8 key steps to take if you are returning to the UK from Australia

Category: Australia & News

Hopefully, we’re not tempting fate when we say that there seems to be light at the end of the tunnel of the Covid-19 pandemic.

One effect of this is that detailed consideration is now being given to plans that have been on the back burner for more than twelve months.

Moving back to the UK having spent some time in Australia could well be the sort of thing we mean. It’s possible that you might have planned to do this last year and had to shelve your plans at the last minute.

It’s not a straightforward process, and we’re sure you’re aware that it takes a lot of planning to get right. Mistakes can be very costly, but most are avoidable with the right advice and consideration.

So, here are eight of the key issues you should be considering as you start planning your return to the UK. As you will see, a lot of the issues are detailed, and we make several references to the importance of professional advice.

1. Covid-19 and travel

At the time of writing this, it’s difficult to confirm the exact requirements for people returning to the UK from Australia when it comes to the Covid-19 virus.

Although current signs are positive, we’d suggest that it’s still too soon to say how straightforward moving between the two will be by the end of this year.

We would say that having had the Covid-19 vaccine is essential – both for travel and, most likely, access to many events in the UK. We would also expect that having had a clear Covid-19 test before departure and presenting evidence of this to board will be compulsory.

The UK government has published details of when you’re required to wear a mask.

2. Ensure you start planning as soon as possible

Unless it’s unavoidable, we’d always recommend that moving from Australia to the UK, and vice versa, is not something to be done at short notice.

Obviously, there could be specific circumstances that are outside your control – maybe employment or family-related issues – but, in general, the more preparation and planning time you have, the better.

How straightforward your planning and moving process is will clearly depend on your individual circumstances. For example, if you have sizable and complicated assets in Australia the planning will be more complex than if you have just been in Australia for a couple of years and have not bought a property.

3. Sorting out your pension arrangements

If you’ve been working in Australia, you most likely will have accrued money in a super fund.

The bad news is that you cannot transfer that to a UK fund. The good news, however, is that once you reach age 60 it’s likely that you will be able to take it as a lump sum, free of tax.

The process of withdrawing the fund as tax-efficiently as possible is really one you should manage with an experienced financial adviser. It could well involve using Foreign Service Relief (FSR), which is not always a straightforward process and needs to be implemented properly to reduce the impact of tax as far as possible.

Back in the UK, pensions are still one of the most tax-efficient ways of saving money – the government will automatically add 20% tax relief to the value of whatever you save, plus higher- and additional-rate tax relief is available.

Finally, as the UK State Pension is based on National Insurance contributions (NICs) you should check your NICs history and consider topping up the years you have missed.

4. Finding somewhere to live in the UK

When you relocate back to the UK, you’re obviously going to need somewhere to live.

If you’ve kept a UK property, it will be a simple step to ensure it’s ready for your return.

If you no longer have a UK property, you will need to have other plans in place. If you have been outside the UK for any length of time you may well need specialist advice to obtain a new mortgage.

It may well be advisable to set up a short-term rental until you’ve found your feet.

5. Managing your Australian property

If you own property in Australia and are not planning to sell it at this stage, you should register with a reliable letting agent to manage it on your behalf. Be aware that the taxation of rental income will depend on your residency status.

We would strongly recommend you consult with a tax adviser who has experience in the field of taxation for expats returning to the UK – both for this and all other tax issues related to your return.

If you’re going to sell your Australian property, you could be liable to UK Capital Gains Tax if you sell it in the year you return to the UK. Here’s one of the issues where advance planning is clearly advantageous. Again, an experienced tax adviser will be able to help you.

6. Planning your tax position

As we mentioned in the previous section, you should look to get professional advice on all tax-related issues concerning your move.

A tax specialist will be able to advise you on residency matters, which will be important when it comes to ensuring you pay the correct amount of tax in the correct jurisdictions.

Every situation is different – there is no “one size fits all” answer. Working with a specialist tax adviser will mean you’ll have the confidence that your affairs are in order, and that you won’t make any expensive mistakes that you cannot rectify.

7. Managing your other Australian-based assets

We have already considered your pension arrangements, but, as well as pension funds, 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 pitfalls that could end up costing you money.

8. Currency considerations

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.

Specialist money transfer organisations will be able to fix a currency rate to mitigate any short-term fluctuations.

It’s also possible to set up a multi-currency account that can ensure you do not get charged transaction fees.

When transferring any amount of money, you must always ensure that the currency firm is fully regulated and that your money is protected.

Get in touch

Finally, we would always recommend that you seek advice about the issues we’ve flagged up in this article.

Mistakes can be costly, and in most cases are easily avoidable with some simple pre-planning.

Get in touch if you believe you would benefit from advice.