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ozni

NHS Pension Lump Sum and Tax

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I am due to claim my NHS 95 pension which includes a lump sum. I left UK 21 years ago. From what I understand I'm going to be heavily taxed on the lump sum component. I would be happy to put this directly into my super account. Is their a way of minimizing the tax payable?

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Hi ozni

Yes assuming you are a permanent resident/citizen here then typically this lump sum will be assessed for tax based on the growth since you arrived (known as the Applicable Fund Earnings (AFE)).

Regards reducing your tax liability by contributing money to Super, possibly (this is not just a strategy available for someone receiving a foreign super lump sum benefit payment it is available to most people looking to reduce their tax liability and maximise their superannuation fund).

You may be able to make a voluntary contribution to Super and claim a tax deduction, see here: https://www.ato.gov.au/individuals/super/in-detail/growing-your-super/claiming-deductions-for-personal-super-contributions/

You need to be aware of the concessional contribution caps surrounding this strategy: https://www.ato.gov.au/super/self-managed-super-funds/contributions-and-rollovers/contribution-caps/#:~:text=Concessional contributions also include personal,all individuals regardless of age. 

There is now also potential to catch up on some previous years concessional contributions if these were not fully used in certain circumstances: https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=3

There are other potential implications to consider also therefore I would suggest you consider seeking professional financial advice for your circumstances.

Regards

Andy


Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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I'd suggest having a paid consultation with Andrew, because transferring pensions is a real minefield and we've seen a lot of people thinking they've got it all sussed ,then they make one small mistake and end up with a huge tax bill.  Not worth the risk!

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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