Making the move to live and work in Australia is an exciting adventure. However, it also comes with financial challenges that you will need to plan for and address.
As a dual-licensed financial planning firm with offices in both the UK and throughout Australia, we understand the complexities of international relocation. We’re here to help you plan with confidence and manage all aspects of cross-border financial planning.
We have produced a new brochure outlining the key financial areas to consider when making the move from the UK to Australia.
The brochure goes though 10 of the key issues that should form part of your planning. Here, you read about seven of them.
1. Plan for the cost of living in Australia
All big projects need careful planning. So, if you’re moving to the other side of the world to start a new life, the financial aspects will need careful consideration.
You’ll need to have a relocation budget, which will cover costs such as flights, shipping, and your initial expenses when you arrive. This will help you ensure you have access to sufficient funds during the transition.
You’ll then need a clear idea of the affordability of your new lifestyle, including income, expenses, and key factors such as housing, healthcare, and education.
2. Open a bank account in advance
In order to hit the ground running upon arrival, you should open an Australian bank account in advance.
Most major banks, such as Westpac and Commonwealth Bank, will allow you to start the process online up to 14 days before you arrive in Australia.
When you arrive, you will simply have to visit a local branch and produce the necessary identification so you can open your account and start banking.
3. Manage currency risk
Part of your transition from the UK to Australia is likely to involve the transfer of money between the two countries.
This could involve substantial sums, including your savings and investments, and possibly the proceeds from the sale of your UK property.
Because of this, it’s sensible to find the most advantageous exchange rate possible.
We would strongly recommend that you use a currency exchange specialist. They will be able to use various options, such as forward contracts, to lock in favourable rates and reduce currency volatility.
4. Deal with taxation issues
Your Australian tax planning should ideally start before you leave the UK.
You will need to file a P85 form with HMRC. This informs them of your departure and will ensure you’re taxed correctly. Importantly, this will also enable you to claim any potential tax refund you may be owed.
If you are selling UK property or transferring assets as part of your transition, we would recommend taking expert tax advice, as timing can be important for tax purposes.
You will also need to register with the Australian Tax Office (ATO) and obtain a tax file number (TFN) from them, so you can start filing annual returns.
When you arrive in Australia, it will be important to get your assets valued as of your arrival. This generally establishes their cost base, which is essential for calculating capital gains or losses if and when you sell those assets in the future.
Find out more: Your guide to understanding how the double taxation agreement between the UK and Australia works
Find out more: Read about the services provided by our tax-planning arm
5. Plan your retirement income
In Australia, pensions are known as Superannuation (“super” for short). This is a long-term savings system where your employer contributes money into a fund for retirement, and you have the option to make your own personal contributions.
If you plan to retire in Australia, you may transfer your accrued UK pension to a super fund by means of a Qualifying Recognised Overseas Pension Scheme (QROPS).
This can offer significant tax advantages, whereby you will have benefited from tax relief on your contributions but may pay no tax on the income you draw.
However, there are eligibility restrictions, and the process of transferring to a QROPS is not straightforward, so we would always recommend you get expert advice.
Also, bear in mind that your UK State Pension cannot be transferred but can be paid to you in Australia. However, it won’t benefit from the UK’s “triple lock” increases.
Find out more: Can you transfer your UK pension to Australia?
6. Manage your UK-based savings and investments
How you deal with the financial assets you have in the UK will depend on your long-term plans, and how long you intend to stay in Australia.
You should be aware of the taxation issues around these assets. For example, ISAs lose their tax-efficient status once you become an Australian resident. Furthermore, you may have to declare ISAs and other UK-based investments on your annual Australian tax return.
As with all financial planning issues relating to your move, we would recommend you get expert advice before taking any action.
7. Make decisions about residential property
Clearly, one of your top priorities will be finding somewhere to live in Australia.
Non-residents and temporary visa holders face certain rules and restrictions when it comes to purchasing property in Australia. This means that, initially at least, you are likely to be looking to rent.
This can be advantageous, as it allows you to spend time in a town or city without making the commitment of a property purchase.
It may be worthwhile using a specialist rental agency that can start the process of helping you to find somewhere to live before you leave the UK.
You will need to decide whether to sell or retain your UK property, as selling before or after the move has different tax implications.
Selling will free up capital that you can then use to help fund your move and any subsequent property purchase in Australia. Alternatively, retaining your UK property will give you somewhere to return to, and you could use it to provide rental income while you are overseas.
Get expert help
We’ve helped thousands of clients manage their finances when relocating down under, and we’re here to support you every step of the way.
If you would like to talk about your own plans for moving to Australia, 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.