If you are a Brit currently living and working in Australia, you may well be planning to return to your home country at some stage in the near future.
Maybe it is something you have always planned to do when you come to retire. Alternatively, you may have been working here in Australia on a fixed-term contract that is now coming to an end, or your circumstances have simply changed, and you need to return to the UK.
It’s likely that the financial and logistical issues of your original move to Australia were detailed and complicated, and it’s fair to say that the same will apply on your return to the UK.
So, read on to discover some of the most important points you need to think about when you do eventually start planning your move back to the UK, and why expert financial advice can be so important.
1. Planning your return can be lengthy and complicated
Clearly, there may be occasions when moving from one country to another has to be done at short notice for some reason.
But if you are in the position of being in control of your timetable, we would always recommend you start planning as early as possible if you’re moving from Australia to the UK, or vice versa.
Even if your plans are only in outline form, the sooner you can start setting out the details and taking steps to get organised, the better your chances of a successful move.
Getting expert advice as part of that planning can really help you, even if you believe your personal circumstances and financial arrangements are straightforward. There are many pitfalls that even the most organised person can easily fall into.
Advice is even more important if your arrangements are complicated. For example, if you have sizeable financial assets in Australia, the planning will likely be more complex than if you have just been in Australia for a couple of years and have not bought a property or accrued a substantial super fund.
2. Your pension arrangements are critical to your financial future
If you’ve been working in Australia for any length of time, you will likely have accrued money in a super fund.
You may also have pension assets back in the UK that you have left there, appreciating in value, while you have been living in Australia.
If you’re in this situation, it’s important to ensure you’re making the most of different tax advantages relating to your respective Australian and UK pension schemes, but also that you’re aware of the various restrictions.
For example, these restrictions mean that, while you cannot transfer your super fund to a UK pension arrangement, the process of withdrawing the fund as tax-efficiently as possible is really one you should manage with an experienced financial adviser.
Such a process may well involve using Foreign Service Relief (FSR), which is not always straightforward and needs to be implemented properly to reduce the potential effect of tax on the income you draw as much as possible.
You may also want to continue taking advice once you return to the UK, around key issues such as maximising opportunities to benefit from tax-efficient saving options when it comes to both pensions and other savings and investments.
3. Selling any property you have in Australia could be a complex process
As potentially your biggest asset, or assets, you are likely to benefit from expert advice when it comes to decisions around any residential property you own in Australia.
For example, if you own an Australian property and are still unsure of your future retirement plans, you may not be planning to sell it at this stage. Instead, you might plan on letting it while you move back to the UK.
While this can provide you with a valuable income stream, issues such as taxation of rental income and your residency status may not be straightforward, and we would recommend you consult with a tax adviser to ensure you’re making the best decision subject to your own circumstances.
Even if you are planning to sell your property as part of your emigration plan, the timing around the sale is very important from a tax perspective.
You could be liable for UK Capital Gains Tax (CGT) if you sell it in the year you return to the UK, so this is clearly one of the key issues where advance planning and expert advice can be advantageous.
4. There may be wider taxation issues around your return to the UK
As well as property, you may also want to take professional advice on all tax-related issues concerning your move.
You may feel that you understand the differences in the tax regimes between Australia and the UK and feel confident enough to manage your tax affairs yourself. But, mistakes can be costly and are often irrevocable, leaving you with an unwelcome and unexpected tax demand from either HMRC or the ATO – or even both.
Everyone’s personal situation is different and there is no “one-size-fits-all” answer. Working with a specialist tax adviser will mean you’ll have the confidence that your residency arrangements are in order, and that you won’t make any expensive mistakes that you cannot rectify.
After many years of advising emigrating professionals, we can confirm that financial advice is important for expats because many people can unwittingly find themselves technically a tax resident in the country they have chosen to live in for part of the year without realising.
This can have both advantages and disadvantages, so it’s important to get clear guidance to help you maximise the former and mitigate the latter as far as possible.
5. You may have other assets in Australia to be considered
We have already considered your pension arrangements, but, as well as your super fund, it is likely that you could have substantial other financial assets split between the UK and Australia.
It’s important that you manage these as tax-efficiently as possible, particularly if you have to move them between different taxation jurisdictions.
So, planning and specialist financial advice are both crucial to ensure you maximise the tax advantages and avoid any errors or oversights that could end up costing you money.
6. You’ll need to avoid currency risk when you move your money
If you are planning to transfer a lot of money from Australia to the UK, you’ll obviously want to minimise the charges you’ll incur on the exchange and get the most advantageous exchange rate you can.
Specialist money transfer organisations will be able to fix a currency rate to mitigate any short-term fluctuations.
They can also help you to set up a multi-currency account that can ensure you do not get charged expensive transaction fees.
When transferring any amount of money, it’s important to always ensure that the currency firm you use is fully regulated and that your money is protected. We can help you find the right experts to ensure your financial transfers proceed without a hitch, giving you valuable peace of mind that your assets are in safe hands.
Get in touch
If you are planning to return to the UK and have any queries regarding your financial planning, 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.
