Uk private pension and tax implications
 

Good morning
my wife is now eligible to a uk private pension and a lump sum
her pension is worth £7000 and lump sum £20000
she is still working in Australia and can put all of her earnings in superannuation
We want to minimise any tax implications, can we claim the $18200 tax free threshold on our uk pension and a little Australian earnings?
Thank you for your time

Re: Uk private pension and tax implications
 

If you are eligible for SAPTO you can earn $32,279 totally tax free (not including any Australian sup you receive).

https://www.superguide.com.au/how-su...x-offset-sapto

Here is a calculator that works out your tax liability at various income levels

https://www.superguide.com.au/how-su...tax-calculator

Your lump sum of £20000 might push you over the limit unless you can take it in small bites.

Re: Uk private pension and tax implications
 

I had similar. You cannot claim any tax free allowance in Uk against ATO
the lump sum will be taxed as income. BUT only the growth since you arrived permanently in Australia. Get a valuation of the lump sum on that date from your pension provider.
The monthly payments are treated as untaxed income in Aus so you might be able to top up into your super at 15% tax unless you are already at the max limit. If your UK pension company deducts tax at source this will be taken into account but you can get them to pay untaxed by completing a form available online.
Im guessing this is a final salary pension and you can’t really alter it much.

Re: Uk private pension and tax implications
 

thank you for this information, appreciated

Re: Uk private pension and tax implications
 

Here's my understanding - but obviously i am no expert so check it out with a professional:

Tax Free Cash

• the "tax free cash" part of the pension will NOT be taxed in the UK,
• It is taxable in Australia, however, the amount of tax you pay will be based the growth in the fund since you left the UK
• Example:
  • I left the UK in 2010 and the value at that time of my Tax free cash was $100
  • When i took my tax free cash in 2023 it had grown to $150
  • Tax is therefore only payable on the $50 i.e.not the whole $150
  • The $50 is added to my other income in Australia and assuming i am a basic rate tax payer, my tax would be $50 x19% = $9.50
  • That means the $150 tax free cash paid from the UK is now worth $140.50 ($150 - $9.50)
• Exchange rates are another issue to consider. You work out the value of the fund using the exchange rate at the time you left and the time you take the tax fre cash
  • The exchange rate on 2010 was approx 1.70 and is now approx 1.95. This means that the value of the pension in 2023 has grown by both the fund growing and the exchange rate increasing. For other people who migrated at different times, the opposite may be true (i.e. the sterling rate was higher than it is now) and because of changes in exchange rates you may end up paying no tax at all
• As you can see its all quite complex and hence its good to get professional advice

Re: Uk private pension and tax implications
 

Thanks everyone.
anyone know any tax return accountants in Perth area who have the expertise to assist us in our tax returns?
just when you think you’ve worked hard and get a little bit of pension, the good old tax man is hovering.

Re: Uk private pension and tax implications
 

We use Diane Driscoll at bdh Sterling in Perth.

HTH

Re: Uk private pension and tax implications
 

I was told by a financial advisor that the way to calculate accumulated earnings was amount of value now (£) - amount of value (£) at time of migration * exchange rate now. I would dearly love this to be wrong and your method to be right (your method is much fairer in terms of actual value). If anyone knows for definite, please shout out!

Re: Uk private pension and tax implications
 

Hi looking to get an estimate on a WA government superannuation after 15 years - haven’t joined scheme and have sat on webinars but they cant offer individual forecasts ?