goingbacksoon Posted September 14, 2014 Share Posted September 14, 2014 I'm 50 years old and going back to the UK to live permanently. I have superannuation and understand that I can't touch it until it matures when I'm 59. I've been told to wait until I'm 60 so it will be tax free. Not sure if that will still be the case when I am a UK resident - can anyone clarify? What happens when it does mature? Do I cash it in and take the lump sum or use it to generate an income from Oz? I also have a portfolio of shares. I understand that it will be better to sell them before I go and bank the money. My question is WHEN is the best time to do this? I will finish work in January 2015. I hope to sell my house in December/January and also bank that money, so potentially there could be quite a lot of interest to be earned. I am employed in the Education system and I have the option of either going on unpaid leave and/or taking my long service leave. I was thinking of taking unpaid leave from January to April, Long Service Leave (at half pay) from April to September, and unpaid leave from September to December. I can either take the long service leave in fortnightly payments or in one or two lump sums (split across two tax years). Not sure what option to take. I hope to have a few months off and maybe do some contract/relief work in the UK. When do I cease being an Australian resident and become a UK resident for taxation purposes? Lastly, National Insurance - I worked for a few years before coming to Oz. I understand that the reciprocal agreement is no more, however am I able to claim credits for the period I was working in Australia up until 2002? If so, what evidence do I need to show them or is it as simple as giving them my TFN? I would really love some advice on this. It was all so simple when I came here many years ago with a backpack and a bit of cash!! Now it all seems rather complicated...! Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 14, 2014 Share Posted September 14, 2014 (edited) I have superannuation and understand that I can't touch it until it matures when I'm 59. I've been told to wait until I'm 60 so it will be tax free. Not sure if that will still be the case when I am a UK resident - can anyone clarify? Yes, being a UK resident makes no difference as far as I'm aware. I also have a portfolio of shares. I understand that it will be better to sell them before I go and bank the money. My question is WHEN is the best time to do this? I will finish work in January 2015. I hope to sell my house in December/January and also bank that money, so potentially there could be quite a lot of interest to be earned. The big issue is that once you become a non-resident, you have NO tax-free threshold - you're taxed at 32c in the dollar, on every single dollar. So you're right to be selling your shares before you go. I don't see any other timing issue, except for how the sharemarket is doing! Then arrange to transfer all that banked money just before you leave. For the same reason, I can't see any benefit in delaying payment of your long service leave payments: if you can get them paid before you leave Australia, you'll be taxed as an Australian resident and will get your tax-free threshold. You'll only be in Australia half the tax year, too. Whereas if you receive any of the payments once you leave Australia, they'll be taxed at 32.5c in the dollar. The issue of Australian residency is complicated but basically it's all about "intent". If you leave Australia intending not to come back, you're a non-resident immediately. You may be able to con them into thinking otherwise, but when you don't come back, I'd say they'll cotton on and backdate your tax status. You're resident in Britain once you've been there a day over six months, but you can apply to be recognised as "habitually resident" before that, if you need to claim benefits. Edited September 14, 2014 by Marisawright Quote Link to comment Share on other sites More sharing options...
rammygirl Posted September 14, 2014 Share Posted September 14, 2014 If you take your super when you are resident in the UK it will be taxed. Only tax free if you are in Oz. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 14, 2014 Share Posted September 14, 2014 If you take your super when you are resident in the UK it will be taxed. Only tax free if you are in Oz. What do you mean by "take"? Do you mean if you cash in your super and transfer the lump sum, or are you talking about drawing it down, or both? Quote Link to comment Share on other sites More sharing options...
goingbacksoon Posted September 14, 2014 Author Share Posted September 14, 2014 Thank you so much - that makes things so much clearer. I will need to change my LSL application at work tomorrow as I thought I was better off getting it in fortnightly instalments, seems that is not the case! I'm sure that one way or another I will be paying lots of tax before I leave Quote Link to comment Share on other sites More sharing options...
rammygirl Posted September 14, 2014 Share Posted September 14, 2014 What do you mean by "take"? Do you mean if you cash in your super and transfer the lump sum, or are you talking about drawing it down, or both? Either surely. You are taxed where you are resident. Once released from the fund it will be classed as income if you are in the UK, even if it never leaves Australia. Quote Link to comment Share on other sites More sharing options...
