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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Were emigrating to Australia and have to reside in Australia

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We're emigrating to Australia and have to reside in Australia for up to 2 years awaiting residency visa and require tax advice about our UK incomes and pensions during this time. We're both 67 this year, have private pensions, state pension and investments. Do you know anybody who may be able to advise us?

I should be able to help with your questions if you can let me know what they are? What have you been told about the Australian tax position whilst you are temporary residents?
Customer: replied 4 years ago.

Once we have a temporary visa we apply for a tax number and we become standard tax payers


Are you looking for information about your UK tax p[osition while you are temporary residents of Australia? Can you tell me what type of investments you hold in the UK. Are any of your pensions related to government service occupations?
Customer: replied 4 years ago.

Yes its UK tax advice we are looking for while we are temporary residents in Australia. We currently do not hold any investments as they have all just matured, we had anticipated emigrating in March this year and had geared the investments around that date, we currently have £570,000 cash awaiting some kind of short term investment, we hold £35,000 in ISAs and £10,000 premium bonds, our Pensions not related to government occupations, but our private pensions will have to continue to be paid in the UK


Leave this with me while I draft my answer.

Hi again.

Usually, when a UK national moves abroad, they become liable for tax on their UK income in their new country of residence from day one with a few exceptions. Australia is different. Immigrants are given temporary residence status for two years before becoming a permanent resident.

Whilst you have temporary residence status in Australia, your UK source income will remain taxable in the UK alone but you will be entitled to personal allowances to offset against that income to alleviate the income tax liability.

If and when you are granted full Australian residency, your UK pension income will only be taxable in Australia.

In order to stop having tax deducted from your pensions after you have become full permanent residents of Australia, you should each complete a Form Australia-Individual 2003, send them to the Australian Tax office who will certify your residence status and send the them on to HMRC in the UK. HMRC will have NT (No Tax) codes issued to your private pension payers and the pensions will then be paid without deduction of UK tax. The state pensions are paid gross in any event but will be taxable in the UK whilst you have temporary residence status in Australia.

As far as bank interest is concerned, you should complete a form R105 for each UK banking organisation that you have interest bearing accounts with to have the interest paid without deduction of tax at source which you would otherwise have to reclaim at the end of each tax year. Not all UK banking organisations will accept this form. The concept of ordinary residence ceased to exist with effect from 6 April 2013 so this form may eventually be replaced but I'm not aware that it has yet.

ISAs are exempt from UK tax for UK residents. When you cease to be resident in the UK, you cannot invest in new ISAs or add to your current ISAs. The income and gains within the ISA will continue to be tax free.

Premium Bonds are tax free. You can continue to hold them after you leave the UK, subject to Australian laws.

UK share dividends carry a non-repayable notional 10% tax credit and is deemed to settle the basic rate tax liability of the recipient. You will have no further UK tax liability on this type of income after you have left the UK.

UK rental income will be taxable in the UK and you will be given credit for UK tax paid on that income against your tax liability on the same income in Australia.

I hope this helps but let me know if you have any further questions.

Customer: replied 4 years ago.

It is our understanding that if we move to Australia and immediately apply for a residents visa, we would be granted a bridging visa, and that then we could apply for an Australian Tax Number, at that time could we then invest some or all of our cash in Australia as interest rates are currently more favourable there. If this is not the case we shall need to invest our cash as soon as possible in some UK investments, to mature around the time our residents visa is granted. Is this also your understanding of the situation.

I'm not an expert on the Australian tax system or the immigration system but if you have been told that you can invest your cash savings in Australia if you have a bridging visa and a tax number I have no reason to doubt it. I can really only deal with UK tax questions here and comment on the double tax treaty between the UK and Australia as it affects you.

What I do know is that as soon as you become a permanent resident in Australia, all your income and gains will be taxable in that country. If you let property in the UK, that income will be taxable in both countries but you will get credit for UK tax paid against your Australian tax liability on the same income.
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