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    TaxKilnUK tax guidance
    TaxKilnUK tax guidance

    Moving Abroad → AU super plus UK pension

    AU Superannuation plus UK Pension Interaction — The Most-Misunderstood UK-AU Topic

    AU superannuation plus UK pension interaction is the most-misunderstood UK-AU topic. Three separable mechanics: (1) AU Superannuation Guarantee (employer compulsory contribution 11.5 percent Jul 2024-Jun 2025; rising to 12 percent from 1 July 2025) operates alongside any UK pension you already hold; (2) UK pension drawn while AU-resident is AU-taxable under DTA Article 17 with HMRC NT (No Tax) code via form Australia-Individual; (3) QROPS transfer of UK pension to AU super carries a 25 percent Overseas Transfer Charge unless the member is AU-resident at the time of transfer (HMRC PTM112000) PLUS a 5-year continuing UK tax liability if the member subsequently leaves AU within 5 full tax years. The Applicable Fund Earnings (AFE) election under s.305-80 ITAA 1997 taxes the foreign-earnings component at 15 percent on receipt. Most UK to AU movers should NOT transfer their UK pension to AU super.

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    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact HMRC. Read our editorial scope →

    In plain English

    There are three separate questions to keep apart: (1) AU SUPER GUARANTEE: When you take an AU job, your AU employer must contribute 11.5 percent of your ordinary earnings to a nominated super fund (12 percent from 1 July 2025). This is independent of any UK pension you hold — you simply have two parallel pots from then on. (2) DRAWING YOUR UK PENSION WHILE AU-RESIDENT: Under DTA Article 17, UK personal pensions (SIPP drawdown, annuity, most occupational defined benefit pensions in the private sector) become AU-taxable as residence-state income. You file Australia-Individual with HMRC; HMRC issues an NT code to the UK pension provider; the provider stops UK PAYE withholding; you report the gross drawdown on your AU return. NHS pre-2008 / Civil Service / Armed Forces / Police pensions are government service under Article 19 — UK source state retention — NT code NOT available. (3) TRANSFERRING YOUR UK PENSION TO AU SUPER (QROPS): This is the most-misadvised area in the UK-AU corridor. A transfer to a QROPS-listed AU super fund triggers a 25 percent Overseas Transfer Charge under FA 2017 Schedule 4 UNLESS the member is AU-resident at the time of transfer AND remains AU-resident for 5 full UK tax years. If you transfer and then leave AU within 5 years, the OTC retrospectively applies. The AU receiving fund treats the Applicable Fund Earnings (the foreign-earnings portion accrued since AU residence began) as assessable income — you can elect under s.305-80 ITAA 1997 to have AFE taxed at 15 percent in the fund (typically advantageous vs marginal rate). Limited AU super funds appear on HMRC's QROPS list. For most UK to AU movers the transfer is financially inferior to leaving the UK pension intact and drawing it under Article 17 from AU. SMSF (Self-Managed Super Fund) considerations are particularly intricate for owner-managed business directors.

    How it works

    AU Superannuation Guarantee — the baseline AU pension

    Compulsory employer contribution at 11.5 percent of ordinary time earnings (2024-25), rising to 12 percent from 1 July 2025. Paid to a nominated super fund (employer default if no nomination). Concessional contributions cap AUD 30,000 (2024-25 + 2025-26). Preservation age 60. Tax-free benefits from age 60 in most cases. Operates independently of any UK pension.

    Drawing the UK pension while AU-resident — Article 17 + NT code

    (1) Establish AU treaty residence (Article 4 tie-breaker as needed). (2) Complete form Australia-Individual; send to ATO for certification; ATO returns it; submit to HMRC. (3) HMRC issues NT (No Tax) PAYE code to UK pension provider. (4) Provider applies NT — gross UK pension paid going forward. (5) Report gross drawdown on AU return. (6) Article 19 government service pensions (NHS pre-2008 / Civil Service / Armed Forces / Police) — NT code NOT available; UK PAYE continues; AU does not tax.

