How to die broke, or as close as possible?

bostonerimus

freebo_2 said:

bostonerimus said:

freebo_2 said:

bostonerimus said:

Have you checked that once you become as UK tax resident that under the UK/Australia tax treaty your pension withdrawals will remain tax free? Will you be leaving any funds in Australia when you move back or will you be liquidating everything and investing it in the UK. This is important again for how you will be taxed.

I think you should rephrase your question as "how do we make sure we don't run out of money so we can give most of it away in old age". This end sup being a balancing act between your asset allocation, spending and lifetime, but if you have something like a very broad 60/40 mix between equities/bonds and cash there's a very high probability that you can sustain and inflation linked starting withdrawal rate of 4% for 30 years. Then you can give money to charities when your needs are few and well known.

If I choose to I can withdraw my entire Australian pension account as cash and pay no tax on it, in Australia, at 60. Then I can put that sum in a UK bank account or any other investment and as far as I understand it the UK taxman is only interested in any income produced, rather than the capital amount.

I think that's right if you do it while an Australian tax resident. If you do it when you are a UK tax resident the treaty says that your Australian pension is taxable in the UK so you'd have to check with HMRC. Check out Article 17

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785856/Synthesised_text_of_the_Multilateral_Instrument_and_the_2003_Australia-UK_Double_Taxation_Convention_-_in_force.pdf

I will check however my understanding is its savings, not income. If I were to leave it in place and draw an income from it that would be different.

Here in Aus its known as Superannuation, and is a purely personal account, which you and your employer contribute to. There's also an Australian state penion but its means tested and I wouldn't qualify.

I think you will find that if you are a UK resident, withdrawals from Australian Superannuation will be taxed by HMRC as income from a foreign pension.

freebo_2

bostonerimus said:

freebo_2 said:

bostonerimus said:

freebo_2 said:

bostonerimus said:

Have you checked that once you become as UK tax resident that under the UK/Australia tax treaty your pension withdrawals will remain tax free? Will you be leaving any funds in Australia when you move back or will you be liquidating everything and investing it in the UK. This is important again for how you will be taxed.

I think you should rephrase your question as "how do we make sure we don't run out of money so we can give most of it away in old age". This end sup being a balancing act between your asset allocation, spending and lifetime, but if you have something like a very broad 60/40 mix between equities/bonds and cash there's a very high probability that you can sustain and inflation linked starting withdrawal rate of 4% for 30 years. Then you can give money to charities when your needs are few and well known.

If I choose to I can withdraw my entire Australian pension account as cash and pay no tax on it, in Australia, at 60. Then I can put that sum in a UK bank account or any other investment and as far as I understand it the UK taxman is only interested in any income produced, rather than the capital amount.

I think that's right if you do it while an Australian tax resident. If you do it when you are a UK tax resident the treaty says that your Australian pension is taxable in the UK so you'd have to check with HMRC. Check out Article 17

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785856/Synthesised_text_of_the_Multilateral_Instrument_and_the_2003_Australia-UK_Double_Taxation_Convention_-_in_force.pdf

I will check however my understanding is its savings, not income. If I were to leave it in place and draw an income from it that would be different.

Here in Aus its known as Superannuation, and is a purely personal account, which you and your employer contribute to. There's also an Australian state penion but its means tested and I wouldn't qualify.

I think you will find that if you are a UK resident, withdrawals from Australian Superannuation will be taxed by HMRC as income from a foreign pension.

Good to know and I'll certainly do my due diligence but will likely still be resident in Australia for tax purposes at the time I cash it in. If/when I then return to the UK the funds will be in some other savings/investment accounts, with an eye to keeping the UK taxman at bay.

bostonerimus

freebo_2 said:

bostonerimus said:

freebo_2 said:

bostonerimus said:

freebo_2 said:

bostonerimus said:

Have you checked that once you become as UK tax resident that under the UK/Australia tax treaty your pension withdrawals will remain tax free? Will you be leaving any funds in Australia when you move back or will you be liquidating everything and investing it in the UK. This is important again for how you will be taxed.

I think you should rephrase your question as "how do we make sure we don't run out of money so we can give most of it away in old age". This end sup being a balancing act between your asset allocation, spending and lifetime, but if you have something like a very broad 60/40 mix between equities/bonds and cash there's a very high probability that you can sustain and inflation linked starting withdrawal rate of 4% for 30 years. Then you can give money to charities when your needs are few and well known.

If I choose to I can withdraw my entire Australian pension account as cash and pay no tax on it, in Australia, at 60. Then I can put that sum in a UK bank account or any other investment and as far as I understand it the UK taxman is only interested in any income produced, rather than the capital amount.

I think that's right if you do it while an Australian tax resident. If you do it when you are a UK tax resident the treaty says that your Australian pension is taxable in the UK so you'd have to check with HMRC. Check out Article 17

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785856/Synthesised_text_of_the_Multilateral_Instrument_and_the_2003_Australia-UK_Double_Taxation_Convention_-_in_force.pdf

I will check however my understanding is its savings, not income. If I were to leave it in place and draw an income from it that would be different.

Here in Aus its known as Superannuation, and is a purely personal account, which you and your employer contribute to. There's also an Australian state penion but its means tested and I wouldn't qualify.

I think you will find that if you are a UK resident, withdrawals from Australian Superannuation will be taxed by HMRC as income from a foreign pension.

Good to know and I'll certainly do my due diligence but will likely still be resident in Australia for tax purposes at the time I cash it in. If/when I then return to the UK the funds will be in some other savings/investment accounts, with an eye to keeping the UK taxman at bay.

Yes, cashing the super in before you leave Australia is the safest route. If you return to the UK permanently remember that you will be taxed by HMRC on your worldwide income and gains, so if you leave money in Australia, HMRC will want to tax that too and you will need to apply the Double Tax Treaty to work out the tax.