1.How does the cost of living really compare with the UK?
This depends on where you are living. In general, the cost of living will be broadly in line or slightly lower than in the UK.
2. Is income tax the same?
You will, on average, probably pay a similar amount of tax in Australia to the UK. The Australian tax system is more transparent than in the UK, and there are a lot of deductions that can be claimed against your income to reduce your tax bill.
3. Do their properties increase in value like ours?
For the most part, yes. Some parts of Australia have seen substantial growth on property prices over the last few years, but as with the UK, it depends on the location.
4. How can I get my pension paid to me?
You could either have your UK pensions paid to a UK based bank account, and then transfer the income to Australia when the exchange rate is favorable, or alternatively have the pension income paid directly to Australian bank account.
If you are not yet in receipt of your private pensions, you can transfer these to an Australian superannuation (pension) scheme and receive income tax-free at retirement (see below).
5. Who taxes my pension?
How you are taxed depends on your Visa. If you are a temporary resident, you will pay tax on your UK pension in the UK. If you are a permanent resident, you will be taxed in Australia. Should you receive pension income (called an income stream) from an Australian scheme, this would be tax free.
6. Can we still invest in the UK from there and have our income paid into our bank account, as we do here?
Yes, but the Australian Tax Office (ATO) tends to encourage inward investment in Australia, and therefore there are taxes that can apply on any investments that are based abroad. The ATO may tax any unrealised growth on foreign investments.
7. Do they have ISAs and tax-free savings plans?
No. The most tax-efficient savings vehicles are the Australian version of personal pensions – ‘Superannuation’. Any investments within Superannuation receive preferential tax treatment – the downside is that you cannot access these until retirement.
8. What are the hidden taxes?
There are two taxes in particular you should be aware of: Foreign Investment Fund (FIF) tax and Section 27CAA tax. FIF tax is a tax on the unrealised growth of foreign investments (including personal pensions).
The other tax is referred to as Section 27CAA, this is a tax on pension funds being transferred into Australia, and it is levied on the growth since residency. Because of these two taxes, it is important to have your pensions reviewed before you leave the UK for advice on whether to transfer them to Australia.
9. What insurance do I need?
You may want to consider short term life insurance as there may be a period where you are no longer employed in the UK, but have not yet started work in Australia. Once you are in employment, you may also want to consider private medical insurance to top-up the state benefits.
10. Will you help us with the red tape?
We are not Visa agents or accountants, so we cannot help you apply for your visa or fill in your tax form. We will help you with the transfer of your pensions to Australia, if this is appropriate and personal financial planning. We will also liaise with our Australian partner to ensure you have help and guidance when you arrive in Australia. If we can help we will tell you, but if not we will point you in the right direction.
Siddalls can answer all these questions for you – and then help you decide the best way ahead for you and your family.