Maintaining your finances after you move
The financial considerations of an international move don’t just stop the minute the property is purchased. Here we outline the key financial considerations for after you purchase.
Even after your property purchase is complete, there remain a number of important financial considerations you’ll have to plan for. You’ve made the move you’ve always dreamed of, now you need to take the right steps to manage your finances post purchase.
One of the first things you need to do before leaving the UK is to inform the HMRC of your departure. Finding out any tax implications that may affect your Estate in the UK while living in Australia is important. Consulting a professional financial advisor is the best way to determine specific steps to tax planning for your given circumstances.
One of the first things you need to do before leaving the UK is to inform the HMRC of your departure.
If you decide to continue paying into your UK pension plan while in Australia you may find that you’ll receive tax relief, which will make it worth doing so. When moving to Australia and bringing your UK pension with you, either in a lump sum or through regular payments, be aware of the foreign tax restrictions that will apply to this income.
Determining your residency in the UK is important for proper tax planning. You can do this by taking the Statutory Residence Test. Make sure you note the difference between residency and domicile status in the UK, as these can have specific tax implications for you, especially when dealing the income and inheritance tax.
If you plan on making an income in Australia or renting out your property you should consult a Financial Advisor and seek advice on Australian tax law and how it applies to you.
Claiming Your Pension
If you are eligible for a UK pension, you will obviously want to consider the best way to claim this when you are in Australia. If you wish to keep your pension in your UK bank account, setting up regular payments to your Australian account is a good way to ensure a steady stream of money is available. Working with Payment Specialists is the easiest and most effective way of setting up a payment system while in Australia. By setting up a Regular Payment Plan with Smart Currency Exchange you will receive your pension in regular payments at pre-agreed exchange rates and for no service fees. It doesn’t get any easier than this.
You will of course want to consider the taxes that may be placed on your pension income. Australia considers your UK pension foreign income, therefor you may be taxed on it. Tax treaties between Australia and the UK have been signed to avoid having foreign income taxed by two countries. You can learn more about this on the Australian Tax Office website.
Some retirees and retirement savers opt to invest their pension in a Qualifying Recognised Overseas Pension Scheme (QROPS) or Self Invested Personal Pension. It is always best to consult a professional financial advisor when making decisions about your pension and retirement savings.
Have you considered how much money you will need to live in Australia? This will depend on many factors such as where you’ll be living, who you’ll be supporting and the standard of living that you expect. It is important to have a realistic expectation of living costs and budget accordingly. Here is a table of what grocery items, home costs, transportation, social expenses and insurances will cost you in Australia.
|Grocery basket in the average supermarket||Cost|
|Loaf of bread||£1.79|
|12 medium eggs||£3.06|
|2 pints of milk||£1.53|
|1kg of apples||£2.14|
|500g fresh fish||£5.62|
|500g standard cornflakes||£1.53|
|40g chocolate bar||£1.02|
|200g Instant coffee||£3.57|
|Bottle of red wine||£10.21|
|500ml washing up liquid||£1.20|
|12 x 400g dog food||£10.00|
|Home costs – comparing a two bedroom apartment (monthly)|
|Mobile phone tariff (per person)||£25.00|
|Council tax (rates)||£106.00|
|Pool maintenance (if appropriate)||£25.00|
|1 litre petrol||£0.58|
|1 litre diesel||£0.57|
|One way train ticket in large town (All transport was http://ptv.vic.gov.au/)||£3.06|
|Monthly train pass in large town||£66.37|
|Taxi starting tariff||£2.14|
|Taxi km/mile tariff in large town||£0.83|
|Car tax for the average five door hatchback (annual)||£306.00|
|Three course set meal||£30.63|
|Glass of white wine||£4.59|
|Bottle of beer||£3.06|
|Cup of coffee||£2.30|
|Gym membership (monthly)||£61.26|
|Property (for property outlined above)||£700.00|
|Car (for the average five door hatchback)||£765.00|
|Health (a family of four in general well health, and a retired couple)||£0.00|
Letting Your Property
If you intend to purchase property and let (or rent) it to holiday-makers or long-term tenants, you should be aware of certain restrictions and tax implications. When buying real estate in Australia foreign buyers are only able to purchase established dwellings if they intend to live their themselves; therefore, until you have obtained permanent residency or citizenship status in Australia, you are unable to rent an established dwelling. Buying and renting out new construction does not have the same restrictions.
When buying real estate in Australia foreign buyers are only able to purchase established dwellings if they intend to live their themselves
If you decide to let your Australian property you can choose to do so through a property management company (for a fee), or do it yourself either locally or on websites like Air B&B. The advantages of letting through a property management service is they take responsibility for finding suitable tenants, and will address any maintenance or emergency issues in your home. Websites like Air B&B may provide better returns, but create a lot more work for you the home owner.
Due to the high cost of homes in Australia, rental yields are generally low compared to more affordable places. Ensuring your property is adequately insured for home and contents is important and you may also want to consider landlord or renter’s insurance.
It is important to beware of tax implications that could be imposed on your rental property. The Australia Tax Office website discusses certain expenses that can be claimed as tax deductions, and declarations needed of rental-related income on your tax return. It’s best to consult with a Financial Advisor to get advice on income received from a rental property.
The Australia Buying Guide takes you through each stage of the property buying process, with practical recommendations from our experts who have been through the process themselves. The guide will help you to: