Mirrored: 9th of April 2010, 12:06 Original: www.timesonline.co.uk Views: 128 Settings: Loading the mirror...
Link: canonical The Perfect Shot Be a World Cup FIFA-accredited photographer Navigation - link to other main sections from here Skip Navigation Times Online Minette Marrin One can only say that anyone who is tired of British theatre is tired of life Minette Marrin * News * Election '10 * Comment * Business * Money * Sport * Life * Travel * Driving * Arts * Archive * Our Papers * Subscriptions * Property & Mortgages * Savings * Investment * Funds * Pensions * Tax * Borrowing * Consumer Affairs * Calculators * Reader Guides [ Search ] ___________ [_____________] Where am I? Home * Money Money Makeover MY PROFILE SHOP JOBS PROPERTY CLASSIFIEDS From The Times July 25, 2009 Should all our savings emigrate too? A young couple planning a new life in Australia seek help deciding what to take and what they should leave behind James and Naomi Moore. David Budworth * James Moore and his fiancee, Naomi Moore (the shared surname is a coincidence), are about to embark on a trip that will transform their lives. They recently received the all-clear to emigrate to Australia and are planning to move to Melbourne, leaving their current home in Nottingham more than 10,000 miles behind. James, a 35-year-old consultant for a data company, says: "We made a joint application and because of our skills and experience - Naomi is a secondary school teacher - the application was fast-tracked." It will be the first time that Naomi, 28, has been to Australia, although it is a country that she has always wanted to visit. James, however, worked there for a year as a high-rise window cleaner in his twenties. He says: "The idea to move came to us a few months ago and was driven primarily by a desire for a better lifestyle. We plumped for Australia because I know it and we have friends out there." Before they leave in early September the couple have many loose ends to tie up. James is close to completing the sale of his home. He is selling the three-bedroom semi-detached house for -L-180,000, which will release -L-85,000 in equity. "We would like advice about what we should do with this money and the rest of our savings," James says. "Is it better to leave it in a high-interest bank account or would it make more sense to invest some in shares?" James has another -L-11,000 in a First Direct Isa, which is paying 3.1 per cent interest, plus -L-4,000 in an Alliance & Leicester savings account. Naomi holds -L-5,000 in a Scarborough Building Society Isa. The couple have a further -L-6,000 split between a number of different savings accounts, none of which is paying a particularly high rate of interest. Their only share-based investment is -L-2,000 in the Gartmore China Opportunities fund. James pays -L-50 a month into the saving scheme. Once the couple have deducted expenses, such as flights and shipping costs, they expect to have a pot of -L-112,000. As they are waiting until they arrive in Australia to find jobs, these funds will help them to establish themselves there. James asks: "Should we leave these savings and investments where they are, or would we be better off moving them offshore or taking them to Australia with us? I would also appreciate some advice about how easy it will be to set up accounts in Australia and transfer money from the UK." James also owns a buy-to-let flat in Nottingham, which he would like to keep. However, he is unsure what to do with the mortgage. "Would it be a good idea to use capital from my savings to pay off the -L-56,000 mortgage on the flat? I suspect not, for tax reasons, but I would like that confirmed." His mortgage costs -L-100 a month and he collects -L-425 in rent. He says: "Will I have to declare the monthly -L-425 on a UK tax return even after I have moved overseas?" Their final dilemma concerns pensions. Naomi has a teacher's pension but because she has worked in the profession for less than two years she has been told that she can cash in the scheme. "Is that a good idea?" asks James. Naomi has another pension with a former employer and she would also like to know whether she is best leaving that where it is. James, meanwhile, has a police pension, from his previous job, which will pay him about -L-1,200 a month from the age of 55. He is in a money purchase scheme with his current employer and makes monthly contributions of -L-66. He would like to know whether he should leave these pension savings where they are or transfer them to an Australian scheme - if that is allowed. What the experts say Financial planning: Jonathan Spring-Rice, Towry Law "The biggest impact on their financial decisions will be that their `home currency' will change to the Australian dollar. Retaining money in sterling in UK bank accounts will add the risk of the exchange rate going against them and reducing its buying power in Australia. Over the past five years the value of sterling has fallen by nearly 20 per cent against the Australian dollar. What may seem like an almost risk-free investment can turn out to be anything but. "When James and Naomi move to Australia they will be liable to tax in Australia on worldwide income. While there is a tax treaty between