    25 percent Overseas Transfer Charge — when it applies

    Under FA 2017 Schedule 4 a 25 percent OTC applies to a transfer from a UK registered pension scheme to a QROPS UNLESS one of the exclusions applies. The relevant exclusion for AU: member is resident in the SAME country as the receiving QROPS (i.e. AU-resident transferring to a QROPS-listed AU super fund). The exclusion is conditional: the member must remain AU-resident for 5 full UK tax years from the transfer. If the member leaves AU within that window, the OTC retrospectively applies.

    Applicable Fund Earnings under s.305-80 ITAA 1997

    On a UK pension lump sum or transfer received in AU residence, AFE is the foreign-earnings growth accrued since AU residence began. Default: AFE is assessable to the member at marginal rate. Election: under s.305-80 ITAA 1997 the member can elect that the AFE component be assessed in the receiving AU super fund at the concessional 15 percent rate. The election must be made within prescribed timing. Typically advantageous unless the member is on a low marginal rate.

    SMSF considerations for owner-managed business directors

    Self-Managed Super Funds (SMSF) are AU super funds with up to 6 members controlled by the members as trustees. For UK owner-directors with significant UK pensions plus AU business interests, SMSFs offer flexibility but ALSO carry: (a) tighter HMRC QROPS-listing requirements; (b) SMSF auditor obligations; (c) limited residency rules (the 'central management and control' test) — moving outside AU can compromise SMSF status. Get specialist advice for SMSF + UK pension scenarios. Cross-link: business owner moving abroad architecture covered in future cluster (07f-45 / D6).

    25 percent tax-free Pension Commencement Lump Sum (PCLS) from AU residence

    UK PCLS (typically 25 percent of pension pot tax-free under UK rules) is more complex when received from AU residence. HMRC's position: UK PCLS is treated as part of the lump sum subject to the standard UK PCLS treatment if drawn under UK rules. ATO position: PCLS forms part of the AFE assessment in AU on receipt. Net effect: the '25 percent tax-free' UK treatment does NOT automatically transfer through to AU — get specialist advice before drawing PCLS from AU residence.

    Who this applies to + key conditions

    Statute + manual references

    Primary: UK: Finance Act 2017 Schedule 4 (Overseas Transfer Charge); FA 2004 plus s.169(2) (recognised overseas pension scheme rules). AU: s.305-80 ITAA 1997 (Applicable Fund Earnings); Subdiv 295 ITAA 1997 (super fund taxation). Treaty: Article 17 UK-AU DTA 2003.

    Related: Superannuation Guarantee (Administration) Act 1992; HMRC QROPS list (transfers list); PTM112000 (HMRC Pensions Tax Manual — overseas transfers); Form Australia-Individual (DT-Individual style — treaty relief); AU super 6-month residency rule under s.305-60 ITAA 1997 (transfer triggering events)

    HMRC manual: PTM112000 (Overseas Transfer Charge); RPSM (Registered Pension Schemes Manual)

    Common mistakes + traps

    Worked example

    David, 58, UK national, moves permanently to Brisbane June 2026; holds UK SIPP of £600k plus UK Civil Service pension of £18k/year

    David's accountant proposes a QROPS transfer of the £600k SIPP to an AU super fund 'to consolidate retirement provision'. David is considering whether to: (a) accept the QROPS transfer; (b) leave the SIPP intact and draw under Article 17; (c) draw the Civil Service pension under Article 19.

