FamilyHughes 10 Posted February 18 Gosh the last 12 years have zoomed by since leaving the UK to live here in Australia and resident for tax purposes. This year I turn 60 and am entitled to receive my UK Defined Benefits Pension at the normal scheme retirement age. I have decided not to take a lump sum and simply want to receive the standard payments monthly. I've received a letter from my Pension scheme in the UK asking for my wishes in terms of lump sum/monthly payment options and wanting to know which bank account to pay the funds into. I've searched online for information and indeed this forum but can't find anything that seems to explain how I go about arranging for my pension payments to be paid with no UK tax taken off at source. I am hoping that I can arrange to pay all taxation in Australia from day 1. I've seen mentions of P85 form needing to be completed and also mention of needing to get the ATO to fill in a form and send to my pension provider. I filled in P85 when I left the UK and have that letter retained, but there was no mention of an NT tax code for example so that doesn't maybe seem relevant. I have searched on the ATO website and the only information I can find is how to apply for a tax off-set once I have been taxed by the UK... just what I'm hoping to avoid. Is there anyone on this board who has gone through this and managed to work out what to do with success? My pension is due to be paid in September this year, so I have a little time to get things organised if possible. Thank you heaps everyone! Share this post Link to post Share on other sites
Marisawright 10,723 Posted February 18 The obvious answer is, ask the Pension Scheme. They will know exactly what documentation they require. Things may have changed since others went through the process, and anyway, it's always best to get it from the horse's mouth. Scot by birth, emigrated 1985 | Aussie husband granted UK spouse visa, moved to UK May 2015 | Returned to Oz June 2016 Share this post Link to post Share on other sites
Sloth 21 Posted February 18 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/833689/aust-indiv2003.pdf Share this post Link to post Share on other sites
rammygirl 2,164 Posted February 18 That looks like the form I used recently. I did it before the pension was due but it took a few months to kick in. You send it to the ATO who send it to HMRC with verification then HMRC inform the pension company to alter the tax code. The pension company refunded the current UK years tax but I had to claim the previous year by submitting a Uk return. I couldn’t refuse the lump sum but was only taxed on the growth since leaving UK. I have a UK/Aus accountant as we need to file in both countries each year - it is worth it. 1 So many wineries ......so little time :yes: Share this post Link to post Share on other sites
Alan Collett 3,431 Posted February 23 I recommend that you consider the after tax position in Australia of a lump sum versus a regular pension. The former is subject to Australia's Applicable Fund Earnings (AFEs) tax provisions whereby some of the monies will be tax free. The latter will be wholly taxable in Australia. Best regards. Managing Director, Go Matilda Visas - www.gomatilda.com Registered Migration Agent Number 0102534; Registered Tax Agent (Australia) Chartered Accountant (UK, and Australia) T - 023 81 66 11 55 (UK) or 03 8637 0337 (Australia) E - alan.collett@gomatilda.com and acollett@bdhtax.com Share this post Link to post Share on other sites
Marisawright 10,723 Posted February 23 10 hours ago, Alan Collett said: I recommend that you consider the after tax position in Australia of a lump sum versus a regular pension. The former is subject to Australia's Applicable Fund Earnings (AFEs) tax provisions whereby some of the monies will be tax free. The latter will be wholly taxable in Australia. However, if you don't take the pension until you're retired, you're going to be in a low tax bracket (unless you've got a very good pension), so wouldn't that make a difference too? Scot by birth, emigrated 1985 | Aussie husband granted UK spouse visa, moved to UK May 2015 | Returned to Oz June 2016 Share this post Link to post Share on other sites
Alan Collett 3,431 Posted February 24 9 hours ago, Marisawright said: However, if you don't take the pension until you're retired, you're going to be in a low tax bracket (unless you've got a very good pension), so wouldn't that make a difference too? Yes, all of these issues are to be considered. Best regards. Managing Director, Go Matilda Visas - www.gomatilda.com Registered Migration Agent Number 0102534; Registered Tax Agent (Australia) Chartered Accountant (UK, and Australia) T - 023 81 66 11 55 (UK) or 03 8637 0337 (Australia) E - alan.collett@gomatilda.com and acollett@bdhtax.com Share this post Link to post Share on other sites
DT55 44 Posted February 28 On 23/02/2023 at 23:18, Alan Collett said: I recommend that you consider the after tax position in Australia of a lump sum versus a regular pension. The former is subject to Australia's Applicable Fund Earnings (AFEs) tax provisions whereby some of the monies will be tax free. The latter will be wholly taxable in Australia. Best regards. Interesting. So in layman terms, say you have a NHS pension which pays a lump sum and then regular payment- they are taxed differently? - Lump sum. Only taxed on any gains since you left the Uk? Is that right? - Regular pension - taxed at your marginal rate? Thanks Share this post Link to post Share on other sites
rammygirl 2,164 Posted February 28 That is right. My UK gov pension worked like that. For me the tax was / is minimal as I am not working here. You may need advice for your particular situation though. So many wineries ......so little time :yes: Share this post Link to post Share on other sites
DT55 44 Posted February 28 1 hour ago, rammygirl said: That is right. My UK gov pension worked like that. For me the tax was / is minimal as I am not working here. You may need advice for your particular situation though. Thanks. Useful to know as you have the option of taking a larger lump sum with the NHS pension. Also is the lump sum taxed at 15% rather than marginal rate? cheers Share this post Link to post Share on other sites
Andrew from Vista Financial 670 Posted March 1 On 28/02/2023 at 12:07, DT55 said: Interesting. So in layman terms, say you have a NHS pension which pays a lump sum and then regular payment- they are taxed differently? - Lump sum. Only taxed on any gains since you left the Uk? Is that right? - Regular pension - taxed at your marginal rate? Thanks Pretty much sums it up from an Australian tax perspective although in some cases this may be a consideration: https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Undeducted-Purchase-Price-of-a-foreign-pension-or-annuity/ 21 hours ago, DT55 said: Thanks. Useful to know as you have the option of taking a larger lump sum with the NHS pension. Also is the lump sum taxed at 15% rather than marginal rate? cheers Typically if a foreign super lump sum benefit payment is received more than six months after gaining residency or ceasing foreign employment then, the Applicable Fund Earnings (AFE) will be taxed at marginal tax rates/ : https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-using-your-super/Super-lump-sums-from-a-foreign-super-fund/ Regards Andy Andy Williams - andrew@vistafs.com.au Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB) SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser Specialising in UK Expat Retirement Planning Advice and Pension Transfers Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177 AR-322874 /AFSL-234951 Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation. Share this post Link to post Share on other sites
DT55 44 Posted March 1 17 hours ago, Andrew from Vista Financial said: Pretty much sums it up from an Australian tax perspective although in some cases this may be a consideration: https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Undeducted-Purchase-Price-of-a-foreign-pension-or-annuity/ Typically if a foreign super lump sum benefit payment is received more than six months after gaining residency or ceasing foreign employment then, the Applicable Fund Earnings (AFE) will be taxed at marginal tax rates/ : https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-using-your-super/Super-lump-sums-from-a-foreign-super-fund/ Regards Andy Thanks Andy - that’s useful to know 1 Share this post Link to post Share on other sites