Chortlepuss Posted September 14, 2014 Share Posted September 14, 2014 My husband is 57 and will be 59 when we plan to leave Oz. He has a teachers pension fund that presumably he can withdraw lump sum aged 60? From what I'm reading, it sounds like he can take the fund tax free if he is resident here but would pay tax on it if he is resident in UK? So if he hangs on for another year until he is 60 he wouldn't have to pay the tax?? Quote Link to comment Share on other sites More sharing options...
Bridgeman Posted September 15, 2014 Share Posted September 15, 2014 My husband is 57 and will be 59 when we plan to leave Oz. He has a teachers pension fund that presumably he can withdraw lump sum aged 60? From what I'm reading, it sounds like he can take the fund tax free if he is resident here but would pay tax on it if he is resident in UK? So if he hangs on for another year until he is 60 he wouldn't have to pay the tax??[/quote If you are talking about a monthly payment from super, then all income in the UK is taxed. It would just be 'income' like any other and so subject to tax. He would however be entitled to a tax free allowance if a resident. I also understand that if you start to take your super payments in Oz, which would be tax free and then then return to the UK within 2 years of starting to take it you are required to repay the tax. Quote Link to comment Share on other sites More sharing options...
Chortlepuss Posted September 15, 2014 Share Posted September 15, 2014 My husband is 57 and will be 59 when we plan to leave Oz. He has a teachers pension fund that presumably he can withdraw lump sum aged 60? From what I'm reading, it sounds like he can take the fund tax free if he is resident here but would pay tax on it if he is resident in UK? So if he hangs on for another year until he is 60 he wouldn't have to pay the tax??[/quote If you are talking about a monthly payment from super, then all income in the UK is taxed. It would just be 'income' like any other and so subject to tax. He would however be entitled to a tax free allowance if a resident. I also understand that if you start to take your super payments in Oz, which would be tax free and then then return to the UK within 2 years of starting to take it you are required to repay the tax. but if he is still resident and takes it as a lump sum at 60 will it be paid tax free even if he comes to UK shortly after withdrawing it? Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 16, 2014 Share Posted September 16, 2014 Either surely. You are taxed where you are resident. Once released from the fund it will be classed as income if you are in the UK, even if it never leaves Australia. What I mean is this. I understood that if you move to the UK and transfer your savings from your Australian bank to your UK bank in a lump sum, that's a transfer of funds, not income, so it wouldn't be subject to tax. So if you withdrew your super (which is a form of savings) as a lump sum and transferred it to your UK bank account, it would be a transfer of funds not income. Obviously any interest earned by that money would be income. Is that incorrect? Quote Link to comment Share on other sites More sharing options...
rammygirl Posted September 16, 2014 Share Posted September 16, 2014 I think the super is different. The funds in a bank can be transferred tax free but withdrawing super is a different event. I think ink you would need to ask an accountant. Quote Link to comment Share on other sites More sharing options...
NickyNook Posted September 16, 2014 Share Posted September 16, 2014 I think the super is different. The funds in a bank can be transferred tax free but withdrawing super is a different event. I think ink you would need to ask an accountant. All withdrawals from super - whether taken a pension or as a lump sum - are tax free in Australia. If you take the super lump sum, put it in your Australian bank account along any other savings and then transfer the lot to the UK it will not be classed as income in the UK. It is your money that you have saved. The UK does not tax people's savings; it only taxes income. Quote Link to comment Share on other sites More sharing options...
rammygirl Posted September 16, 2014 Share Posted September 16, 2014 (edited) Yes but it depends where you are resident when you take the lump sum. It was suggested I think that you can take the lump sum tax free whilst residing in the UK. i thought you could only get Super tax free ( lump sum or otherwise ) whilst resident in Australia. yes if you take the super whilst resident, then move to the UK you can transfer the savings tax free. Although worth checking whether you need to do it at a certain time in the tax year to be fully exempt. as I said for this amount you want to be getting proper advice from someone who understands both UK and Aus tax systems. Also bear in mind that rules can and do change! Making it hard to plan for the future. the UK treats pension income as income no matter where it is from. Edited September 16, 2014 by rammygirl Quote Link to comment Share on other sites More sharing options...
