Relocating from Australia to the UK brings with it a range of important financial decisions – none more significant than how to manage your long-term investments.
This could be particularly pertinent if you already had a good-sized portfolio before you left Australia.
On the face of it, you may see it as a simple choice between continuing to invest in Australia or growing your wealth in the UK, where you’re currently living.
However, as with many financial planning issues, it’s not necessarily such an easy “either-or” decision.
Read about some of the factors that should drive your decision-making.
Let your long-term plans shape your strategy
Before making any long-term investment decisions, you need to have an idea of what you want to do and, importantly, where you intend to live.
For example, if you only plan to stay in the UK for a short time – perhaps on a fixed-term work contract – keeping a strong investment presence in Australia may make sense.
A healthy portfolio of investments in Australia provides you with some long-term financial security, particularly in relation to your return home.
On the other hand, if you see your long-term future as being spent in the UK, it’s likely to make more financial sense to focus on growing your wealth here, both from the point of view of practicality and tax efficiency.
If you are unsure of your long-term plans at this stage, a balanced approach may be advisable, allowing you to take advantage of the UK’s tax-efficient options while maintaining funds in Australia.
Managing your existing Australian investments
If you have previously invested in Australia, you are likely to be comfortable with familiar company names and the investment structures available to Australian residents.
Furthermore, you may still have income in Australia, such as from rental property, that you are using to fund your investments there and grow your wealth.
You are also likely to have an invested super fund, which, along with your other non-super investments, will go towards meeting your future spending needs if you plan to return.
However, investing exclusively in Australia, particularly just in Australian markets and companies, can create concentration risk if you don’t consider your wider investment strategy.
By investing in the UK, you can help create a more diverse portfolio across different markets and reduce currency risk if you access Australian investments from the UK.
You also need to consider how the new Capital Gains Tax (CGT) regime, announced in the Australian Budget and due to come into effect in June 2027, could affect your long-term investment strategy.
Find out more: How proposed changes to Capital Gains Tax could affect you, and what you should be doing about them
There are strong reasons to invest where you are living
As a UK resident, you can make the most of tax-efficient investment structures that can help your wealth grow more effectively.
For example, you can invest up to £20,000 into a Stocks and Shares ISA. Your funds will grow in a tax-efficient environment. Furthermore, all the time you remain resident in the UK, any money you draw from your ISA will be exempt from Income Tax and CGT.
Also bear in mind that the £20,000 allowance applies to each individual, so between you and your partner, you can quickly build a substantial fund.
For longer-term investments, you may want to consider a pension (not accessible until age 55, rising to age 57 in 2028), which offers tax relief at your marginal rate of Income Tax on your personal contributions.
From an administrative perspective, investing where you are living can also simplify managing your funds, as well as avoid currency conversion costs when you access funds in Australia.
Having an investment portfolio in the UK creates financial flexibility, especially if you decide to settle permanently.
Don’t overlook currency risk
Holding investments across Australia and the UK inevitably introduces currency risk.
Fluctuations in the exchange rate of the Australian dollar to UK sterling could reduce the effective value of your wealth if you are selling assets in Australia and transferring the proceeds to the UK.
For example, when the Australian dollar is weak against sterling, you get less equivalent purchasing value. However, the reverse will apply if sterling is the weaker currency, making it beneficial to sell Australian assets and convert the proceeds into pounds.
Because of this, maintaining a spread of investments across both countries mitigates the risk of becoming overly exposed to a single currency.
Find out more: Why expats in the UK and Australia need to take currency risk seriously
Striking the right balance
Ultimately, there is no one-size-fits-all answer for Australian expats in the UK. The key factor in putting together your investment strategy is your long-term plan.
Investing in the UK means you can make the most of tax-efficient options and have assets available to fund your plans while you are living in the UK.
At the same time, keeping your Australian investments will provide you with valuable flexibility if you intend to return home in the near future or have to make the return journey at short notice.
Cross-border investing across different markets can also help reduce risk and potentially improve your long-term outcomes.
Find out more: Why a long-term investment strategy could protect you from inflation or recession
Get in touch
Regularly reviewing your investment strategy as your residency status evolves can help ensure your investments continue to support the life you want to build.
If you would like to discuss your investment plans in more detail, 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; it does not take into account your personal objectives, financial situation, or needs.
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.