In reply to as646:
I am a 100% British citizen who has retired and been repatriated to the UK. However, I also have a Green Card (Permanent Residence card in the US), which means that I am 100% tax-liable in the US on all my world-wide income each year, regardless of where and how earned. In such a situation, one has to file both UK and US tax returns, declaring all income on both. (This process is cumbersome, and not helped by the fact that the US and UK tax years are not in sync.) As long as you do that, the authorities in the two countries decide how you should pay tax, or whether you come under the "tax treaty" between the two countries, or not. In principle, you should never be double-taxed.
The US Tax Return is mind-bogglingly complicated - mine is typically about 48 pages of multiplying this line by that line in another form, and applying various factors: you really have to get a US tax advisor in such a situation. The UK form is way simpler, but there still is some impenetratable jargon for those working part of the time overseas, such as is your foreign income "remittable" or "unremittable" or "remittable and arising" or "remittable and unarising"? (I kid you not). There are various documents that you can download (typically about 24-pages per piece of jargon) to explain these, but the chances are you will still be none the wiser after you have perused these. Or even if you are wiser, it will still not be exactly clear how the rules apply to *your* case. So you will have to contact the HMRC for help.
That reminds me: I also get taxed by the Netherlands. In typical Dutch fashion, they tax you upfront at 40%, so you have to understand their system in order to (try to) claim back the tax that you were never really owed them in the first place!
Another thing re reporting to the US authorities: in addition to the US tax return, there is also another form (Form TD F 90-22.1: "Report of Foreign Bank and Financial Accounts) that one is also meant to file to a completely different government department (but, of course, they are connected). It is a criminal offence in the US not to do so. Ten years ago that authority wanted to know where you had accounts; five years ago they also needed to know the balance in each account; and last year they wanted to know the maximum amount of money in each account during the year, and the balance at the end of the year.
C'est la vie, or long live democracy!