Advice on being taxed in the UK

[Geraldineinoz]

In regards to my husband's income stream, will the whole amount we draw each month be taxed or only the amount left after the tax free amount is deducted?

I understand that the UK tax free amount is 12,750 pounds per year. I am trying to get my head around all of this, any advice will be most helpful. Thank you in advance.

[Marisawright]

31 minutes ago, Geraldineinoz said:

In regards to my husband's income stream, will the whole amount we draw each month be taxed or only the amount left after the tax free amount is deducted?

I understand that the UK tax free amount is 12,750 pounds per year. I am trying to get my head around all of this, any advice will be most helpful. Thank you in advance.

I'm not sure I understand the question.  

The income stream will be taxed as part of your total income, whatever that is.  You get a tax free threshold of GBP 12,750 per year and then you'll be taxed on the rest of your income, whatever that is.

[Geraldineinoz]

Just now, Marisawright said:

I'm not sure I understand the question.  

The income stream will be taxed as part of your total income, whatever that is.  You get a tax free threshold of GBP 12,750 per year and then you'll be taxed on the rest of your income, whatever that is.

Thank you Marisa, I thought that but wasn't sure.

[Andrew from Vista Financial]

10 hours ago, Geraldineinoz said:

In regards to my husband's income stream, will the whole amount we draw each month be taxed or only the amount left after the tax free amount is deducted?

I understand that the UK tax free amount is 12,750 pounds per year. I am trying to get my head around all of this, any advice will be most helpful. Thank you in advance.

Hi

Can you confirm that you are referring to:

1. Australian Income Stream...Account Based Pension?
2. And you are moving to the UK or already living in the UK?

Thanks

Andy

 

[Alan Collett]

If you are residing in Australia and the income is taxable in Australia - ie you aren't a temporary tax resident (as defined) - you disregard the UK personal allowance when working out the taxable amount for Aus tax purposes.

Best regards.

[Ken]

On 30/05/2024 at 15:51, Alan Collett said:

If you are residing in Australia and the income is taxable in Australia - ie you aren't a temporary tax resident (as defined) - you disregard the UK personal allowance when working out the taxable amount for Aus tax purposes.

Best regards.

But then they'd have an Australian Tax Free allowance of $18,200 to play with.

[Geraldineinoz]

Hi Andy,

We are still living in Australia but are looking at moving back later in the year.   I hadn't even thought about being taxed in the UK until my husband mentioned it, so I thought I had better get some advice before we just packed up and moved back.  

I think I have it right now but would like to confirm.

If we sell our house put the proceeds into our Australian bank account, then move our money to the UK it would be classed as savings and would be tax free.

Once we have purchased a home,  my husband's income stream would be paid into our Australian bank account and then transfered each month into the UK bank account.   Our UK aged pensions would be paid directly into this UK account and any interest this account accrued would be classed as income once the tax free amount had been deducted, and this is what we would be taxed on.   Have I got this right?  I hope this makes sense.

[Geraldineinoz]

An amendment to my last post.

I should have said:-  Bank interest plus Income stream plus Pensions equal INCOME 

Less Tax free amount, Balance is Taxable income.

Sorry for the mistake.  Please can you confirm this for me.

[Marisawright]

6 hours ago, Geraldineinoz said:

I should have said:-  Bank interest plus Income stream plus Pensions equal INCOME 

Less Tax free amount, Balance is Taxable income.

Yes, you've got it.

[Geraldineinoz]

Thank you, at last l have got my head around it. 

[rammygirl]

Yes and the tax liability arises when the pension is paid not when you transfer it to the UK. 

[Marisawright]

59 minutes ago, Geraldineinoz said:

Thank you, at last l have got my head around it. 

One thing I thought of:  is it possible to get the pension paid directly into a UK bank account, instead of going into an Australian bank account first?

I ask because if you have any funds or investments in Australia, they will be liable for Australian tax.  It's not a lot -- you just let the bank know you are living permanently overseas and they deduct 10% tax at source, and that's that.   But it's an extra hassle you could avoid.

[Ken]

4 hours ago, Marisawright said:

One thing I thought of:  is it possible to get the pension paid directly into a UK bank account, instead of going into an Australian bank account first?

I ask because if you have any funds or investments in Australia, they will be liable for Australian tax.  It's not a lot -- you just let the bank know you are living permanently overseas and they deduct 10% tax at source, and that's that.   But it's an extra hassle you could avoid.

That only applies if it's an interest earning account otherwise there wouldn't be any tax to deduct. Even if you could get the money paid direct to a UK bank account I would advise to avoid that as the exchange rate your UK bank will give you will not be the best. If you keep the money in an Australian account you could wait for a good rate.

Another option is to have it paid to a Wise account (it has a BSB and account number just like any Australian bank account).

[Andrew from Vista Financial]

16 hours ago, Geraldineinoz said:

Hi Andy,

We are still living in Australia but are looking at moving back later in the year.   I hadn't even thought about being taxed in the UK until my husband mentioned it, so I thought I had better get some advice before we just packed up and moved back.  

I think I have it right now but would like to confirm.

If we sell our house put the proceeds into our Australian bank account, then move our money to the UK it would be classed as savings and would be tax free.

Once we have purchased a home,  my husband's income stream would be paid into our Australian bank account and then transfered each month into the UK bank account.   Our UK aged pensions would be paid directly into this UK account and any interest this account accrued would be classed as income once the tax free amount had been deducted, and this is what we would be taxed on.   Have I got this right?  I hope this makes sense.

 

Hi Geraldine

Is the Income Stream a lifetime income stream or an Account Based Pension (ABP) income stream?

ABP can be fully accessed typically tax free.

Andy 

[Marisawright]

8 minutes ago, Andrew from Vista Financial said:

Hi Geraldine

Is the Income Stream a lifetime income stream or an Account Based Pension (ABP) income stream?

ABP can be fully accessed typically tax free.

@Andrew from Vista Financial, are you aware she's asking what their UK tax liability will be after they have moved to the UK?

[Ken]

13 minutes ago, Marisawright said:

@Andrew from Vista Financial, are you aware she's asking what their UK tax liability will be after they have moved to the UK?

I believe that's why he's asking the question. If it's a lifetime income stream it can't be changed so will have to be taxed in the UK. If an Account Based Pension it can be changed so there is the option of taking it all before moving to the UK and not being taxed in the UK at all (depending on how the money is subsequently invested).

[Marisawright]

46 minutes ago, Ken said:

I believe that's why he's asking the question. If it's a lifetime income stream it can't be changed so will have to be taxed in the UK. If an Account Based Pension it can be changed so there is the option of taking it all before moving to the UK and not being taxed in the UK at all (depending on how the money is subsequently invested).

So you're saying they have the option of withdrawing the lot and putting it in their Australian bank account before they leave (same as their house proceeds).  Once it's in the bank, it's just savings and they can just transfer it (same as their house proceeds).

Then, of course, they'd have to invest it in the UK somehow.  I suppose the good thing is that they'd no longer be at the mercy of exchange rates.  I think they'd need professional advice as to the most tax-advantageous way of investing it in the UK.