Wealth Check: 'I want to sort out my finances before moving to Australia'
Saturday 30 October 2004
Sean Cranny works in London but plans to move to Australia next year with his girlfriend, an Australian national.
Sean Cranny works in London but plans to move to Australia next year with his girlfriend, an Australian national. He hopes to move to Brisbane, and to look for work in marketing, PR or market research, ideally in the public sector or higher education.
Making the move, though, means that Mr Cranny wants to tidy his finances, in particular his pension arrangements. He is unsure whether he can - or, indeed, should - transfer funds to Australia, and needs to find out more about how pensions and investments work there.
He has already set aside some savings to fund the move to Australia, but how should he best manage his money in the meantime?
We put his case to Meere Patel at Hargreaves Lansdown, Patrick Connolly at John Scott and Partners and Anna Sofat at Destini Global Financial Services.
SEAN CRANNY, 33, HEALTH SECTOR PROJECTS OFFICER
Education: BA (Hons) in Business Studies
Debt: £1,000 (credit card)
Pension: Paying £40 a month into a policy with Windsor Life, held since 1993. Local government scheme, with a transfer value of £2,584. Five months' contributions to Australian pension scheme.
Monthly outgoings: rent £400, bills, including food, £200.
Mr Cranny's largest assets are in his pension funds. The Australian pension system differs from the UK's, mainly because membership of a Superannuation Scheme, known generally as Super, is compulsory.
Ms Sofat points out that employers in Australia must pay nine per cent of salaries into a Super scheme, so Mr Cranny will be guaranteed pension contributions once he finds work. But the tax treatment of Australian pensions is very different. Australians pay tax on contributions at 15 per cent - here contributions are tax-free - and also on growth, again at 15 per cent. But unlike in the UK, benefits from an Australian pension are usually tax-free.
Mr Cranny will almost certainly be able to transfer his existing Australian pension to a new scheme. But the choice is less clear-cut for his UK pension funds. Under UK pension rules, he can continue to pay into his UK pension fund until 2006, based on his best earnings in the UK over the last five years, says Mr Connolly. Then, under pension simplification, his contributions will be limited to £3,600 before tax relief.
This means there is no immediate urgency for Mr Cranny to transfer his UK pensions; he might wish to wait until his residency becomes permanent. But Ms Patel recommends that Mr Cranny transfer his pensions to Australia once he is settled and working there.
If he does opt to leave his pension money in the UK, he may have to pay Australian tax on the growth in his pension, between the time he moves and transfers the money. Ms Sofat points out that he does have a window of six months to transfer pensions to Australia without incurring taxes. He will need to find a pension provider in Australia that will accept the transfer, and also check with the Inland Revenue here.
SAVINGS AND INVESTMENT
Ms Sofat cautions that the Australian authorities will also levy tax on any other investments Mr Cranny leaves in the UK. Growth, even if it is not realised, is assessed as income on an annual basis. Tax can be as high as 48.5 per cent, for incomes over AS$70,000 (£28,500) a year.
Ms Patel says the Australian investment market is well developed, with mutual funds that operate in a similar way to unit or investment trusts here. There are differences in the tax treatments of investments, but this should not put off Mr Cranny from setting aside money for the longer term.
In the short term, though, Mr Cranny is likely to need financial flexibility. Mr Connolly feels that he should keep his money accessible on deposit. As he plans to make the move to Australia a permanent one, he should look to hold his savings in Australian dollars, to minimise currency risk.
Mr Connolly adds, though, that Mr Cranny is likely to be paying more interest on his credit card than he makes on his savings. He should clear debts before leaving the UK, preferably immediately, in order to free up cash.
MAKING THE MOVE
Mr Cranny should look into opening an Australian bank account either before he moves - via a bank that operates both in the UK and there, or through the UK office of an Australian bank - or he should open one up as soon as he arrives.
Ms Patel says that Mr Cranny should keep an eye on the pound-Australian dollar exchange rate, as this fluctuates. The rate is now around AS$2.46 to the pound, but it has been as high as $2.80 and as low as $2.20 recently. Ms Sofat says that a reputable currency broker might be able to help Mr Cranny judge when to move his funds to Australia.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Apple agrees deal with Visa on contactless payments
- 1 Is Apple's iCloud safe after leak of Jennifer Lawrence and other celebrities' nude photos?
- 2 Joan Rivers: 'Palestinians deserve to be dead'
- 3 Perez Hilton apologises for Jennifer Lawrence naked photo leak
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
iJobs Money & Business
£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...
£650 per day: Harrington Starr: .NET Developer C#, Win Forms, WPF, WCF, MVVM,...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony