Jules sharpen Posted January 20, 2022 Share Posted January 20, 2022 Hi there, I was wondering if one of you financial people can advice me with my dilemma. I will reach my preservation age later on this year and I have read on this site that the British tax system would take 37 percent if I left my superannuation in Australia and then tried to collect it after I transfer my residence to the UK because the British taxation would class it as earnings as appose to savings. Firstly Is this correct? And secondly can I cash in all of my superannuation if I retire from my job and if I have reached my preservation age with Vicsuper. someone told me that I may not be able to take it all out in one lump sum. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted January 20, 2022 Share Posted January 20, 2022 (edited) 1 hour ago, Jules sharpen said: I have read on this site that the British tax system would take 37 percent if I left my superannuation in Australia and then tried to collect it after I transfer my residence to the UK .....Firstly Is this correct? Yes, it is. If you take a lump sum after you have left Australia, the British taxman will treat it as your income for the year and tax accordingly, which can easily amount to 37%. 1 hour ago, Jules sharpen said: secondly can I cash in all of my superannuation if I retire from my job and if I have reached my preservation age with Vicsuper. someone told me that I may not be able to take it all out in one lump sum. If you have reached preservation age and have retired, you should be able to take the whole amount as a lump sum. However I would call VicSuper and ask them to confirm - and ask them to put it in writing, please, so you're sure. If you decide to take the lump sum while you are still permanently resident in Australia, once the money is in the bank, it becomes just savings. Then when you subsequently move to the UK, there will be no tax implications to transferring it. However, you then have the issue of what to do with the cash. You will have to invest it in something in the UK. Your other alternative is to leave the money in your superannuation fund, and when you're ready to retire, convert it to an income stream (pension). You can choose how much you want to receive each month and can vary it as often as you like. The Australian taxman won't want anything, but pensions are taxable in the UK. However, as you'll only be bringing over so much per year instead of the whole shebang, you won't be pushing into a high tax bracket. Edited January 20, 2022 by Marisawright Quote Link to comment Share on other sites More sharing options...
Marisawright Posted January 20, 2022 Share Posted January 20, 2022 BTW have you looked into backpaying your missing National Insurance contributions to maximise your British state pension? Are you aware that if you leave Australia before you can claim the Australian govt pension, you will not be able to claim it at all? Quote Link to comment Share on other sites More sharing options...
Jules sharpen Posted January 20, 2022 Author Share Posted January 20, 2022 Thank you I am going to speak to them tomorrow and I will ask them to put it in writing. Thank you… Quote Link to comment Share on other sites More sharing options...
Jules sharpen Posted January 20, 2022 Author Share Posted January 20, 2022 Hi there i forgot to mention that I’m only 58 and intend to retire when I reach my preservation age of 59 then move back to the UK. Therefore, because I’m under 60 would this make a difference. Quote Link to comment Share on other sites More sharing options...
Ken Posted January 22, 2022 Share Posted January 22, 2022 On 20/01/2022 at 19:43, Jules sharpen said: Hi there i forgot to mention that I’m only 58 and intend to retire when I reach my preservation age of 59 then move back to the UK. Therefore, because I’m under 60 would this make a difference. It makes a difference in Australia as the payment isn't necessarily tax free. It depends on the contents of your Super fund i.e. whether or not there is an untaxed element and whether or not the total balance exceeds the low rate cap (currently $225,000). Only if the total is less than $225,000 and it is entirely composed of taxed elements will there be no tax to pay on a withdrawal while under 60 - and yes that's even though you've reached preservation age. Quote Link to comment Share on other sites More sharing options...
Parley Posted January 22, 2022 Share Posted January 22, 2022 Best to wait until you are 60. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted January 22, 2022 Share Posted January 22, 2022 1 hour ago, Ken said: It makes a difference ...... Only if the total is less than $225,000 and it is entirely composed of taxed elements will there be no tax to pay on a withdrawal while under 60 - and yes that's even though you've reached preservation age. That's why I recommended he ask the Super Fund. I knew it used to be 60 but I wasn't sure if that was still the case. Quote Link to comment Share on other sites More sharing options...
Jules sharpen Posted January 22, 2022 Author Share Posted January 22, 2022 Thank you. Quote Link to comment Share on other sites More sharing options...
Jules sharpen Posted January 22, 2022 Author Share Posted January 22, 2022 Thank you. Quote Link to comment Share on other sites More sharing options...
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