Tax and Pensions

[Cheery Thistle]

Looking for a qualified and reliable professional to inform on the following: 

- Tax on property income from UK when Aus PR

- Pensions - how and when we set up to keep paying NI contributions for pension stamp in UK so that we can draw UK state pension when time comes 

- Tax implications of property disposal of UK properties when PR in Aus 

- Pensions - what should/can we do with occupational and private pension pots from UK

Ideally if you have actually used the person and been happy with the info and service provided. 

[Marisawright]

@Alan Collett is your go-to person for tax.  You need someone who understands how both tax regimes work.  I've never seen anyone else even mentioned here.

NI contributions -- you can apply to pay Class 2 contributions because you'll be working.  However it would be worth deferring a decision until you know whether you're going to settle in Australia or move elsewhere.   You won't lose anything by doing that, because there's a facility to back-pay up to 6 years of missed payments and it's no more expensive.

Occupational and private pot pensions -- @Andrew from Vista Financial.   However AFAIK there is nothing you need to do now.    It would be very unwise to transfer them to an Australia pension scheme (superannuation) until you're 150% sure you'll never ever return to the UK, because there is no mechanism to transfer Australian pensions to a UK pension scheme, period.   So once the money is in an Australian fund, it will be stuck there until you retire (and the British taxman will take a big chunk of it in tax when you cash it out, if you're living in the UK at the time).

[InnerVoice]

I was in touch with @Andrew from Vista Financial a few months ago about the possibility of moving my UK SIPP over. I chose not to proceed in the end due to being unsure whether I was going to retire in Australia, but Andrew was very transparent about the process and the costs involved, which seemed very reasonable for the service he provides.

[Andrew from Vista Financial]

7 hours ago, Marisawright said:

@Alan Collett is your go-to person for tax.  You need someone who understands how both tax regimes work.  I've never seen anyone else even mentioned here.

NI contributions -- you can apply to pay Class 2 contributions because you'll be working.  However it would be worth deferring a decision until you know whether you're going to settle in Australia or move elsewhere.   You won't lose anything by doing that, because there's a facility to back-pay up to 6 years of missed payments and it's no more expensive.

Occupational and private pot pensions -- @Andrew from Vista Financial.   However AFAIK there is nothing you need to do now.    It would be very unwise to transfer them to an Australia pension scheme (superannuation) until you're 150% sure you'll never ever return to the UK, because there is no mechanism to transfer Australian pensions to a UK pension scheme, period.   So once the money is in an Australian fund, it will be stuck there until you retire (and the British taxman will take a big chunk of it in tax when you cash it out, if you're living in the UK at the time).

Thanks Marisa and totally agree definitely want to ensure you are settled in Australia before transferring a Pension.

There can sometimes be certain circumstances where some action might be advisable for one reason or another before or shortly after arriving, this is not necessarily about transferring the Pension but more to do with accessing it within tax free windows. 

[Andrew from Vista Financial]

3 hours ago, InnerVoice said:

I was in touch with @Andrew from Vista Financial a few months ago about the possibility of moving my UK SIPP over. I chose not to proceed in the end due to being unsure whether I was going to retire in Australia, but Andrew was very transparent about the process and the costs involved, which seemed very reasonable for the service he provides.

Hi, thanks for the comments, much appreciated

[bluequay]

11 hours ago, Marisawright said:

NI contributions -- you can apply to pay Class 2 contributions because you'll be working.  However it would be worth deferring a decision until you know whether you're going to settle in Australia or move elsewhere.   You won't lose anything by doing that, because there's a facility to back-pay up to 6 years of missed payments and it's no more expensive.

Is that definately the case? we paid to make up a couple of partial years for my wife yesterday, and one of the questions they asked was whether you were resident in the UK for that period. You need to inform HMRC that you are no longer resident for tax purposes when you leave, so if their systems are in anyway joined up they will know!

Edited February 1 by bluequay

[Ferrets]

10 hours ago, bluequay said:

Is that definately the case? we paid to make up a couple of partial years for my wife yesterday, and one of the questions they asked was whether you were resident in the UK for that period. You need to inform HMRC that you are no longer resident for tax purposes when you leave, so if their systems are in anyway joined up they will know!

I’ve just back paid for 2019-2023, and now on a DD for class 2, no issues with non residency and in fact if you are overseas you can get class 2 which is much cheaper.

For the OP it depends how long you have been here; HMRC have extended the period you can backdate to 2006, but this is only available until April 2025, with a long turnaround time for processing.

@Andrew from Vista Financial the CF83 form seems to have changed so there is no option to select which class you are applying for, is that to try and dissuade class 2 applications?

[Andrew from Vista Financial]

Hi

Yes looks like a recent change to the applicatiopn form however looking through it seems that rather than the individual telling HMRC what Class they are applying for instead after completing the form HMRC will tell you what Class you are elgible for (refer Section 6, page 3).  

[bluequay]

12 hours ago, Ferrets said:

I’ve just back paid for 2019-2023, and now on a DD for class 2, no issues with non residency and in fact if you are overseas you can get class 2 which is much cheaper.

For the OP it depends how long you have been here; HMRC have extended the period you can backdate to 2006, but this is only available until April 2025, with a long turnaround time for processing.

@Andrew from Vista Financial the CF83 form seems to have changed so there is no option to select which class you are applying for, is that to try and dissuade class 2 applications?

Interesting, I'm just about to pay to make up 4 partial\missing years that will leave me a single year short of a full pension when we leave. I need to check to see whether it will be better value to just buy those years after we leave!

[InnerVoice]

16 hours ago, bluequay said:

Interesting, I'm just about to pay to make up 4 partial\missing years that will leave me a single year short of a full pension when we leave. I need to check to see whether it will be better value to just buy those years after we leave!

The answer to your question is probably going to be 'yes'. Voluntary Class 3 NI contributions are currently £824.20 for a full year, while Class 3 NI contributions are only £163.80/year, so unless paying up your partial years is going to be less than the latter amount, you'll be better of waiting until you arrive here. Bear in mind to qualify for Class 2 NI contributions you need to have paid at least 3 years NI contribution (which most have), and have been working in the UK immediately prior to leaving. It's also worth clarifying that you haven't already paid sufficient years NI to get a full pension, as the number of years required will vary (it isn't 35 years for everyone).