The tax systems in both Australia and the UK are complex and while a double taxation agreement exists to prevent the same income being taxed twice, how it applies depends on where you’re resident, the type of income you earn and how long you stay in either country.
Before you make financial decisions, it’s important to understand how UK and Australian tax rules interact and when to seek specialist advice.
Disclaimer
The information in this article is for general guidance only and should not be relied upon as personal tax advice. Rules can change and your circumstances may differ. Always seek independent advice from a qualified Australia and/or UK tax specialist before making decisions or submitting tax returns.
How tax residency determines what you tax pay
The single biggest factor in cross-border taxation is residency.
- In the UK, residency is decided by the Statutory Residence Test, which considers days spent in the UK and your ongoing ties (home, work, family).
- In Australia, the Australian Tax Office (ATO) uses several tests: the “resides” test, domicile test, 183-day test and Commonwealth superannuation test.
It’s possible to be resident in both countries under their domestic rules, but the UK–Australia Double Taxation Agreement (DTA) then assigns residency to one country using “tie-breaker” criteria such as permanent home and centre of vital interests.
Once residency is established under the treaty, that country usually has the main right to tax your worldwide income.
The UK–Australia double taxation agreement (DTA)
The DTA prevents the same income from being taxed twice, but it doesn’t exempt you from filing returns in both countries. It sets out which country has taxing rights over different types of income and how relief is granted.
Key principles include:
- Employment income: Normally taxable where the work is performed. Short-term UK visits by an Australian tax resident may be exempt if under 183 days and certain conditions are met.
- Pensions: Most UK pensions (including the UK State Pension) are taxable only in the country of residence. That means if you’re resident in Australia, your UK pension income will generally be taxable there and can often be paid gross from the UK once HMRC receives the correct treaty paperwork.
- Government service pensions: May remain taxable only in the UK if paid for past UK government employment, unless you’re an Australian citizen.
- Dividends, interest, and royalties: Each country may apply limited withholding tax, but credits are given under the DTA.
- Capital gains: Gains on property are taxed where the property is located. For other assets, the country of residence typically has taxing rights, with special rules on temporary or changing residency.
The DTA is detailed, but the essential point is that you must still declare worldwide income in your country of residence and then apply treaty reliefs to avoid double taxation.
What happens to UK income and investments
When you move to Australia and become resident there for tax purposes, you may still have UK income sources such as rental property, savings and/or pensions.
Each is treated differently.
Tax treatment of UK property
You remain liable for UK income tax on any rent received, and you must complete a UK Self-Assessment tax return each year. The UK’s Non-Resident Landlord Scheme allows rent to be paid gross if you register, otherwise letting agents must withhold basic rate tax.
If you sell your UK property while living in Australia, you must report and pay UK Capital Gains Tax (CGT) within 60 days of completion. Australia may also tax the same gain, though its cost-base and timing rules differ. Usually, you can claim a foreign tax credit in Australia for any UK CGT paid.
UK savings and ISAs
Interest from UK bank accounts remains taxable in Australia.
Importantly, ISAs lose their tax-free status once you become Australian resident. Any income or gains inside an ISA must be declared on your Australian tax return.
UK pensions and drawdowns
Private and occupational pensions are generally taxed in Australia under the DTA, though tax treatment depends on whether payments are classed as “foreign superannuation”. Pension lump sums and transfers require careful planning, particularly if you intend to move funds into an Australian superannuation scheme.
Understanding superannuation and UK pensions
Australia’s superannuation system is similar in concept to UK pensions but operates under very different rules.
- Contributions: Employers pay a Superannuation Guarantee (11.5% in 2024–25, rising to 12% from July 2025).
- Investment growth inside super is taxed at 15%, though long-term gains may be taxed at 10%.
- Withdrawals are typically tax-free after age 60, depending on fund type and components.
If you have UK pensions, transferring them to an Australian super fund is only possible in limited circumstances.
The fund must be a Qualifying Recognised Overseas Pension Scheme (QROPS). Currently, only a small number of Australian schemes qualify, usually for people over age 55.
Transferring without a QROPS can trigger a 55% UK tax charge, so specialist advice is essential before moving any pension.
We’ve written an article which discusses this in more depth, read the article for more information: Transferring a UK pension to Australia: updated guide to ROPS, rules and risks
Capital gains and moving assets to/from Australia
Australia taxes capital gains on worldwide assets once you become resident. If you previously lived in the UK, it’s important to:
- Document market values of assets on the date you become Australian resident. These become your new cost bases for Australian CGT.
- Be aware that foreign currency accounts and investments can generate taxable gains or losses when converted.
- Understand that the UK’s main residence relief and Australia’s main residence exemption differ. Owning property in both countries requires careful timing of sales to avoid losing valuable reliefs.
If you later leave Australia, you may be deemed to have disposed of certain assets for CGT purposes unless you elect to keep them taxable in Australia.
Managing currency and timing
The UK and Australia have different tax years, the UK runs to 5 April, Australia to 30 June. This creates timing mismatches that can affect tax credits, CGT calculations, and even pension payments.
Exchange rate fluctuations can also change the sterling value of your taxable income or gains when converted to Australian dollars.
Many expats manage this risk by keeping detailed transaction records and using official year-end exchange rates published by the ATO or HMRC.
Healthcare and the Medicare levy
British citizens in Australia are covered by a reciprocal healthcare agreement, allowing some emergency treatment under Medicare.
However, most long-term residents must pay the Medicare levy (normally 2% of taxable income).