goingbacksoon Posted September 17, 2014 Author Share Posted September 17, 2014 Hmmmm...agree I will have to check this. Looks like getting some advice from a UK/Oz tax specialist is the way to go. I am going to fly down to Brisbane next week to open a bank account with HSBC, so I will see if I can get some advice while I'm in the big smoke. Does anyone know how to claim NI contributions using the reciprocal agreement with Oz and UK prior to 2001? I have searched the Internet but cannot find exactly how to do this. I have tax returns for many of those years, but not all of them. Has anyone gone through this process and can give me some advice? Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 18, 2014 Share Posted September 18, 2014 (edited) Hmmmm...agree I will have to check this. Looks like getting some advice from a UK/Oz tax specialist is the way to go. I am going to fly down to Brisbane next week to open a bank account with HSBC, so I will see if I can get some advice while I'm in the big smoke. Does anyone know how to claim NI contributions using the reciprocal agreement with Oz and UK prior to 2001? I have searched the Internet but cannot find exactly how to do this. I have tax returns for many of those years, but not all of them. Has anyone gone through this process and can give me some advice? I'd suggest looking into Citibank first before you go with HSBC. If you open a Citibank Plus account in Australia and a Citibank account in the UK, transfers between the two accounts are fee-free and their exchange rate is good. For instance, I recently drew a Sterling bank cheque on my (Aussie) Citibank Plus account, to send to the UK. There was no commission and no charge for the bank cheque. Very handy. As for NI contributions - you can't claim under the reciprocal agreement until you are resident in the UK, because it's only available to residents. If you stay in Australia you can't claim those years at all. This is what it says in my State Pension Forecast from HM Revenue: "The Pension Service may include the period you lived in Australia up to 5 April 2001 in calculating your State Pension entitlement. They might ask you to provide confirmation of your residence. You should keep the following documents: Travel documents Passports Employers references Tax statements Statements from two pepole who can confirm the time you spent in Australia" I'd suggest getting your own State Pension Forecast. That will tell you what you'll get based on your current situation (NOT including any claim for Australian work records). It will also tell you how to make extra NI contributions and how much, if you choose to do so. http://www.nidirect.gov.uk/how-to-get-a-state-pension-statement Edited September 18, 2014 by Marisawright Quote Link to comment Share on other sites More sharing options...
goingbacksoon Posted September 18, 2014 Author Share Posted September 18, 2014 Wow thanks Marisa - that is great. I will definitely look into the Citibank option. I will need to keep some funds in Australia when I leave. It is great to have such a wealth of knowledge on this forum. I'm so busy with work, organising schooling, getting the house ready to sell, decluttering, etc etc leaves little time for shopping around for the best deals. Also, thank you for the Pension advice. I will get busy and dig around for all that information. My old UK passport has the dates I arrived in Australia and I have references, tax statements, etc. Lucky I am a bit of a hoarder when it comes to paperwork. Do I need letters from people in the UK or Australia? Guess I could split the difference and get one from each country Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 18, 2014 Share Posted September 18, 2014 Wow thanks Marisa - that is great. I will definitely look into the Citibank option. I will need to keep some funds in Australia when I leave. It is great to have such a wealth of knowledge on this forum. I'm so busy with work, organising schooling, getting the house ready to sell, decluttering, etc etc leaves little time for shopping around for the best deals. Also, thank you for the Pension advice. I will get busy and dig around for all that information. My old UK passport has the dates I arrived in Australia and I have references, tax statements, etc. Lucky I am a bit of a hoarder when it comes to paperwork. Do I need letters from people in the UK or Australia? Guess I could split the difference and get one from each country I'm guessing they would need to be in Australia. After all, people in the UK could only testify that you'd been out of the country, they couldn't swear you actually arrived in Oz! Quote Link to comment Share on other sites More sharing options...
BillW Posted January 19, 2015 Share Posted January 19, 2015 I'd suggest looking into Citibank first before you go with HSBC. If you open a Citibank Plus account in Australia and a Citibank account in the UK, transfers between the two accounts are fee-free and their exchange rate is good. For instance, I recently drew a Sterling bank cheque on my (Aussie) Citibank Plus account, to send to the UK. There was no commission and no charge for the bank cheque. Very handy. Hey Marisa, Was it easy to open a Citibank account in UK if you are not a resident ? We have had massive problems with British banks refusing to open an account because we are not resident. My wife has an account from when she was working in Edinburgh in 2001 and they will not let me be a co-signatory on that because I am not a resident. We have ended up opening an account at Lloyds in Jersey in order to transfer money in both names. Bill Quote Link to comment Share on other sites More sharing options...
