I am trying to work out when I can afford to retire when I reach the age of 60 in October 2024. I am a dual national UK and Australian Citizen and have been living permanently in Australia since August 2009.
I have multiple personal pensions with varying values in the UK. These mature when I reach. Each of the UK pensions will only pay out the entire amount as a lump sum when they are claimed and will not offer the option to take out a regular pension payment, say fortnightly.
I have been in contact with the Pension companies and they say that TAX will be deducted when the money is paid out according to the UK tax laws.
The UK Inland Revenue (UKIR) advise that a form can be completed “Application for relief at source from UK Income Tax and claim for repayment of UK Income Tax”, which is based on the United Kingdom/Australia Double Taxation Convention. This form is to be submitted to the ATO. From what I can make out the form details the amount paid as a lump sum and the tax deducted by the UK Inland Revenue.
I have superannuation in Australia which would pay me approximately $20K per full tax year, if I retire at 60. I would have no other taxable income at that time although there would be approx. $35K gross earnings from employment between July 1, 2024 and the date I retire.
For example in the Tax year 2024/25.
Gross Income (employment Australia) $35,000
Pension from Australian Superannuation (pro rata) $15,000
Gross Lump Sum Payment UK Pension $120,000
Emergency Tax deduction on UK Pension by UKIR $39,880
Assuming that I do not draw any additional funds in the UK i.e no additional taxable income in the UK, I believe that at the end of the UK Tax year March 31st 2025, I will be eligible for a refund of approx. $25,140 as this is the personal allowance in the UK, but I am not sure about this. Therefore the final UK tax deduction should be approx. $14,740 not $39,880.
UK Tax deduction on UK Pension with personal allowance $14,740
I would like to know how to calculate what tax deductions I would have from the ATO (if any) in addition to the tax deducted by the UK Inland Revenue.
2,745 views
3 replies