jrobs Posted April 24 Share Posted April 24 Hello - I have tried searching the forum for my exact topic but cannot find exactly what I am after. I have inherited a SIPP in the UK. I left the UK approx. 10 years ago and intend to live in Aus for the rest of my life I am 45 and my mother was 77 when she passed. I believe I can take it as a lump sum and be taxed at my income rate? or I can choose Flex drawdown? I really do not want to touch it for another 20 years until I retire and earn less so My queries are - Can I transfer it to a managed fund with better fees and performance and if so is this tax free? Can I leave it as a SIPP, let it grow and not touch it for 20 years until I retire and earn less? If I do or when I do draw down on it - do I pay income tax in Aus or in the UK? And Does anybody have a great IFA in the UK who can also deal with Australian residents? Many Thanks if anybody can help Quote Link to comment Share on other sites More sharing options...
paulhand Posted April 24 Share Posted April 24 @Alan Collett is likely your man. 1 Quote Link to comment Share on other sites More sharing options...
Ken Posted April 25 Share Posted April 25 23 hours ago, jrobs said: Hello - I have tried searching the forum for my exact topic but cannot find exactly what I am after. I have inherited a SIPP in the UK. I left the UK approx. 10 years ago and intend to live in Aus for the rest of my life I am 45 and my mother was 77 when she passed. I believe I can take it as a lump sum and be taxed at my income rate? or I can choose Flex drawdown? I really do not want to touch it for another 20 years until I retire and earn less so My queries are - Can I transfer it to a managed fund with better fees and performance and if so is this tax free? Can I leave it as a SIPP, let it grow and not touch it for 20 years until I retire and earn less? If I do or when I do draw down on it - do I pay income tax in Aus or in the UK? And Does anybody have a great IFA in the UK who can also deal with Australian residents? Many Thanks if anybody can help There are no inheritance taxes in Australia and while there is IHT in the UK a SIPP is IHT Free. Take the money now. You'll only be taxed in Australia on any growth that occurred after you inherited it and (because it's a SIPP) there is no UK tax. If you leave it in a SIPP for the next 20 years, there is no UK tax (because a SIPP is tax free in the UK) but there will be a lot of Australian tax to pay when you cash it in (becaus a SIPP is not tax free in Australia). You'll have to pay tax in Australia on the growth of the SIPP over the next 20 years all in one lump year. Even if you are no working that could still be a lot of tax. If you want to keep the money for your retirement (I'm assuming you plan to do that in Australia) you should consider Super or other investments in Australia. Quote Link to comment Share on other sites More sharing options...
jrobs Posted April 25 Author Share Posted April 25 6 hours ago, Ken said: There are no inheritance taxes in Australia and while there is IHT in the UK a SIPP is IHT Free. Take the money now. You'll only be taxed in Australia on any growth that occurred after you inherited it and (because it's a SIPP) there is no UK tax. If you leave it in a SIPP for the next 20 years, there is no UK tax (because a SIPP is tax free in the UK) but there will be a lot of Australian tax to pay when you cash it in (becaus a SIPP is not tax free in Australia). You'll have to pay tax in Australia on the growth of the SIPP over the next 20 years all in one lump year. Even if you are no working that could still be a lot of tax. If you want to keep the money for your retirement (I'm assuming you plan to do that in Australia) you should consider Super or other investments in Australia. Im not sure this is correct. If I take it as a lump sum now I get taxed at income tax rate. If I tax it once retired my income tax will be lower Quote Link to comment Share on other sites More sharing options...
rammygirl Posted April 25 Share Posted April 25 I think what ken is saying is that only the increase in the value from when you inherited it is taxed. Not the whole amount. You should look at the valuation on transfer to you to establish growth. This will be taxed at your marginal rate. The longer you leave it the more growth therefore more tax to pay. Quote Link to comment Share on other sites More sharing options...
AliG Posted April 26 Share Posted April 26 On 25/04/2024 at 13:02, jrobs said: Im not sure this is correct. If I take it as a lump sum now I get taxed at income tax rate. If I tax it once retired my income tax will be lower No idea on Aus vs UK tax but I am based in UK and recently inherited a SIPP - the rule (in UK) for inherited SIPPS is that you can withdraw in full (or bit by bit) and if the person dies before 75 with no income tax due but if they died age 75 or later than any amount you withdrawal attracts income tax... Quote Link to comment Share on other sites More sharing options...