Australia and the UK, this only prevents tax being paid twice. "The money held in Isa accounts, while tax-free under UK rules, will not avoid a tax charge in Australia. There is a tax liability under Foreign Investment Fund rules, which broadly taxes the growth in the fund on an annual basis. James and Naomi should be aware of this when deciding to retain or sell the Gartmore investment. "The decision to retain cash or invest in another asset should be taken with care. However, they should retain a higher level of cash until their plans are more certain. If they are going to invest, it would be better to do this once they are in Australia and can take into account the currency and tax issues. "Opening bank accounts in Australia before they arrive is fairly simple. Many of the leading Australian banks have a branch in the UK and are able to assist in opening accounts. Current accounts, often referred to as transaction accounts, can be arranged with debit cards and can offer the usual services provided by a UK bank. "When transferring large sums of money, they should check out the exchange rate with a specialist currency exchange company, such as HIFX, where the costs of sending the money can be much less." Action plan Be aware of the risk of leaving money in UK bank accounts. Keep spare cash in bank accounts until their plans are more certain. Use a UK branch of an Australian bank to open a new account. Property and mortgages: David Hollingworth, London & Country Mortgages "While standard advice would be that it makes sense to pay off a mortgage rather than retain savings, it is not quite so simple when it comes to buy-to-let. Many landlords choose to retain a level of mortgage on their investment properties because they can deduct the mortgage interest from the income, helping to reduce the level of income tax liability. "From James and Naomi's monthly payments, it sounds as if the mortgage rate is very competitive, but they should check whether that rate is ongoing or will revert to a higher one at some point. If it is an ongoing rate, it does not look like there will be much scope to switch to a better rate in the current market. "Whether or not rental income must be declared for tax purposes after emigrating, the short answer is yes. The non-resident landlord's scheme requires the letting agent or tenant to pay the rent to the landlord having already deducted tax. "However, it is possible to apply to HM Revenue & Customs (HMRC) for the income to be paid without any tax deducted, which would certainly be worth doing in James's case, assuming that his tax affairs are up to date. Information can be found at www.hmrc.gov.uk. If approval is granted, the rental income is still liable to income tax, but he will have control in ensuring that he deducts any allowable expenses. Much will also depend on the level of other taxable UK income, as the rental could be covered by his personal allowance." Action plan Consider keeping mortgage to reduce tax payments. Apply to HMRC for rental income to be paid without any tax deducted. Pensions: Robert Reid, Syndaxi Chartered Financial Planning "Naomi should think carefully before cashing in her pensions - she will not get a full refund of the contributions she has paid. The amount will be subject to deductions for tax. She may get a better deal by transferring both pensions into a single scheme. "All the pensions can be left in the UK, moved to Australia or even another jurisdiction, but there are a lot of factors to consider. Pensions not moved to Australia within six months of residency are subject to tax charges. However, James and Naomi should watch for Australian advisers keen to push them into Australian funds. What if they don't settle? Their visa also bars a release of pensions moved to Australia until they are 60. "Before they depart, it is a good idea to seek advice from a company such as Montfort International, which is a specialist in this area." Action plan Consider transferring Naomi's pensions rather than cashing them in. Do not rush to move pension funds to Australia. James's response The experts have given me a useful starting point for organising my finances before we emigrate. Keeping our money in cash did appear risk-free but, as Mr Spring-Rice mentions, fluctuations in currency rates make it a big gamble. If I exchange all our money now it would be annoying if the pound strengthened against the dollar. I agree that it is best to remain liquid until we settle and I will look at opening a bank account in Australia (I see that you can open one with Westpac over the internet) and transferring some, or all, of our cash, depending on the exchange rate. As for the rental property, it looks as if it makes most sense to retain the mortgage. I have set up a meeting with an accountant to discuss the tax situation. I have also set up a meeting with Montfort International and look forward to hearing what they have to say about my pension. Australia could be a great experience for us, and getting our financial situation sorted is important to making it work. Would you like a financial makeover? Write to Money, The Times, Times House, 1 Pennington Street, London E98 1TB, marking your envelope Money MoT, or