4 key considerations for high net worth individuals moving to Australia

Category: Australia & News

A recent report in International Adviser about wealth and migration trends suggested that the UK is expected to see a net outflow of 3,200 high net worth individuals (HNWIs) in 2023.

The same report also found that Australia is expected to attract the highest net inflow of HNWIs in 2023. In fact, New World Wealth estimates that over 80,000 HNWIs have moved to the country over the past 20 years.

The Australian points-based immigration system tends to favour wealthy individuals. Furthermore, it also boasts a top-quality healthcare system that HNWIs are able to buy their way into – something that isn’t always possible in other countries around the world.

Then there are the other attractions of life in Australia, including the:

  • Relatively warmer weather all year round
  • Outdoor lifestyle
  • Easy integration process based on a common language

Of course, even with all these benefits, there are still plenty of aspects to think about ahead of relocating, especially surrounding your wealth.

If you’re a HNWI and are thinking of moving to Australia, find out four key financial issues you need to consider before you move.

1. Consider currency risk on the transfer of your assets

If you’re planning to move substantial assets from the UK to Australia, it makes sound financial sense to minimise the cost of doing so.

It is possible to transfer your pension and other investments into funds and investment portfolios denominated in Australian dollars (AUD). Such a transfer will often be made at a favourable exchange rate. Doing this can help reduce currency risk and could help to ensure that you don’t have to sell a substantial investment holding at an inopportune time.

It’s likely that you’ll be looking to transfer a large amount of money from sterling to AUD as part of your move, too.

We would strongly recommend that you use a specialist currency trading company to do this for you. They are usually able to access far more competitive exchange rates than you would normally be able to find if you transferred the money yourself through your own bank.

They can also give you access to forward contracts to enable you to lock in a transfer rate up to a year in advance. This can help give you some security and certainty around your currency transfer.

2. You will need to carefully plan the disposal of your UK assets

Non-UK residents are not usually subject to UK Capital Gains Tax (CGT). This means that, once you cease being a UK resident, you may be able to sell most of your UK-based assets and not be liable for CGT on any profit you make from the sale.

However, because your worldwide capital gains will be assessable for Australian tax once you become a resident in Australia, it’s important to plan the disposal of your assets carefully.

For example, your UK individual savings accounts (ISAs) will typically be subject to Australian tax. This means that you may find it beneficial to cash them in prior to your move to Australia. You can then reinvest the value in Australian assets once you’re a tax resident there.

You may also want to carefully assess other investments you hold in the UK, such as shares and investment trusts. For each, you will need to consider the tax situation if you hold them in Australia. In each case, this could help you decide on the best time to dispose of them.

You should also bear in mind that the transfer of assets between yourself and your spouse is liable for tax in Australia, unlike in the UK. So, asset transfers between spouses prior to leaving may be beneficial.

Read more: The top 10 financial planning tips if you’re moving to Australia

3. There is no Inheritance Tax in Australia

One of the big factors that’s often a key consideration for HNWIs moving to Australia is that there are no inheritance or estate taxes in Australia. However, you may have tax obligations for the assets you inherit.

Clearly, this can be highly advantageous from both a tax and a succession planning perspective.

However, you do need to bear in mind that you will have tax obligations for the assets you inherit, and your intended beneficiaries will in turn have a potential tax liability on assets they inherit from you.

For example, super death benefit tax is applied to the taxable component of a deceased person’s superannuation payout received by their beneficiaries, subject to different tax rates depending on the beneficiary’s relationship to the deceased and the form of the benefit.

Additionally, Income Tax will apply to any dividends or rental income from shares or property you inherited. Likewise, you will be liable for tax on any profits you generate on the sale of investments you inherit.

This will likely be a different estate planning environment from that which you will have been used to in the UK. Rather than planning around the specific issue of IHT, it is far more geared around a holistic tax planning strategy for inherited wealth in Australia.

4. You may want to make a separate will

Australian law recognises a will that has been prepared in another country. As a result, it is possible for all your assets to be dealt with under the terms of your English will.

However, we would strongly recommend that both you and your spouse or partner make separate wills dealing with your Australian assets, so you have separate wills for each financial jurisdiction where you have assets.

You also need to ensure that you review both wills regularly to confirm that they accurately reflect your financial assets and remain correct in terms of how you want your assets distributed on your death.

Having two wills in place can help speed up the probate process, as they can be dealt with concurrently. Whereas, with a single will, it’s likely that assets would have to be dealt with separately.

Read more: 6 great benefits of retiring in Australia

Get in touch

We have a wealth of experience when it comes to helping clients deal with the financial side of moving from the UK to Australia.

To find out more about how we can help you, please get in touch with us.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

This article is for information only. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.

All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.