AliG Posted April 26 Share Posted April 26 On 25/04/2024 at 06:55, Ken said: There are no inheritance taxes in Australia and while there is IHT in the UK a SIPP is IHT Free. Take the money now. You'll only be taxed in Australia on any growth that occurred after you inherited it and (because it's a SIPP) there is no UK tax. If you leave it in a SIPP for the next 20 years, there is no UK tax (because a SIPP is tax free in the UK) but there will be a lot of Australian tax to pay when you cash it in (becaus a SIPP is not tax free in Australia). You'll have to pay tax in Australia on the growth of the SIPP over the next 20 years all in one lump year. Even if you are no working that could still be a lot of tax. If you want to keep the money for your retirement (I'm assuming you plan to do that in Australia) you should consider Super or other investments in Australia. My understanding from recent experience - If you do a lump sum inherited SIPP withdrawal in UK it will attract income tax (unless the person you inherited the SIPP from died before 75). What I dont know (and perhaps this was your point) if you leave it in the UK SIPP, then at the point of future withdrawal would you pay UK income tax AND Aus CGT (i.e. cant offset as different type of tax)? One further niche thought - but if you think you might want to pass some of the SIPP onto another beneficiary when you die (without ever having to draw down on it yourself) then presumably it might make sense leaving that bit where it is ie no UK income tax or Aus CGT if it is never drawn down, and no IHT at the point it is passed on to a beneficiary. (BUT IM NOT AN IFA so take advice!) Quote Link to comment Share on other sites More sharing options...
jrobs Posted April 28 Author Share Posted April 28 Thats an interesting - pay CGT tax in Aus and pay income tax. Does anybody know a good IFA I can contact for advise? Quote Link to comment Share on other sites More sharing options...
rammygirl Posted April 28 Share Posted April 28 If you are resident in Australia that is where you are taxed. Sometimes HMRC withhold tax or tax you but the agreement between Uk and Australia means you can offset any tax or opt to be taxed only in Australia. worth paying for advice for your particular situation. Unfortunately few people can give dual Aus and Uk advice plus financial advice. I would start with a dual Uk Aus tax accountant. Quote Link to comment Share on other sites More sharing options...
AliG Posted Friday at 14:43 Share Posted Friday at 14:43 On 28/04/2024 at 12:47, rammygirl said: If you are resident in Australia that is where you are taxed. Sometimes HMRC withhold tax or tax you but the agreement between Uk and Australia means you can offset any tax or opt to be taxed only in Australia. worth paying for advice for your particular situation. Unfortunately few people can give dual Aus and Uk advice plus financial advice. I would start with a dual Uk Aus tax accountant. Agree with all that, but.... when you offset its usually for the same type of tax - ie if you pay UK income tax on rental earnings in UK then you can offset that against any income tax that would be due in Aus... the bit that I don't know if you can offset different types of tax: when you withdraw form a SIPP in the UK you may be subject to income tax in UK and then CGT in Aus. This sounds like a question for @Alan Collett Quote Link to comment Share on other sites More sharing options...
Ken Posted yesterday at 05:03 Share Posted yesterday at 05:03 (edited) On 04/05/2024 at 00:43, AliG said: Agree with all that, but.... when you offset its usually for the same type of tax - ie if you pay UK income tax on rental earnings in UK then you can offset that against any income tax that would be due in Aus... the bit that I don't know if you can offset different types of tax: when you withdraw form a SIPP in the UK you may be subject to income tax in UK and then CGT in Aus. This sounds like a question for @Alan Collett In Australia CGT is part of income tax. It's in the UK that CGT is a different tax from income tax. Despite that you can (normally) offset the CGT paid in the UK against the income tax due in Australia (although you will have to discount it 50% if you've claimed the 50% discount on the gain in Australia). Edited yesterday at 05:07 by Ken Quote Link to comment Share on other sites More sharing options...
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