If you’ve moved from the UK to Australia and still have a UK pension, you might be thinking about transferring it to an Australian superannuation fund. It’s a common question for migrants and returning expats, but the rules can be complex, especially when it comes to tax.
Here’s a simple guide to help you understand the main points before making a decision.

Tax Considerations in Both Countries

You’ll need to look at:

• Your Australian tax residency date – this determines how much of your pension growth may be taxable here.

• The UK’s pension access rules – most pensions can’t be accessed until you’re at least 55.

• The growth in your pension since you became an Australian resident – that growth is often what’s taxed when you move or withdraw your funds.

Withdrawing a Lump Sum from Your UK Pension

There are two main timing scenarios that affect how much tax you might pay.

1.Withdrawal within six months of becoming an Australian resident

If you take your UK pension lump sum within the first six months of becoming an Australian tax resident, it’s usually not taxed in Australia.

2.Withdrawal after six months

If you wait longer than six months, Australia generally taxes the growth in your pension since you became a resident. This amount is called the “applicable fund earnings.”

In the UK, typically 75% of a lump-sum withdrawal would be taxable. However, under the UK–Australia tax agreement, you can ask the UK tax authority to apply a “zero tax code.” That means only Australia will tax the withdrawal. The process can take some time, but it can often give a better tax outcome.

Transferring Your UK Pension to an Australian Super Fund

It’s possible to move your UK pension into an Australian super fund, including a self-managed super fund, as long as the receiving fund is recognised as a Registered Overseas Pension Scheme (ROPS) and you meet eligibility rules (usually you need to be at least 55).

What to Check Before Transferring

• ROPS Status: Make sure the Australian super fund is authorised to accept overseas transfers.

• Contribution Caps: Be mindful of Australia’s contribution limits. The annual non-concessional cap is currently $110,000, but with the three-year bring-forward rule, you may contribute up to $330,000 in one go.

• Tax Within Super: Once your money is in super, earnings are taxed at 15%, which can be lower than paying tax personally on investment income.

• Accessing Super Later: When you reach your preservation age and meet the conditions of release, you may be able to withdraw the funds tax-free.

Why People Choose to Transfer

• Simpler management – everything in one retirement system.

• Tax benefits – lower tax on investment growth inside super.

• Long-term planning – better suited if you intend to live in Australia permanently.

Please do not hesitate to get in touch with us if you need any additional information relating to this matter. Bates Cosgrave team is delighted to be of assistance to you.