Please note: This article was written in 2017. Contact our Nexia team for the latest advice.
When dealing with UK and Australian cross-border financial and taxation matters, you really need to speak to someone who has an in-depth knowledge of both the UK and Australian financial and taxation systems. Nexia can provide you with unparalleled access to financial and taxation advice from experts who have lived and worked for leading firms in both the UK and Australia. Below are some examples of the ways we can assist you.
Advice on UK Pensions
Changes to the Australian superannuation law on 1 July 2017 reduced the options available to individuals in respect of moving their UK Pension to Australia.
The UK pension laws also changed with effect from 9 March 2017, which means that the choices available to individuals are as follows:
- Leave their UK pension in the a UK pension scheme;
- Export their UK pension to a Recognised Overseas Pension Scheme (ROPS) in the country where they are a tax resident; or
- Transfer their UK pension to another country (other than the UK or Australia) and potentially suffer an upfront tax charge of 25% of the UK pension fund on transfer.
If you have a UK pension we can advise you on the best course of action, from a UK and Australian financial and tax perspective.
Key issues to consider are:
- How should you access your UK Pension fund? As an annuity? By receipt of a lump sum? By rolling over to a recognised overseas pension scheme that has been approved by HMRC (the UK tax authority)?
- What are the UK tax implications for your UK pension?
- Are you 55 years old or more and eligible to rollover your UK Pension to a Australian self-managed superannuation fund (SMSF) which is a recognised overseas pension scheme under UK tax law?
- Is there Australian tax on the rollover of your UK Pension to an SMSF?
- Will your rollover from your UK Pension to an SMSF exceed the non-concessional superannuation cap? From 1 July 2017, the non-concessional superannuation cap is $300,000 (assuming that you are eligible for the three year bring forward rule). In addition, you cannot make a non-concessional superannuation contribution unless you have total superannuation member account balances of less than $1.6 million.
- Should you transfer your UK Pension to a recognised overseas pension scheme in another country?
We can provide you with expert advice to help you make the most appropriate decision regarding your UK pension, from a personal, financial and tax perspective, potentially resulting in significant tax savings or more income. There is no need to deal with advisers offshore – you can obtain all of the advice you need here in Australia from qualified reputable professionals.
UK/Australian Tax Issues
Nexia Australia has experts on the application and interaction of the UK and Australian tax laws including income tax, capital gains tax, UK inheritance tax and the taxation of trusts.
Emigration to Australia or the UK
If you are planning on moving to Australia from the UK, or have recently moved to Australia from the UK you will need tax advice on how best to structure your affairs. Similarly if you are planning a move to the UK, from Australia, we can advise you on the best way to negotiate the complexities of the UK and Australian tax laws.
Estate Planning
If you have assets in the UK above £325,000 your estate is likely to be required to pay UK Inheritance Tax on your death at 40% of the value of those assets. If you are originally from the UK, you may also find that UK Inheritance Tax is payable at 40% on your worldwide estate. The best advice is to contact us early to see if your have a UK Inheritance Tax problem. We can assist you in legal ways to reduce your UK Inheritance Tax exposure.
The interaction of the UK and Australian tax position on death is complex. Traps exist in the Australian and UK capital gains tax laws and in the UK’s Inheritance Tax laws. With appropriate planning these traps can be avoided. In fact, in certain instances the combined effect of UK Inheritance Tax on death and Australian Capital Gains Tax on the distribution/sale of an asset from a deceased estate may result in an effective tax rate of 87% (that is 40% UK Inheritance Tax and 47% Australian Capital Gains Tax). The UK/Australian Double Tax Treaty does not grant a credit for the UK Inheritance Tax against the Australian Capital Gains Tax. If you think that you may be affected by this issue, please contact us.
Taxation of Trusts
We can advise on the UK tax implications of Australian Trusts where the beneficiaries are UK tax resident. Please note that there are extensive changes under UK tax law that effect the UK taxation of Australian and other offshore Trusts. These changes to the UK tax law are likely to apply retrospectively from 6 April 2017.
We also advise on the Australian tax implications of UK Trusts where the beneficiaries are Australian tax residents.
Next steps
Our experts could save you money, optimise your income and protect you against incorrect financial dealings.
For more information on tax planning and expatriate tax or to discuss your personal situation with a Nexia Adviser, get in touch to arrange a consultation.