flip

Hi

does anyone know whether you can continue an endowment in the uk while a resident in Australia?

we have had endowment mortgages which we continued when we bought another house using a pep (later converted to isa) mortgage. they only have 10 years left to go as we're getting on a bit.

i understand in oz the mortgages are repayment.

any chance we'd be able to continue the payments and get the pay off still tax free at the end of the ten years?

hope i don't get mobbed by the "you got it too good" mob for asking such a "greedy" question.

thanks for any help.

Bordy

I remember this coming up before flip & there were a couple of people who continued there endowment payments in UK from Oz.
So I think it probably can be done, maybe try a search.

moneypenny20

I think, from memory, you can keep them going but you will get clobbered for the tax in 10 years time.

We have decided to cash (sell ) ours before we go. Will use the crap amount offered to pay for the container and flights. Going to be worth b*gger all in the end anyway - well ours is .

biggy

you can keep them going, we are.....with regards the tax thing....dont quote me on this but I was told that if u bring money over from stuff like that , if u pay it straight into ur Aussie mortgage then u wont get stung for tax.....anybody else been told this?? You can also keep ur life insurance u have in the UK going, just let them have your addy in Oz

Grayling

Be very careful

These are tax free in the UK but not in Australia.

Any growth is considered as income and is taxed ANNUALLY not at maturity.

www.ato.gov.au

You really need to take expert advice.

G

flip

Thanks everyone

So how do I find the best financial advice? and is it terribly expensive?

Carolyn

spottydog

Sorry can't help on where to get advice.

The regulations on PEPs and ISAs (or were 6 years ago when I worked in them) are that you can only open one for that year if you are resident in the UK and once you leave, whilst previous ones can be kept open, nothing can be added to them. So once you leave the country you won't be able to keep making the payments but you will be able to keep the ones you've got open (and, I believe, Australia will tax you on them).

wmoore

Try Alan Collett who posts on here. I'm sure he's a bean-counter

kirsty&al

Hello,

Endowments, ISAs and PEPs all come under the FIF rules (Foreign Investment Funds). Note that personal and group pensions also come under these rules.

If the total value of your FIFs (and those of your associates - typically spouse and dependents) is more than $50k then you will be taxed on any increase in value every year.

If you have less than $50k then you don't have to pay tax on the yearly increase but you will pay tax when the fund pays out. The amount of tax will be based on the difference between the pay-out value and its value (in A$s) when you became tax resident (this is typically when you arrive to stay permanently).

There is a second hand market for endowments in the UK. This can be done through the web or through a financial advisor.

Sorry to pass on the bad news.
Regards
Alistair

hevs

We decided to keep one of ours as it was under the $50 .000 and only has a few years left to run We put the remainder of the monthly direct debits into our english bank accounts so that we will have enough to pay it out. There is no problem (apart from the tax) with keeping them there.

ABC, Al or any boffin??() if we lensfer it and use the english visa card, would there be any dodgy implacations i this??

ACE

We have 4 policies 2 will mature in 2008 and the other 2 in 2009. 2 of them are worth less than $50K the other 2 are worth more. Does anyone know if the former policies will be tax exempt or will the total amout be assessed together as one lump sum. We will be seeking professional advice closer to the time of our departure but I just wanted to hear peoples' opinions.

Thanks
ACE

kirsty&al

Only if you get caught.

Unfortunately it has nothing to do with the transfer of the money. Even if you get a capital gain and leave the money in the UK, you're supposed to declare it.

The only good thing is that because it will be more than 12 months you'll get the 50% discount. Also you will get some advantage if the exchange rate was higher on the day that you became tax resident compared with the day the policy pays out. Remember the money you made before you arrived is tax free.

You know what they say about death and taxis.

Regards
Alistair

kirsty&al

If the total of all of your policies (your meaning you and your associates - typically spouse and dependents) come to more than $50k then these will come under the FIF rules. Note this is not a tax free limit - it is a trigger point.

Considering you are that close to payout, you will probably pay less tax to the ATO than you would lose by cashing them in.

Note: if you want to leave you policy in place then you don't have to keep an account in the UK paying in every month, you can elect to become fully paid up (i.e. you pay all of your contributions to the end). I don't know if you get anything to offset the interest you would have earned if you continued to pay monthly.

Regards
Alistair

kirsty&al

Hevs, just realised... was this a genuine question or were you trying to stop me killing easy prey?

Al.

jumbo

If you remove the pep/isa wrappers you can offset Australian tax with the UK 10% tax credits