    1. Option (a) QROPS transfer of £600k SIPP to AU super: 25 percent OTC under FA 2017 Schedule 4 — exclusion applies if David is AU-resident at time of transfer AND remains so for 5 full UK tax years. If David transfers and leaves AU in (say) year 3, retrospective OTC £150k applies. Even if he stays 5+ years, the AFE component (foreign-earnings growth since AU residence began) is AU-assessable — AFE election at 15 percent under s.305-80 ITAA 1997 typically advantageous vs marginal rate.
    2. Option (b) Leave SIPP intact, draw under Article 17: David's accountant files Australia-Individual; HMRC issues NT code; SIPP provider stops UK PAYE; David draws £30k/year from age 60 reported gross on AU return; AU tax at marginal rate net of any UK FTC (nil under NT). No OTC exposure. No SMSF complexity. Pot continues to grow tax-deferred in UK wrapper.
    3. Option (c) UK Civil Service pension £18k/year: Article 19 (government service) — UK source-state retention. UK PAYE continues regardless of AU residence. NT code NOT available. AU does not tax. This income stream is fixed regardless of options (a) vs (b).
    4. Net assessment: Option (b) is typically financially superior unless David has specific reasons to consolidate (e.g. AU super estate planning advantages on death). The 'consolidation' framing in the accountant's proposal does not justify the OTC exposure plus AFE administrative burden plus 5-year residency lock-in.

    Outcome: Most UK to AU movers should NOT transfer their UK pension to AU super. The combination of 25 percent OTC exposure (FA 2017 Schedule 4), 5-year continuing UK tax liability (PTM112000), AFE assessment in AU (s.305-80 ITAA 1997), and limited HMRC QROPS-listed AU funds typically makes the transfer financially inferior to leaving the UK pension intact and drawing under DTA Article 17 from AU.

    How this connects to the rest of the framework

    UK-AU DTA 2003 →

    Article 17 governs UK pension residence-state taxation; Article 19 governs UK government service source-state retention.

    SRT plus AU + NZ residence tests →

    AU residence is the precondition for Article 17 relief plus QROPS OTC exclusion.

    NI + State Pension abroad →

    UK State Pension separate — frozen in AU (see frozen pension page) but voluntary Class 2 / 3 NI continuation still relevant.

    Frozen UK State Pension (AU + NZ) →

    UK State Pension specifically frozen in AU — separate page covers Carson context plus statistical scope.

    Frequently asked questions

    What happens if I miss the Self Assessment deadline?+
    The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.
    Do I need an accountant or can I file Self Assessment myself?+
    Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.
    How do payments on account work?+
    When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.
    I'm told the QROPS transfer to AU super is tax-free if I'm an AU resident — is this right?+
    Partially. The 25 percent Overseas Transfer Charge IS excluded if you are AU-resident at the time of transfer AND remain AU-resident for 5 full UK tax years (FA 2017 Schedule 4; HMRC PTM112000). However: (a) the AFE component is still AU-assessable in the receiving fund — not tax-free; (b) if you leave AU within 5 years the OTC retrospectively applies; (c) limited HMRC QROPS-listed AU funds. The marketing framing of 'tax-free' is incomplete.
    What is the AFE election and when should I make it?+
    The Applicable Fund Earnings election under s.305-80 ITAA 1997 allows you to elect that the AFE component (foreign-earnings growth since AU residence began) of a UK pension lump sum or transfer be assessed in the receiving AU super fund at the concessional 15 percent rate, instead of being assessable to you personally at marginal rate. Typically advantageous unless your marginal rate is below 15 percent. The election is timing-limited — usually must be made by the relevant AU return due date. Get AU-side advice on timing.
    Can I transfer my UK pension to a UK QROPS first, then to AU later?+
    Daisy-chaining transfers does NOT defeat the OTC — each transfer is assessed independently and the 5-year residency requirement runs from EACH transfer. There is no legitimate route around the OTC structure other than meeting the residency exclusion. Schemes that purport to defeat OTC via creative routing are typically high-risk.
    Does my AU super follow me back to the UK if I return?+
    Yes, but with complications. On returning to UK residence: (a) AU super preservation rules still apply (typically tied up until age 60); (b) UK FA 2004 / FA 2017 rules apply on any subsequent withdrawal — UK PAYE may apply on receipt depending on the structure; (c) UK domicile / IHT positioning may shift the wrapper treatment. Get specialist UK + AU advice on return before drawing AU super into UK residence.

    Free + regulated-body resources

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