Thinking of moving to Australia? Here are 4 key ways we can help you with your financial planning

Category: News & United Kingdom

A recent article by the Independent revealed that the state of Western Australia is seeking to persuade more than 30,000 UK workers to emigrate there.

While the article specifically references workers in the public sector, such as medical staff and teachers, it also references that the state is additionally looking to encourage those in other occupations to make the move.

After a decade of austerity and reduced investment in the public sector, followed by the pandemic and recent cost of living crisis, many people could well be receptive to the idea of a better climate, higher wages and an outdoor lifestyle.

Emigrating is not a decision to be taken lightly

According to the Australian Department of Home Affairs, nearly 1.2 million people who were born in the United Kingdom now live in Australia.

It’s important to be aware, however, that moving yourself and your family to the other side of the world is a big decision, and not one to be made impulsively.

There are many issues you need to consider, such as:

  • The impact on the other members of your immediate family
  • How your move could affect your relatives who would remain in the UK
  • Your employment opportunities.

While you will make your eventual decision taking your personal circumstances into account, we can offer expert advice and add value when it comes to your financial aspects of moving to Australia.

Here are four of the key issues we can help you with.

1. Dealing with your pension arrangements

It may seem odd to think about retirement when you could have much of your working life ahead of you. However, planning for your life after you finish working should be one of your key financial priorities.

Australian pensions, commonly known as “super” arrangements, are primarily arranged through your employer, although it is possible to make contributions through your own fund if you’re self-employed.

Unlike in the UK, super contributions are subject to tax as they are paid into the scheme. However, when you’re eligible, you are able to draw income from your fund tax-free.

Subject to eligibility criteria and the type of scheme, you may be able to transfer your UK pension to an Australian super. However, one important point to note is that you can’t transfer your pension if you’re in an unfunded public sector arrangement, such as the NHS pension scheme.

2. Maximising the value of your UK assets

If you’re moving to Australia, it’s likely that you could have a large sum of UK currency to transfer, either immediately or soon after your move.

When transferring your money, it’s advisable to use a specialist currency trading service as the rates offered can often be more advantageous than a bank-to-bank transfer.

You can also use forward contracts to lock in a currency transfer rate up to a year in advance to create certainty that you know exactly how much you’ll transfer.

Note that, even if you are able to transfer your pension (as you read in the previous section) you can’t do this until age 55, rising to age 57 in 2028.

However, some specialist UK-based pension schemes will allow you to transfer your current pensions into investment portfolios denominated in Australian dollars (AUD).

The switch can take place at an exchange rate that is likely to be favourable for you and, as a result, helps remove currency risk.

3. Dealing with property decisions

We’ve helped many clients make the move from the UK to Australia. Two common issues we’re asked for advice on relate to property.

Managing your UK property

What you do with any property you own in the UK is clearly dependent on your individual circumstances.

While selling it provides you with a substantial cash sum to finance your move, you may think it prudent to retain it in the short term, especially if you aren’t sure how long you’ll stay in Australia.

It provides you with a tangible link with the UK and somewhere to come back to if you change your mind, or only decide to move for a limited period.

Doing so also gives you the opportunity to create a handy income stream by renting it out. If you decide to do this, we would strongly recommend you use a specialist agency. They can give you the valuable peace of mind that issues such as rent collection and property maintenance will be taken care of in your absence.

Residential property in Australia

When it comes to your residential property requirements, there is no “one-size-fits-all” answer, and what you ultimately do will come down to your personal circumstances.

Clearly, there are certainly benefits of owning property in terms of capital growth – although you should be aware that property prices in Australia haven’t been subject to the same dramatic increases recently seen in the UK.

If you’re initially unsure of how long you will reside in Australia, and where you’ll want to live and work, you may be best advised to rent initially while you find your feet.

Renting can also give you the opportunity to get to know a city and its suburbs, so that you’re able to make an informed decision on where you want to live if you ultimately decide to buy your own home.

You should also be aware that you may be subject to an 8% foreign buyer stamp duty surcharge if you purchase residential property prior to becoming a permanent Australian resident. This is something you may want to factor in to your decision making.

4. Managing your taxation issues

If you have the luxury of deciding exactly when you’re going to move, it’s possible to create a highly tax-efficient outcome for yourself.

Because the Australian and UK tax years start on different dates, you can potentially split your financial arrangements between the countries and make use of both sets of tax-free allowances even if you’re only in each for a partial tax year.

Other issues could affect the timing and tax implications of your move – for example, how you manage the taxation on retained assets in the UK, any rental income you receive, and the profits from shares.

As you’d expect, HMRC and ATO have different reporting requirements so it’s important to get such management decisions right as mistakes can be costly and leave you facing an unwelcome tax bill.

Our tax agents – bdhTax – have extensive experience in delivering tax solutions for UK citizens moving to Australia.

Then, once you’re settled, they can also help you manage your tax affairs between the UK and Australia so that you’re submitting accurate tax returns to HMRC and the ATO. This can help you to mitigate the amount of tax you’re liable for.

Get in touch

If you’d like some advice about the financial aspects of emigrating to Australia and want to find out how we can help you, please get in touch with us.

Please note

The value of your investments 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 ATO and HMRC legislation, which is subject to change.