Saved $25,000 in tax on UK pension transfer

23rd September 2013

Do you have an entitlement to a pension, but are not actually receiving it yet?  Or do you have friends, colleagues or family who have entitlements?

There are considerable changes coming up before 31/3/14, and you really need to act now.  Otherwise, if not done before Christmas (slower processing times), you might miss out.

Luke McKenzie of Move My Pension (www.movemypension.co.nz) specialises in UK pension transfers and can help you through the changes and ensure you get the best outcome for your investment and with the minimum tax.  When I was last talking to Luke, he mentioned a person paying $25,000 in tax using the exemption before 31/3/14, vs having to pay $50,400 in tax if they wait until after 31/3/14.  $25,000 tax saving isn’t bad!

If you have a UK pension of over £100,000, then it is very worthwhile contacting Luke on 0800 485 736 or info@movemypension.co.nz.

Further about tax changes

Under the proposed changes, the foreign investment fund rules will no longer apply to foreign superannuation schemes.  Instead, lump sums from foreign superannuation schemes will be taxed when they are withdrawn or transferred to a New Zealand or Australian scheme.

The amount of tax will depend on how long a taxpayer has been New Zealand resident, using one of two calculation options.

Periodic pensions will not be taxed under either of these methods, but will be taxed in full on receipt, as most periodic pensions currently are.

In addition, those who have made a lump-sum withdrawal or a transfer to another superannuation scheme between 1 January 2000 and 31 March 2014, but did not comply with their tax obligations at the time, will have an option to pay tax on only 15 percent of the lump sum amount.

The proposed changes to the tax treatment of foreign superannuation are to come into effect from 1 April 2014.

Coombe Smith are property accountants and property experts in Hamilton, who help the Waikato property community and are proud to have property clients throughout New Zealand and the World. Do you need a property accountant to help with your rental properties?