UK Pension access

[Bobbyfaescotland]

I have been living in Australia for 13 years and have only recently found out that I have a small private pension that I must have had from a previous UK employer, I completely forgot about it. The fund is not much, its around £7500. I am just turning 57 in October and I believe I can get access to it but I also read somewhere that the UK government would pillage a large amount of it in tax, if I transfer it to my Australian bank account. I have no UK bank accounts as they were all closed when I emigrated.

Any advice would be greatly appreciated

[Paul1Perth]

55 minutes ago, Bobbyfaescotland said:

I have been living in Australia for 13 years and have only recently found out that I have a small private pension that I must have had from a previous UK employer, I completely forgot about it. The fund is not much, its around £7500. I am just turning 57 in October and I believe I can get access to it but I also read somewhere that the UK government would pillage a large amount of it in tax, if I transfer it to my Australian bank account. I have no UK bank accounts as they were all closed when I emigrated.

Any advice would be greatly appreciated

I've been getting my NCB pension since I was 50 and I don't think there's any UK tax implications. The pension scheme always kept me updated and sent me a letter telling me the options for lump sum and monthly payments.

There are tax implications here though, it's seen as an income so if You're working you will pay tax in Aus. If you take a lump sum beware of a big tax bill when you do your return.

[Alan Collett]

Although it's a small amount it will be an annoyance and an aggravation if tax is deducted in the UK and you then have to seek a tax repayment from HMRC because the sum you receive from the UK scheme is properly solely taxable in Australia under the applicable provision of the Tax Treaty.

A lump sum that is received as a tax resident of Australia is taxed under the Applicable Fund Earnings provisions - so only the growth since you became a tax resident of Australia is taxable here.

Best regards.

[Bobbyfaescotland]

38 minutes ago, Alan Collett said:

Although it's a small amount it will be an annoyance and an aggravation if tax is deducted in the UK and you then have to seek a tax repayment from HMRC because the sum you receive from the UK scheme is properly solely taxable in Australia under the applicable provision of the Tax Treaty.

A lump sum that is received as a tax resident of Australia is taxed under the Applicable Fund Earnings provisions - so only the growth since you became a tax resident of Australia is taxable here.

Best regards.

Thanks Alan, does that mean that I can withdraw my £7500 from my Scottish Widows Pension fund and transfer it to my bank account in Australia, then declare it as an income on my tax return and pay my marginal tax rate.

[Alan Collett]

Just now, Bobbyfaescotland said:

Thanks Alan, does that mean that I can withdraw my £7500 from my Scottish Widows Pension fund and transfer it to my bank account in Australia, then declare it as an income on my tax return and pay my marginal tax rate.

Unfortunately not.

• The UK pension fund will probably deduct tax from the lump sum - maybe ask what PAYE Coding will be applied if you ask them to release the lump sum to your bank account.
• You need to calculate the AFEs as this is the amount to be taxed in Australia.

Do you have an accountant in Australia who helps with your tax return each year?    If not 2021 might be a year when you appoint one!

Best regards.

[Bobbyfaescotland]

looks like I will be leaving it there until I am 67 then, hopefully then it will be all mine and not the tax mans

[Alan Collett]

The same issues are likely to arise when you are 67 ...

Best regards.

[Paul1Perth]

2 hours ago, Alan Collett said:

Although it's a small amount it will be an annoyance and an aggravation if tax is deducted in the UK and you then have to seek a tax repayment from HMRC because the sum you receive from the UK scheme is properly solely taxable in Australia under the applicable provision of the Tax Treaty.

A lump sum that is received as a tax resident of Australia is taxed under the Applicable Fund Earnings provisions - so only the growth since you became a tax resident of Australia is taxable here.

Best regards.

Both me and the wife got lump sums and big tax bills here last year. Better ask our accountant about Applicable Fund Earnings.

I got a cheque sent for 13pounds something tax rebate from HMRC. By the time the bank had taken their cut to put it in I ended up with about $8.

[Alan Collett]

19 minutes ago, Paul1Perth said:

Both me and the wife got lump sums and big tax bills here last year. Better ask our accountant about Applicable Fund Earnings.

I got a cheque sent for 13pounds something tax rebate from HMRC. By the time the bank had taken their cut to put it in I ended up with about $8.

=>    Feel able to contact me for a chat ...

Best regards.

[Paul1Perth]

23 hours ago, Alan Collett said:

=>    Feel able to contact me for a chat ...

Best regards.

Thanks Alan.