Is Australian Super taxed in the UK

[Marisawright 9,806]

1 hour ago, Sleeples in Australia said:

Hi.  New to the forum so be patient please.  Was there a definitive answer to Winter1 question back in 2013  "Is Australian Super taxed in the UK?".  I am looking at returning this year and am worried thaT i will be double taxed (15% on contributions in Australia, then taxed on Australian pension income in the UK).

Any help appreciated.

Your pension is tax free in Australia (you paid 15% tax when it was in superannuation mode, it’s tax free once you start taking it as a pension). 

You’ll have to declare it on your UK tax return and it will be taxed at whatever the rate for foreign pensions is at the time.

[BillW 11]

Hello,

Anybody had any interesting experiences or revelations since the last post was made ?

This is interesting  https://www.gov.uk/government/publications/pension-tax-for-overseas-pensions/pension-tax-for-overseas-pensions#chapter-2---taxation-of-payments-from-foreign-pension-schemes-or-annuities

Relevant section is approx half way down the page titled  "Changes to taxation of pension payments"

Am currently wading through it attempting to reduce it into everyday vernacular English.

Bill

 

[The Pom Queen 5,787]

@Andrew from Vista Financial can hopefully answer your questions he is our super and pension guru for both Australia and UK along with a great financial advisor 

[The Pom Queen 5,787]

On 14/10/2019 at 20:02, BillW said:

Hello,

Anybody had any interesting experiences or revelations since the last post was made ?

This is interesting  https://www.gov.uk/government/publications/pension-tax-for-overseas-pensions/pension-tax-for-overseas-pensions#chapter-2---taxation-of-payments-from-foreign-pension-schemes-or-annuities

Relevant section is approx half way down the page titled  "Changes to taxation of pension payments"

Am currently wading through it attempting to reduce it into everyday vernacular English.

Bill

 

The original post was made in 2013 I would think any changes wouldn’t be in our favour 

[Ken 1,494]

On 31/10/2019 at 04:58, The Pom Queen said:

The original post was made in 2013 I would think any changes wouldn’t be in our favour 

One change does appear to be in the taxpayer's favour. Provided I'm reading it correctly 25% of a lump sum payment can be taken tax free (same as with a UK pension fund). That wasn't originally the case. An Australian Superannuation fund (other than an SMSF) appears to tick all the boxes under PTM112200.

[4ever15 0]

On 11/11/2019 at 07:54, Ken said:

One change does appear to be in the taxpayer's favour. Provided I'm reading it correctly 25% of a lump sum payment can be taken tax free (same as with a UK pension fund). That wasn't originally the case. An Australian Superannuation fund (other than an SMSF) appears to tick all the boxes under PTM112200.

Hello 

any updates on this ?  I’ve got an untouched Australia accumulated superannuation fund and tho I was thinking of setting up a pension it’s a one off choice wondering if it is better to take a lump sum & leave the rest but no clue what the implications are.

i didn’t think  you could  take 25% tax free as uk doesn’t approve of Australian funds. Which on the surface seems crazy as uk funds are hardly a gold standard. Thanks 

[Marisawright 9,806]

7 hours ago, 4ever15 said:

 I’ve got an untouched Australia accumulated superannuation fund and tho I was thinking of setting up a pension it’s a one off choice wondering if it is better to take a lump sum & leave the rest but no clue what the implications are.

i didn’t think  you could  take 25% tax free as uk doesn’t approve of Australian funds. Which on the surface seems crazy as uk funds are hardly a gold standard. Thanks 

When you say, "setting up a pension is a one off choice", what do you mean?

If you're doing what most Australians do, which is to convert your super to an income stream, then it's not a one off choice.  You can choose to vary the monthly payments whenever you like (though there's a minimum amount you must take every year).   You can also commute the pension to a lump sum at any time.

If you're thinking of setting up a pension that will pay you a guaranteed monthly amount, that's not called a pension in Australia, it's called an annuity.  You can buy one for x number of years, or buy one that will go on paying until you die.  My brother-in-law went that route and bitterly regretted it when he got cancer in his late sixties.  If he'd had an income stream instead of an annuity, he could have chosen to take a lump sum there and then and enjoy the time he had left.  As it was, you can't get a lump sum from an annuity - and of course, the payments stopped when he died, so his widow got nothing.  If he'd had an income stream, she would've inherited the money.

The downside of an income stream pension is that it only lasts as long as there's money in the fund - but it does give you a lot more flexibility.

Edited December 10, 2019 by Marisawright

[4ever15 0]

Thanks Marisa

 tho you can choose when and how much you take out subject to a minimum  I can’t seem to set up an income stream and leave money invested to top up the stream. As it runs Down. .  My plan. Was to take a chunk now as a stream and leave some invested in Super then later top up the income stream. That’s doesn’t seem to be allowed. In the uk have to  pay tax. I may move to Australia who knows depends a bit on how things work out in uk.  So it’s crazy to take most done the fund when I’m in the uk. 
Definitely wouldn’t take annuity agree. Not a good idea. Thanks anyway. 

[Marisawright 9,806]

3 hours ago, 4ever15 said:

Thanks Marisa

 tho you can choose when and how much you take out subject to a minimum  I can’t seem to set up an income stream and leave money invested to top up the stream. As it runs Down. .  My plan. Was to take a chunk now as a stream and leave some invested in Super then later top up the income stream. That’s doesn’t seem to be allowed. 

No, because it’s not necessary. You move the whole lot to an income stream. Then the money in the income stream fund continues to be invested and earn interest exactly the way it did in your super fund. So there would be no benefit in leaving any money in your super fund. 

Edited December 14, 2019 by Marisawright

[4ever15 0]

Thanks and Yes from the perspective of an Australian  living in AUS ,  def. no  advantage it’s  tax free.
I am not living there now (tho may in the future as uk becomes ever more of a basket case).  So uk wise  i would be   paying 40% tax -  it’s better for me to just take out what I need a lump sum and leave the rest.  I think I can do that but EVEN that is not so easy when you are in Europe. I’m on the wrong forum just  found the post appreciation for thoughts. Im

super complicated 

[Marisawright 9,806]

1 hour ago, 4ever15 said:

So uk wise  i would be   paying 40% tax -  it’s better for me to just take out what I need a lump sum and leave the rest.  

The lump sum will be taxed at 40% (or even more, if it pushes you up into a higher tax bracket that year), so how will that help?  

You need to consider what other sources of income you'll have in your retirement. You won't be paying 40% tax on the pension if you don't have a lot of other income.

Did you understand my explanation of how the "income stream" pension works?   The income stream not a frozen sum of money that just sits there and gets depleted.  The money is still invested, the way it was in your super fund, so it's still growing.   That's why there's no need to leave any of your money in the old super fund.

Edited December 15, 2019 by Marisawright