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Sloth

Taking my super back to the UK.

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I have a question that I can't find a ready answer to.

I'm originally a UK citizen, and have been living and working in Tasmania since 2006, and became an Aus citizen in 2009. I'm now thinking of returning permanently to the UK. I am over 60.

I have read that in order to avoid UK tax, it's necessary to withdraw my super whilst still in Australia and send it back to the UK as savings.

Let's say I withdraw my super on 1 July 2022 so it's now just cash in my bank account, which I then transfer to my UK bank. I then finalise my other affairs in order to return home, and I leave Australia, arriving back in the UK on 1 September 2022.

By the end of the UK tax year on 5 April 2023, I will have been in the UK for more than 183 days, so I will be deemed to be a UK tax resident for the entire year from the preceding 6 April-this includes the date on which I withdrew my super prior to leaving Australia.

Does this have any UK tax implications for my super?

Do I need to elect for split year treatment in the year I return to the UK?

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Hi there

Thanks for the question however I am a licensed Australian Financial (Tax) Adviser not a UK one so cannot provide advice in this area I am afraid.

However looking at your question....does this have any tax implications for my Super.

If you did as planned then when you arrive in the UK it would not be Super any longer it would be money in the bank along with any other money you have in the bank when you move back so I think it's unlikely to have any tax implications for your Super.

Regards

Andy.

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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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Thanks Andrew. It seems to be a grey area due to the HMRC residence test.

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Posted (edited)

The circumstances you describe are one where split year tax treatment should apply. Put an X in box 3 of your SA-109 (which you need to complete as part of your Self-assessment tax return) and the date you returned in box 6. Split year tax treatment can only apply when you are UK resident under the HMRC residence test so it's not a grey area. You are a foreign tax resident prior to returning and a UK tax resident from the date of return.

Also to point out (although I think you are already aware) it's the date your funds leave your Super account that matters not the date you transfer it to the UK. Transfers from one bank account to another bank account are not taxable income or everyone would have to pay tax every time they took money in or out of their savings account!

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

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Thanks for your advice-I thought that would be the correct approach, but it's always good to have confirmation from somebody who knows!

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50 minutes ago, Ken said:

The circumstances you describe are one where split year tax treatment should apply.

That's what I thought, Ken, but the OP's post made me doubt.  Thanks for clarifying!


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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2 hours ago, Ken said:

The circumstances you describe are one where split year tax treatment should apply. Put an X in box 3 of your SA-109 (which you need to complete as part of your Self-assessment tax return) and the date you returned in box 6. Split year tax treatment can only apply when you are UK resident under the HMRC residence test so it's not a grey area. You are a foreign tax resident prior to returning and a UK tax resident from the date of return.

Also to point out (although I think you are already aware) it's the date your funds leave your Super account that matters not the date you transfer it to the UK. Transfers from one bank account to another bank account are not taxable income or everyone would have to pay tax every time they took money in or out of their savings account!

Do you have to do that if you just sell your home in Australia and move back to the UK ?

This will be the same won't it. In Australia if you are retired and over your preservation age you can withdraw all your Super without restriction. Then it is just your money.

The OP might be selling a home too and just taking a large amount of money back. Home plus Super, maybe a couple million but should be no tax issues.


I want it all, and I want it now.

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Posted (edited)

My query was nothing to do with “taking a large amount of money back”, but related to HMRC’s rules around tax residency in the year I move back. 
I wanted to clarify my thoughts around moving my super and split year tax treatment. 
 

https://www.gov.uk/tax-foreign-income/residence

Edited by Sloth

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56 minutes ago, Parley said:

Do you have to do that if you just sell your home in Australia and move back to the UK ?

This will be the same won't it. In Australia if you are retired and over your preservation age you can withdraw all your Super without restriction. Then it is just your money.

The OP might be selling a home too and just taking a large amount of money back. Home plus Super, maybe a couple million but should be no tax issues.

The OP was specifically asking about superannuation.  If you withdraw your lump sum while still legally resident in Australia, there's no restriction, it's just your money and you can do whatever you like with it, including sending it anywhere in the world.

Withdraw your lump sum after you've arrived in the UK, and the Inland Revenue will take a very large slice.

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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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Posted (edited)
26 minutes ago, Marisawright said:

If you withdraw your lump sum while still legally resident in Australia, there's no restriction, it's just your money and you can do whatever you like with it, including sending it anywhere in the world.

Would I be right in thinking that if left your super invested and drawdown after reaching preservation age, then you will never pay any tax as long as you stay resident in Australia? Whereas if you withdraw it all as cash and reinvested it elsewhere, then you'd have to pay tax on any income earned in your country of residence.

Hence, unless you're absolutely certain that you're going to leave Australia and never come back, you'd be very unwise to cash in all your super.

Edited by Wanderer Returns
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29 minutes ago, Wanderer Returns said:

Would I be right in thinking that if left your super invested and drawdown after reaching preservation age, then you will never pay any tax as long as you stay resident in Australia? 

Yes, super is tax-free in Australia.

30 minutes ago, Wanderer Returns said:

Whereas if you withdraw it all as cash and reinvested it elsewhere, then you'd have to pay tax on any income earned in your country of residence.Hence, unless you're absolutely certain that you're going to leave Australia and never come back, you'd be very unwise to cash in all your super.

Yes, BUT the difficulty is that if you do decide you're never going back, and you want to take a lump sum, you'll be faced with losing over a third of it to the Inland Revenue. 

You'd be left with only one option, which would be to convert your super to a pension.   It would still be taxable as normal income in the UK but not as bad as the lump sum.

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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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1 hour ago, Marisawright said:

The OP was specifically asking about superannuation.  If you withdraw your lump sum while still legally resident in Australia, there's no restriction, it's just your money and you can do whatever you like with it, including sending it anywhere in the world.

 

Yes that is what he said he was going to do. And there are no issues. Similar to just selling your house and then sending the money back.


I want it all, and I want it now.

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10 hours ago, Marisawright said:

Yes, super is tax-free in Australia.

Yes, BUT the difficulty is that if you do decide you're never going back, and you want to take a lump sum, you'll be faced with losing over a third of it to the Inland Revenue. 

You'd be left with only one option, which would be to convert your super to a pension.   It would still be taxable as normal income in the UK but not as bad as the lump sum.

Good points. And also, if you cashed it all in before leaving Australia you could open an ISA as soon as you arrived back in the UK.

If you arrived at the beginning of April, you could deposit 40 grand within a week!

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23 hours ago, Parley said:

Do you have to do that if you just sell your home in Australia and move back to the UK ?

This will be the same won't it. In Australia if you are retired and over your preservation age you can withdraw all your Super without restriction. Then it is just your money.

The OP might be selling a home too and just taking a large amount of money back. Home plus Super, maybe a couple million but should be no tax issues.

Do you have to do what? Split year? You should unless you want to pay tax in the UK on everything you earned in the first part of the year. If you don't tell HMRC this year is a split year they'll come back to you about last year thinking they're due some tax from that year!

The important thing to remember if you have a home in Australia is to sell it before you leave the country because the Capital gain on the sale of your home for an Australian resident is tax free (some exceptions if you have a huge amount of land or business use of part of your premises but that's the general case). Unfortunately foreign residents don't get any concessions on CGT in Australia so the whole amount is taxable so selling after you leave is very expensive.

Yes you'll be able to withdraw all your Super without restriction (once you meet the requirements to do so) even if you are staying in Australia, but if you leave it in Super any further growth is also tax free whereas alternative investments (including just getting bank interest on it) are taxed. It is just your money but don't waste it.

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

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