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PaulFC

Superannuation, moving back to UK

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Hi

I am 55 years of age, and my wife and I are looking to move permanently back to the UK at some stage over the next few years.  My preservation age is 60. I am hoping one of the Finance guys on this forum can assist me.  I am sure I would not be alone in wanting to know the answer to my questions but despite having read many posts on Pomsinoz for the last few years, I am still a bit unsure of how my super would be affected depending on when I move back to the UK

Question 1: I understand that if we stay in Oz until my 60th birthday and formally retire from my job, I can access my super in full with no tax implications in Aus.  If I do this and then move back to the UK, do you know if my super money (big lump sum) is then liable to taxation in the uk after I settle back there or is it considered to be part of my personal wealth that I believe I am allowed to take back into UK as a 1 off tax exempt transfer when I move back (along with money from the sale of my house and other savings)?

Question 2: If we decided to move back to UK before my 60th birthday and got a job in the UK. Once I turn 60 I am presuming I can still access my super, in the same way as if I was still living and working in Aus ie I would need to retire from my job (new uk one).  If this is correct, can I still 'cash' in the full value of my super?, if so, as I am now resident overseas, are there ATO tax implications on cashing my super in addition to those in UK? I believe I would lose approx 1/3 of the total value of the sum transferred to UK tax dept. (depending on my marginal rate of tax in UK for the financial year I transferred the lump sum).  If I chose not to 'cash' in the full amount and instead took a small ongoing annual income which would be transferred over to a UK  bank account on a fortnightly/monthly basis, would this income be treated in the same way as any other UK based earnings and taxed accordingly at the appropriate marginal rate of tax?   

Thanks for any help you can offer.

 

  

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On 27/01/2021 at 17:51, PaulFC said:

Hi

I am 55 years of age, and my wife and I are looking to move permanently back to the UK at some stage over the next few years.  My preservation age is 60. I am hoping one of the Finance guys on this forum can assist me.  I am sure I would not be alone in wanting to know the answer to my questions but despite having read many posts on Pomsinoz for the last few years, I am still a bit unsure of how my super would be affected depending on when I move back to the UK

Question 1: I understand that if we stay in Oz until my 60th birthday and formally retire from my job, I can access my super in full with no tax implications in Aus.  If I do this and then move back to the UK, do you know if my super money (big lump sum) is then liable to taxation in the uk after I settle back there or is it considered to be part of my personal wealth that I believe I am allowed to take back into UK as a 1 off tax exempt transfer when I move back (along with money from the sale of my house and other savings)?

Question 2: If we decided to move back to UK before my 60th birthday and got a job in the UK. Once I turn 60 I am presuming I can still access my super, in the same way as if I was still living and working in Aus ie I would need to retire from my job (new uk one).  If this is correct, can I still 'cash' in the full value of my super?, if so, as I am now resident overseas, are there ATO tax implications on cashing my super in addition to those in UK? I believe I would lose approx 1/3 of the total value of the sum transferred to UK tax dept. (depending on my marginal rate of tax in UK for the financial year I transferred the lump sum).  If I chose not to 'cash' in the full amount and instead took a small ongoing annual income which would be transferred over to a UK  bank account on a fortnightly/monthly basis, would this income be treated in the same way as any other UK based earnings and taxed accordingly at the appropriate marginal rate of tax?   

Thanks for any help you can offer.

 

  

Question 1: If you take your Super as a lump sum while still resident in Australia then it will not be taxable income in the UK (the foreign income of a non-resident is not taxed in the UK). There is no tax of the transfer of money that you had before you became a resident regardless of the source of that money (super, employment, property sale or anything else).

Question 2: There are no ATO tax implications on cashing in your Super (provided you are a citizen or permanent resident - for temporary residents punitive tax rates apply). The Double Taxation Agreement assigns pension income to be taxed in the country of residence - so if you are living in the UK it will be taxed by HMRC not the ATO. This applies whether you receive it in a UK bank account or an Australian bank account, and yes this does mean it would taxed in the same way as any other UK based earnings (except of course that there would be no PAYE deducted) and taxed accordingly at the appropriate marginal rate of tax.


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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To summarise Ken’s post in very simple terms: if you take the lump sum while still resident in Australia and it’s been deposited in your bank account, it’s just cash and there’s no UK tax liability.

If you wait until you’ve left Australia and then claim the lump sum, the Inland Revenue will grab about 30% of it. 

If you turn it into a small pension then it is tax free in Australia but taxed as income in the UK

Edited by Marisawright
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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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