leeeesa

Hi everyone.
I am looking for advice/your experiences with UK private pensions being paid in Australia. My husband and I have five, very small private pensions between us and as we are now over 55 are looking to start receiving them. We have been advised by our pension companies that as we are no longer residing in the UK, we cannot receive the tax free lump sum and monthly payment. Our only option seems to be taking the full amounts and paying hefty tax. Has anyone had recent experience if this please? Did you pay tax in UK and Australia? thanks in advance.

Jakeinaka

I'm in Japan but I had a different response from my UK private pension company. I can't see why Australia should be different.
In my case at 55 there was no reason why I could not take the tax free 25%, in fact, I have started drawing some funds. 4 tax free withdrawals in the UK, no problem.
When I get to the 25% used up threshold, then battle with HMRC will commence.

leeeesa

Thanks for your reply!
This is interesting, our pensions are split between Standard Life/Aviva and Phoenix and they all say no to the lump sum and monthly payments. Good luck with your “battle” 😀

scotty9000

Possibly you could consolidate them into a sipp to make it easier. AJ bell. And or go back to the uk for a year and become tax resident to get the lump sum.

Jakeinaka

That's sort of what I did, moved to another provider who is more "friendly". There is a BUT, mine needs a UK bank account to pay into. Another can of worms for many...

kojasi

I'll be at that stage in 4 years and trying to get my head around this.
I think what you've heard is correct.

Here is what I'm planning from what I've read. Obviously I need to get this confirmed by a pro.

1. Open UK bank account
2. The day I turn 55 , make a 100 pound withdrawal from my SIPP. This will trigger an emergency tax code deduction by AJ Bell as a non resident, but the payment in the window (age 55 but before 06 April 2028) will ensure that I'm not pushed back to wait until I've turned 57 years to take my pension pot (as per new pension rule changes)
3. Fill out HRMC forms requesting a non-resident tax code for future SIPP withdrawals.
4. Forward this tax code to AJ Bell. Get confirmation from them on this.
5. Withdraw whatever I like from my SIPP every year with no UK tax deducted by AJ Bell, nor payable to UK goverment later.
6. Annually move $27500 (annual concessional cap limit) of my annual UK SIPP withdrawal into my SMSF, thereby reducing my Australian taxable income.
7. Add the balance of my annual SIPP withdrawals to my Australian taxable income.






I may be wrong but I don't think you can temporarily switch countries to choose where you pay tax. I think they look at your domicile status ie where your permanant home is, where your family live. I guess if you switch back again, that will trigger some alerts somewhere at the tax office.

rammygirl

Point three. The forms you need are from the ATO. return them to the ATO and they will endorse them confirming Aus residency. They then send them to HMRC who inform the pension company to pay you gross without Uk tax deductions. This, using snail mail can take a while so you may need to claim back overpaid tax. At least this is how I did it after advice from my accountant.

kojasi

Thank for this info. It is very helpful!

Would appreciate if you would help witll your timeline just so I can gauge when to begin the process
ie how long did it take from your completing of the the ATO form to your SIPP being notified of the new tax code?

Do you know if this can all be done in advance of turning 55, or do i have to first make a non-resident taxed withdrawal from the SIPP before I can move onto the ATO>HMRC forms process?

Thanks again


Thanks again

rammygirl

I just sent the form to the ATO, they then communicated with HMRC. From sending the form in to my pension company altering the tax code was 3 or 4 months. No idea if you can do it before drawdown starts.

mikelincs

The problem I see with that is that many UK banks will no longer accept people not living in the UK opening new accounts, given that some of them are closing accounts of people living abroad.

Jakeinaka

I'm not a pro but:
1. Open UK bank account: Very difficult if not resident in the UK
2. The day I turn 55 , make a 100 pound withdrawal: I did similar
3. Fill out HRMC forms requesting a non-resident tax code: Exactly what I'm doing
4. Forward this tax code to AJ Bell: Not necessary I think, in my case after being taxed by HMRC, I received communication from both them and my provider about new tax code.

The rest will depend how successful I am in the new year

Pulaski

If the pension amounts are small, consider drawing them down 100% (not necessarily in one lump sum), and using the proceeds to live on, and only starting to claim your other (main) pensions when the private pension funds are entirely used up.

This strategy could be advantageous if your other pension entitlements increase if you defer claiming them.

capnbirdseye

It's very easy to get a UK bank account from Wise (Google it). They specialize in this, and their exchange rates for transfers are very reasonable.

Jakeinaka

Don't need to Google it, Wise isn't a bank. Some pension providers may accept a Wise account for payments, but mine doesn't. In my case the conditions are clear:

Pulaski

This is correct, and is important information, because money (GBP) placed with Wise in the UK is not covered by deposit insurance, specifically because Wise not a bank.

If you look at Wise's web site they deflect questions about deposit insurance with a lot of fancy-sounding blather, to distract the uninformed, without actually lying, from the simple fact that when your money is held by Wise, it is not insured, plain and simple, neither as a bank deposit, nor as a investment fund.

Wise's web site talks about how it is regulated, and being regulated is good, but doesn't prevent Wise from collapsing, and Wise also talks about segregation of funds, which is also good, but is not IMO a substitute for deposit insurance.

All that said, Wise does provide a useful service, but personally I wouldn't use it for more than either [1] making transfers between traditional bank accounts, or [2] holding small sums (under £1,000) for ease of access/ convenience.