIPP. Or if you converted to a QROPS, you could contribute to that.

This is interesting but conflicts with:

So just contribute to your Roth IRA (or backdoor Roth if appropriate).

I have a SIPP but have not contributed to it. Should I make contributions while I'm still resident here in the UK?

Especially curious about:

might qualify you as a UK-relevant individual to contribute to a pre-existing SIPP.

How could I find out or go that route?