6 Month Window for UK Pension Transfers to Australia
For many years UK pension fund members migrating to Australia have been in a dilemma as to whether or not to transfer their funds to Australia within 6 months of their arrival.
Some key announcements by Her Majesty’s Revenue and Customs (HMRC) on the QROPS rules governing the tax on transfer means that pre-departure pension advice is essential, says the UK’s pension transfer pioneers, Montfort International plc.
UK Rules Effecting Australian Pension Advice
Before an HMRC announcement on 12th January 2009 it was understood that many people transferring their UK pensions to Australia, after 6 month window of arrival in Australia, could face a UK tax charge on their Australian taxes if the tax was paid by the Australian superannuation scheme. In addition, this charge would be regarded as an unauthorized payment from the Australian scheme.
This meant that the tax on growth after transfer which the UK pension member would need to pay could not be paid by the scheme in many cases without breaching UK QROPS rules. This meant that the member would have to pay tax out of their own pocket at a potentially higher rate.
The HMRC announcement on 12th January 2009 has clarified that tax paid by the scheme, in respect of the 6 month window for transfer being passed, is no longer an unauthorized payment.
As a result of this announcement an individual transferring to Australia is no longer under pressure to transfer their UK pension to an Australian Superannuation scheme soon after arriving in Australia and can look to transfer when the exchange rate is preferable.
Some key announcements by Her Majesty’s Revenue and Customs (HMRC) on the QROPS rules governing the tax on transfer means that pre-departure pension advice is essential, says the UK’s pension transfer pioneers, Montfort International plc.
UK Rules Effecting Australian Pension Advice
Before an HMRC announcement on 12th January 2009 it was understood that many people transferring their UK pensions to Australia, after 6 month window of arrival in Australia, could face a UK tax charge on their Australian taxes if the tax was paid by the Australian superannuation scheme. In addition, this charge would be regarded as an unauthorized payment from the Australian scheme.
This meant that the tax on growth after transfer which the UK pension member would need to pay could not be paid by the scheme in many cases without breaching UK QROPS rules. This meant that the member would have to pay tax out of their own pocket at a potentially higher rate.
The HMRC announcement on 12th January 2009 has clarified that tax paid by the scheme, in respect of the 6 month window for transfer being passed, is no longer an unauthorized payment.
As a result of this announcement an individual transferring to Australia is no longer under pressure to transfer their UK pension to an Australian Superannuation scheme soon after arriving in Australia and can look to transfer when the exchange rate is preferable.
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