e-mail moneymot@thetimes.co.uk. Please include current finances, short and long-term goals and a daytime telephone number. You must be prepared to disclose your income and be photographed. * Print * Email Bookmark and Share Your Comments Order By: * Newest first * Oldest first * Most recommended have your say Would you like to post a comment? Please register or log in Login Register * Terms and conditions Money Central Petrol The 10 cheapest petrol stations in the UK A broken Union Jack piggy bank ePoll: Has your bank ever treated you unfairly? * Money Central [IMG] Troubleshooter Rebecca OConnor Problem solved Ask Rebecca O'Connor to take on your complaint Money Bulletin e-mail Free to your inbox Every Wednesday receive the best news and advice Money MoT Free makeover Let us fine tune your finances Money Guides [IMG] Select from the dropdown [_____________________] * MOST READ * MOST COMMENTED * MOST CURIOUS Most Read Skip Most Read Today * Is Sir Alex Ferguson: a) absurd, b) pathetic... * Treasury opposed Brown's `job... * George W. Bush 'knew Guantanamo prisoners... * The 50 Biggest Movies of 2009 MOST COMMENTED Skip Editor's Pick Today MOST CURIOUS Skip Most Curious Today * How high is Mount Everest? China and Nepal... * Farmers in West Country breed sheep that... * Discoveries point to age of Tarzan and Jane * Potent mauve stinger jellyfish invade... * Chinese Party lothario took kickbacks to... Focus Zone accenture Need to Know: Industry sectors news at a glance. Interactive heatmap, video and podcast lloyds Mapping Business: We are backing British business, what is the confidence of the nation and what businesses are succeeding? [IMG] Visit Las Vegas: In this special section we explore a different way to enjoy Las Vegas Corsica Corsica Travel: An island of beauty and contrast, this unspoilt Mediterranean isle is the perfect holiday destination More Reports More reports: Enjoy further reading from Travel to Fashion, Business to Sport, discover more previous next * Need to Know * Mapping Business * Visit Las Vegas * Corsica Travel * More reports Money symbol on computer key Find an IFA Find a local independent financial advisor [IMG] Shall we dance? Join the Times Dance for Fitness Group today [IMG] Free credit report Online credit history with CreditExpert from Experian A lawyer with gown and wig Find a Lawyer Cut your legal costs Financial Brochures IFrame Requires IE5.0 or higher/Netscape 6.0 or higher. Your browser doesn't support IFrames, sorry. Generic photo of a job interview. Free CV Review Sell yourself! Have your CV reviewed by experts crossword with Cross fountain pen. Crossword Club Sign up today or try one of our free demo crosswords Classifieds * Cars * Jobs * Property * Travel Cars Skip Cars of the Week Stratstone, the No.1 Choice for Luxury Cars. Europe's largest independent Jaguar Dealer group with 23 locations across the UK. To view our latest New Car Offers and Jaguar Approved Vehicles visit Stratstone.com. Jaguar XJ 220 1991 -L-POA Preston Car Insurance The best policy at the best price Be Wiser Insurance Audi RS6 Avant 50t Fsi V10 Quattro 5dr Tip Auto 2008 -L-56,850 Essex * Search for more cars and bikes Jobs Skip Jobs of the Week Software Developer/Consultant 30-48k depending on experience Cirrus Logistics Basingstoke Business Consultant -L-55k - -L-65k O2 Slough General Manager Attractive Salary Ramsay Health Care UK Midlands Junior Associate 48,500 - GBP 55,000 Mckinsey and Company London * Search more Jobs Properties Oahu - Honolulu, Hawaii, United States Enjoy an exquisite location at the foot of Diamond Head in a traditional Hawaiian beach house lifestyle. -L-6,593,400 GBP Bridges Wharf, Battersea Award-winning riverside development, SW11. Luxury apartments for sale from -L-350,000. Mayfield Grange, Sussex Find out more about our luxurious apartments and houses for sale in the heart of Sussex. It's in your hands! -30% off key ready properties in Cyprus with guaranteed fast and easy finance. Prices from 89,000 Euros! * Search for more properties Holidays Skip Travel of the Week 3 nights 4* Radisson Blu Jersey from only -L-159 by sea and -L-229 by air! Includes FREE night, FREE upgrade to sea-facing room*, transfers and return travel Med Cruise Deals Sail from Southampton on the Grand Princess & receive FREE onboard credit up to $200 plus free child places available. 14nts From -L-799! Real Cyprus Offer with Sunvil -L-200 discount per couple on all packages for completed stays between 7th April-20th June 2010. Celebrity Eclipse 2011 Now on Sale! Book now for extra savings of up to -L-300 Off per person! Cruises from just -L-299 pp * Search for more holidays Place your advert now Search Ad Reference: _________ [ Search ] Where am I? Home * Money Money Makeover * Contact us * Back to top * News * Election '10 * Comment * Business * Money * Sport * Life * Travel * Driving * Arts * Archive [ Search ] ___________ [_____________] Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement. Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions | E-paper News International associated websites: Milkround | Globrix Copyright 2010 Times Newspapers Ltd. This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69. [IMG] Link: alternate