Marisawright Posted January 19, 2015 Share Posted January 19, 2015 Hey Marisa, Was it easy to open a Citibank account in UK if you are not a resident ? W haven't opened an account in the UK yet, we just have Australian ones. We're not going to transfer any large amounts of money until we're sure we're settled in the UK - after all I haven't lived there for 30 years and my husband's an Aussie, so we might not like it as much as we expect! We've just sold up our shares/property and put the money in the bank for now, and we'll withdraw money at ATM's in the UK to live on, just like we do here. Quote Link to comment Share on other sites More sharing options...
BillW Posted February 7, 2015 Share Posted February 7, 2015 Hmmmm...agree I will have to check this. Looks like getting some advice from a UK/Oz tax specialist is the way to go. I am going to fly down to Brisbane next week to open a bank account with HSBC, so I will see if I can get some advice while I'm in the big smoke. Does anyone know how to claim NI contributions using the reciprocal agreement with Oz and UK prior to 2001? I have searched the Internet but cannot find exactly how to do this. I have tax returns for many of those years, but not all of them. Has anyone gone through this process and can give me some advice? Hello Goingbacksoon, We are goingbacksoonasourhouseissold. Have been investigating the same issues as you have asked about and was wondering if you have had any solid answers yet that you are confident with ? Regards Bill Quote Link to comment Share on other sites More sharing options...
Marisawright Posted February 7, 2015 Share Posted February 7, 2015 (edited) Have been investigating the same issues as you have asked about and was wondering if you have had any solid answers yet that you are confident with ? Regards Bill You claim NI contributions using the reciprocal agreement by applying to the Pension Service. Here's what they told me in their letter: ""The Pension Service may include the period you lived in Australia up to 5 April 2001 in calculating your State Pension entitlement. They might ask you to provide confirmation of your residence. You should keep the following documents: Travel documents Passports Employers references Tax statements Statements from two pepole who can confirm the time you spent in Australia" You have to wait until you've established residency in the UK before you can apply. Edited February 7, 2015 by Marisawright Quote Link to comment Share on other sites More sharing options...
Gbye grey sky Posted February 8, 2015 Share Posted February 8, 2015 You claim NI contributions using the reciprocal agreement by applying to the Pension Service. Here's what they told me in their letter: ""The Pension Service may include the period you lived in Australia up to 5 April 2001 in calculating your State Pension entitlement. They might ask you to provide confirmation of your residence. You should keep the following documents: Travel documents Passports Employers references Tax statements Statements from two pepole who can confirm the time you spent in Australia" You have to wait until you've established residency in the UK before you can apply. This was of interest to us too as my wife worked in Oz in the 90s for a number of years. Worked in Uk before and since so probably has about 20 years of UK NI contributions. If she could also claim the Oz years that would help boost her pension in 15 years time as she wont be adding any more years. I note that last comment though that you have to be UK resident to apply so that seems to make it clear that those years wont count for her. Quote Link to comment Share on other sites More sharing options...
BillW Posted February 8, 2015 Share Posted February 8, 2015 (edited) Thanks Marisa, I reckon this ought to be where my tax file number comes in handy. Am hoping that I can simply ask ATO "Can you please supply a listing of all tax returns I have filed since I started work ?" will let you know how I go. Interesting about the residency requirements for applying in the future, my wife and my parents both succesfully applied for and received UK pensions whilst living in Australia. Regards Bill Edited February 8, 2015 by BillW Quote Link to comment Share on other sites More sharing options...
BillW Posted February 8, 2015 Share Posted February 8, 2015 This was of interest to us too as my wife worked in Oz in the 90s for a number of years. Worked in Uk before and since so probably has about 20 years of UK NI contributions. If she could also claim the Oz years that would help boost her pension in 15 years time as she wont be adding any more years. I note that last comment though that you have to be UK resident to apply so that seems to make it clear that those years wont count for her. Hey Grey Sky, Any complications caused by your wife living in UK whilst having money in a super fund in Australia - did the UK govt want a bite out of the earnings as tax ? Bill Quote Link to comment Share on other sites More sharing options...
Marisawright Posted February 8, 2015 Share Posted February 8, 2015 This was of interest to us too as my wife worked in Oz in the 90s for a number of years. Worked in Uk before and since so probably has about 20 years of UK NI contributions. If she could also claim the Oz years that would help boost her pension in 15 years time as she wont be adding any more years. I note that last comment though that you have to be UK resident to apply so that seems to make it clear that those years wont count for her. That's correct. You can claim your Australian years towards your UK pension IF you're resident in the UK. If you're resident abroad, you can't. Quote Link to comment Share on other sites More sharing options...
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