First year tax question
 

Would be grateful for advice on the following.

Lets say that you move permenently to Australia on the first of next January,
and you earn £50,000 in the UK tax year up to that date then you would get taxed in the UK at maginal rates.

If then you earn a further $50,000 whilst in Australia between the first of January and the end of the Australian tax year would that be charged at Australian marginal rates starting at $0 or do any UK earnings get taken in to account meaning that the $ earnt in Australia get taxed at bumped up higher marginal rates ?

Thanks for any advice.

Re: First year tax question
 

The UK earnings do not come into play when you move to australia, only what you earn since you became resident is relevant.

Re: First year tax question
 

Correct. If you manage things properly - closing the UK tax and becoming an Oz tax resident the next day each treats you separately.

IIRC you get a bit of a bonus in that the UK tax allows you the full tax year's personal allowance even though you are not there for part of the year: ie., it's not pro-rated.

Re: First year tax question
 

If you are clever with your timing you can earn a tidy lump sum playing this game.

BB

Re: First year tax question
 

I forgot about this.. Should I inform hmrc about leaving during the tax year as I'm sure I would get a tax rebate. Or will it be sorted anyway at year end?

Re: First year tax question
 

You need to inform them via form P86 from memory. You may well get a rebate.

You can also get the VAT back on some of the things you take with you when you leave the country under a different scheme.

BB

Re: First year tax question
 

Oooh.. Any more info about VAT? Doubt I would get anything but I have never heard of that before!

Re: First year tax question
 

So the Aussie personal allowance is pro-rated? Thanks.

Re: First year tax question
 

Anything you buy from a shop participating in the scheme (eg M&S) in the 3 months before you leave is VAT free provided you take it with you on the aeroplane. You fill in a form at M&S and then claim the VAT back at the airport.

BB

Re: First year tax question
 

But the company that does the VAT refund takes a big chunk and you have to join the queues at the airport before checking in to get these
(been there, done it last year when I was on a business trip to the UK and hit Oxford Street before flying home)

Re: First year tax question
 

So to be clear if you arrive in January half way through the Aus tax year then you get 50% of the personal allowance ($3000)
Do the other marginal rates get halved as well so does the $37000 threshold at 15% become $18500 and the 30% threshold become $40000 or are the marginal rates unaffected other than the personal allowance ?

Thanks

Re: First year tax question
 

Well I got AU$350 back (they give you any currency) which is money for nothing so I wasn't complaining!

BB

Re: First year tax question
 

The PA will be pro rated. Not sure about the tax bands, but I don't think they are pro rated, not thought about that one.

Re: First year tax question
 

OK thanks,I think I will pose that one to the ATO to be sure.

Re: First year tax question
 

Found this on the ATOs website



Example

Britney left Australia permanently on 22 December this financial year. She is entitled to six months, that is, from July to December, of the tax-free threshold in the financial year. Her tax-free threshold is therefore:

= $500 x 6
= $3,000.

Britney would pay no tax on her first $3,000 of taxable income. She enters the 15% tax bracket after that, and will have the usual marginal rates following from then on.


I assume this applies to incoming permanent migrants too so the marginal rates remain even if you are resident for only a part year other than the personal allowance which is pro ratad