Higher-income individuals without adequate private hospital cover may also face a Medicare Levy Surcharge of up to 1.5%. This is separate from your income tax and can significantly increase your effective rate if you remain uninsured.
Basic tax filing requirements in both Australia and the UK
- In Australia: Lodge a tax return each year declaring worldwide income. Claim credits for UK tax already paid using the foreign income tax offset.
- In the UK: File a Self-Assessment return if you have UK-sourced income, gains, or are required under the Non-Resident Landlord Scheme.
It’s important that you keep records for at least five years after the relevant filing date in both jurisdictions, as each tax authority may request evidence of foreign income and credits claimed.
How the UK and Australian tax systems operate for British expats
Overview of the UK system for expats
- Tax year runs 6 April to 5 April.
- Returns are normally due by 31 January (online) following the tax year end.
- Key forms and processes:
- Self Assessment (SA100) is the main tax return.
- SA109 is a required non-resident or dual-resident status declaration when submitting a SA100.
- Capital Gains summary (SA108) is used for property or investment disposals.
- UK Property Disposal Return is mandatory within 60 days of selling a UK property, even if also reported later in Self-Assessment.
- Non-Resident Landlord Scheme is essential if letting our a UK property and requires the landlord to register with HMRC to receive rent gross.
If you miss UK filing or payment deadlines, HMRC can issue automatic penalties (£100 initial fine plus daily penalties after three months, and interest on unpaid tax).
Overview of the Australian tax system
- Tax year runs 1 July to 30 June.
- Standard lodgement deadline: 31 October following the end of the tax year, or mid-May if you use a registered tax agent.
- Key forms and processes:
- Individual tax return (NAT 2541) – main lodgement form.
- Foreign income schedule (NAT 2541-F) – to declare overseas income (UK property, pensions, etc.).
- Rental property schedule (NAT 2541-R) – required if you let out UK property.
- Capital gains schedule (NAT 2541-CG) – for disposals of shares, property or other investments.
Failure to lodge (FTL) penalties start at one penalty unit ($330 in 2025) for each 28 days late (up to five units), plus interest. The ATO can also issue default assessments if it believes you under-reported income.
Common tax mistakes of British expats in Australia
- Assuming the UK–Australia treaty means you don’t need to file in both countries. In reality, each system expects its own return, you then claim a foreign tax credit.
- Reporting UK income on a cash rather than accrual basis. The ATO generally uses the accrual method; HMRC allows cash basis for small landlords. Mismatching methods can distort credits.
- Forgetting the UK 60-day CGT rule. Australia may recognise the same sale in a different tax year, so timing matters.
- Failing to include ISA or UK savings income on the Australian return. The ATO treats all overseas accounts as reportable.
- Over-claiming foreign tax offsets. You can only claim up to the amount of Australian tax payable on that income.
- Ignoring exchange rate differences. The ATO requires conversions at the rate applying on the date of each transaction or disposal.
Why it’s important to get your tax in both countries correct
When calculating and filing taxes in multiple jurisdictions, mistakes can be incredibly costly whether intentional or not. If you get it wrong, you may experience:
- Duplicate taxation if credits are claimed incorrectly (i.e. you pay tax twice unnecessarily).
- ATO data-matching audits, as Australia automatically receives UK interest, pension and property data under the CRS agreement.
- Delays in tax refunds or visa renewals, since financial compliance can affect certain visa categories.
Frequently asked questions
Do I pay UK tax on my pension if I live in Australia?
Under the UK–Australia double taxation agreement, most UK private and occupational pensions, including the State Pension, are taxable only in your country of residence. If you are tax resident in Australia, you will normally pay Australian tax on your UK pension income, and HMRC can usually pay the pension gross once the correct treaty form has been submitted. However, government service pensions may remain taxable in the UK unless you are an Australian citizen.
Can I transfer my UK pension to an Australian superannuation fund?
Transfers are only possible if the Australian fund is a Qualifying Recognised Overseas Pension Scheme (QROPS). Currently, only a small number of self-managed super funds (SMSFs) meet this standard, and generally only for people over age 55. Transferring to a non-QROPS fund can trigger a UK tax charge of up to 55%, so always seek professional advice before transferring your pension.
Are my UK ISAs still tax-free when I move to Australia?
No. ISAs lose their tax-free status once you become Australian tax resident. Any income or capital gains generated within your ISA must be declared on your Australian tax return and may be subject to local tax. You can keep the ISA open, but new contributions are not allowed while you are non-resident in the UK.
Do I still need to file a UK tax return after moving to Australia?
Yes, if you still have UK-sourced income such as rent, dividends, or capital gains from property sales. You will need to register for Self Assessment and complete the relevant sections, including form SA109 to declare non-resident status. In addition, if you sell UK property, you must file a UK Capital Gains Tax Property Disposal Return within 60 days of completion, even if you also declare the gain in Australia.
Will I be taxed twice if I earn income in both the UK and Australia?
No, the UK–Australia double taxation agreement is designed to prevent this. It assigns taxing rights to one country or the other, and if both tax the same income, you can claim a foreign tax credit in your country of residence for the amount already paid abroad. You still need to file in both countries to claim these credits correctly.
When to seek professional advice
Cross-border tax between the UK and Australia is full of technical overlaps: different year-ends, CGT timing, foreign exchange impacts, superannuation rules and pension transfer restrictions.
Even experienced investors can misinterpret how treaty relief applies.
If you are planning to move to Australia, already live there, or intend to return to the UK, professional advice from someone experienced in both tax systems can help ensure you stay compliant and avoid paying more tax than necessary.
