Super/UK Pensions - UK Pensions
Lump Sum & Regular Income
The taxation of UK pension income is dependent on your tax residency and visa status. The Double Taxation Agreement (DTA) between the UK and Australia determines where the income is taxable. It is not a choice. Both UK lump sums and regular pension incomes may be taxable in either the UK, Australia or both.
For individuals whom are a permanent resident of Australia, under the terms of the DTA between the UK & Australia it is not correct to pay tax on your pension under PAYE in the UK, and to claim a credit for this UK tax on your Australian tax return. The UK pension is only taxable in Australia, (unless your visa permits you from reporting your foreign sourced income) and would be omitted from any UK tax return and included on your Australian return only.
An application is required to be completed to achieve this outcome, whereby a NT (No Tax) PAYE Coding is issued to each of your UK Pension Schemes, this will ensure the pension income is received gross (with no tax deducted), and the gross pension income is included on your Australian tax return.
Please note that this applies to pension income only, and does not apply to any lump sum payments.
Whether you retain the pension income in the UK or remit it to Australia is not a relevant factor in how the pension is taxed.
If you are in receipt of pension income from a foreign pension or annuity you may be entitled to claim a deduction to reduce the taxable amount in Australia if your foreign pension has an Undeducted Purchase Price (UPP). Only some foreign pensions and annuities have a UPP. The UPP is the amount you have contributed towards the purchase price of your pension or annuity – your personal contributions, for which you didn’t claim a tax deduction at the time you made the contribution i.e. after tax contributions.
Our services include obtaining an NT (No Tax) code from HMRC if applicable and also obtaining an Undeducted Purchase Price (UPP) determination from the ATO.
We are able to advise regarding the taxation of UK lump sums and regular pension incomes in both the UK and Australia. We at GM Tax can also provide you with a comprehensive guide to your UK & Australian tax position when considering accessing or transferring your UK pension benefits to Australia.
Please call one of our offices or send an online enquiry via our website for assistance with accessing and receiving UK pensions.
GM Tax also offers the following services:
- Preparation of Financial Statements for Self Managed Superannuation Funds (SMSF).
- Preparation of SMSF tax returns, with all returns submitted to the ATO electronically.
- QROPS approval applications with HMRC, including attendance to trust deed alterations.
- Assistance with QROPS reporting obligations to HMRC.
- Preparation with the application for exemption from UK tax in relation to UK Pensions with Australia.
- Establishment of SMSF and attending to all appropriate registrations.
- Preparation and electronic submission of UK and Australian tax returns.