BillW

Hello,

Are there any good web pages to help me understand how our Australian Superannuation is treated by the UK income tax office.

In Australia, the earnings on my wifes pension fund are tax free and I dont have to report earnings on my super fund in my tax return.

Can anybody recommend any companies that have assisted with sensible treatment of Aussie super money when repatriating to UK ?

Regards

Bill

JAJ

You probably need to seek the advice of a United Kingdom tax professional, and be prepared to pay for such advice. The Chartered Institute of Taxation | Home may give you resources to find a practitioner with experience in this area.

The U.K./Australia tax treaty says that pension income is taxable in the country of residence. DT2661 - Double Taxation Relief Manual: Guidance by country: Australia: Pensions

Which doesn't help you much, since you may be paying U.K. tax on the income, while it might be tax free if you remained in Australia. As far as I know the U.K. normally exempts 10% of non-U.K. pension income, but there may be other tax resources worth investigating. For example, see:
EIM74101 - The taxation of pension income: Amount of pension income charged to tax and also
EIM15082 - Employer-financed retirement benefits schemes: Extra-Statutory Concession A10: aim

None of this is suitable for self-research, and especially if your decision to move to the U.K. is contingent on this, you should get professional advice first.

BillW

JAJ,

Thanks for the links.

I've found some tax accountants near where I'm going on holiday this year and have written to arrange appointments.

Am working my way through reading/understanding the other links - pretty dry stuff.

The most difficult thing I've read in the last year has been a paperback detective story.


Bill

JAJ

On the face of it, it appears that a person whose main source of income is Australian superannuation may face a significant tax penalty if moving back to the United Kingdom. If contemplating this step, you should certainly take professional advice to confirm that this is the case, also if there are any work-arounds.

One of which might be if you can claim you're non-domiciled, although this would be unlikely for anyone originally from the United Kingdom. And even for others, there are numerous restrictions involved in using the remittance basis and it becomes prohibitive for most people after 7 years.

spouse of scouse

Agree, there certainly are significant tax implications to moving to the UK with an Oz super pension being your primary source of income. We've had preliminary advice here in Oz about our allocated super pensions, to the effect that after our UK personal tax-free allowances, our pensions will be subject to the usual income tax rate. They are tax-free here at the moment, but the Liberal (Conservative) government is making noises about changing that. We're going back to the financial/tax advisor bod for further info, and although everyone's situation is different I'll post any useful, generic info I get.

BillW

Hello SPouse of Scouse,

Thanks for the note.

There is also some discussion here that may be of interest.

<<<snip>>

Bill

nun

There are two main issues here:

1) How does the UK tax gains in the Super before income is taken
2) How does the UK tax income taken from the Super.

The answer to 2) is given in the DTA; if you are a UK resident the Super income is UK taxable.

The answer to 1) is far more problematic. Australian Superannuation seems quite complex with growths on some bits being tax deferred and others taxable.

There is no mention of the treatment of gains in pension funds in the DTA so you'll have to do some more research on HMRC rules and policy.

JAJ

In theory perhaps, or perhaps not. In practice, I have never heard of HMRC actively seeking to enforce anything like this.

nun

There must be an HMRC policy on this as there must be lots of Aussie expats with Superannuation pensions living in the UK. The DTA is not very helpful, but a call to an HMRC tax office might help.

JAJ

If there is a HMRC policy it would most likely be in the HMRC manual. There's no specific mention in this section:
DT2661 - Double Taxation Relief Manual: Guidance by country: Australia: Pensions

Calling a HMRC tax office is likely to be a waste of time, at best they will only be able to reiterate whatever is in the manual.

Observation. Forum discussion tends to elevate theoretical issues into practical problems. Which don't necessarily exist in the real world.

nun

Yep the link is mostly just paraphrasing the DTA.

I suppose when you are use to the way the IRS treats foreign financial arrangements you get a bit paranoid.