Moving UK Pension to Australia

Australian Expats

Moving UK Pension to Australia

Can I collect my UK Pension if I retire to Australia?

Yes, retired expats are entitled to receive your British State Pension, even if you live abroad. Your pension can be paid into any bank account in the world, in any currency. But beware, there are tax implications to collecting your UK Pension in Australia.

What are the tax implications of collecting my UK Pension in Australia?

If you’re on a temporary visa in Australia and haven’t informed HMRC you’re tax resident in Australia, your British pension could be taxed in the UK. You’d also be taxed in Australia, but would get a “foreign tax credit” for the amount you paid. In other words, you wouldn’t pay more than the Australian income tax due on your UK pension such as a SIPP or final salary pension scheme.

UK-Australia Double Taxation Agreement means you can stop paying UK taxes by formally notifying HMRC that you’re tax resident in Australia. You’ll then only pay Australian income tax on your UK Pension.

However, you’ll be taxed in Australia at your highest marginal rates of income tax. You may be better off transferring your UK Pension to Australia altogether.

Can I move my UK Pension to Australia?

In short, yes, but only if it is a private or company scheme. If it is the UK state pension, you can NOT move it. This is good news if you’ve decided to retire abroad and have non-state pension benefits. However, there are specific rules around moving your UK Pension to Australia.

How do I transfer my UK Pension to Australia?

Changes to the law in 2015 effectively restricted straight transfers from a UK to an Australian pension.

To be able to transfer your UK pension to Australia without incurring HMRC tax penalties (of up to 55%) and additional charges you need to ensure that you are transferring your UK Pension funds to a Self-Managed Superannuation Fund (SMSF) (an Australian pension scheme) which is a Qualifying Recognised Overseas Pension Scheme (QROPS).

What are the tax implications of moving my UK Pension to Australia?

Australian residents do not pay income tax on their pension schemes at retirement after age 60. Australian pension schemes are not taxed. By moving your UK pension scheme to an Australian SMSF QROPS, you avoid paying tax on your pension scheme on income and death.W

Where can I find advice about transferring my UK Pension to Australia?

QROPS is a complex area with financial repercussions for transgressions. There’s also Australian Tax Office (ATO) legislation to comply with. Then, there are considerations such as which currency to maintain, contribution caps and exit tax rates, which type of SMSF to opt for, and so on. We have advisers specialist in this area, who stay up to date on the current programs and legislation. We can advise you on the various options available, break down some of the more complicated aspects, and help you navigate the legal requirements.

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Nathan D’Cruz

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