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main | our service | the benefits | frequent questions | fee fallacy | the rules | the pitfalls |
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Transfer your UK pension to NZ no
matter where If you leave your pension in the UK you will probably get taxed The technical bit - If you live outside the UK and have a UK pension, any income you receive directly from that UK pension will be taxed at your highest marginal tax rate in either the country that you live in or the UK (up to 40%). That is because it is subject to: UK tax on income from UK pensions (even though you aren't living there); and, the country that you live in taxation rules.
Transfer your pension to New Zealand and these could taxes could be completely or partially eliminated The technical bit - By transferring your pension to New Zealand you will no longer be subject to UK tax rules and related taxes (if you have been living outside of the UK for five full tax years). Why? Because your pension ceases to be a UK pension and becomes a New Zealand superannuation fund and under New Zealand tax law income received from superannuation funds is tax free. Depending on which country you live in you may then be able to receive the funds without taxation in that country (particularly if there is a favourable double tax treaty - such as that between New Zealand and Australia). This is a very specialist area and we recommend that you approach a tax advisor in the country in which you are currently located and have them talk to us.
Example Take for example an investment banker in Sydney (or Tokyo or New York) who worked for a number of years in London and was salary sacrificing their bonus in the UK to avoid PAYE and National Insurance contributions. The individual has accumulated a fund of say, £1.4million (made up of approximately £650,000 of sacrificed after tax salary) that is still located in the UK.
Leave it in the UK - And an annuity will have to be purchased at some point. This will then give rise an an annual income tax liability in the UK that will be deducted directly off the pension payment. Essentially this be a tax rate of around 35% for PAYE.
Transfer it to NZ - And an annuity does not need to be purchased. The funds can be withdrawn tax free in amounts that suit the banker at times that are appropriate. The only tax liability that will be potentially created is that in his home country whereby the lack of a double tax treaty (or an unfavourable one) would lead to tax on the withdrawals in New Zealand as income. |
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