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    UK-Australia Cross-Border Tax

    The 2003 DTA in practice: residency tests on both sides, pension transfers (QROPS and what remains), frozen UK State Pension, property tax across borders, and the SRT versus Australian domicile test.

    The 2003 UK-Australia Double Taxation Convention allocates business profits to the country of residence unless a permanent establishment exists in the other country. British residents moving to Australia typically become Australian tax residents immediately on arrival if they intend to stay, have employment lined up, or establish a home. UK private pensions can be transferred to a QROPS-compliant SMSF, but most large public super funds no longer qualify. The UK State Pension is taxable only in Australia for Australian residents under the DTA, but critically, it is frozen at the rate first claimed, with no annual cost-of-living increases.

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    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact ATO. Read our editorial scope →

    Key articles of the 2003 UK-Australia DTA

    The 2003 convention governs how income is taxed when connected to both countries. Article 4 defines tax residency and includes dual-residency tie-breaker rules. Article 7 allocates business profits to the country of residence unless a PE exists in the other country. Article 6 gives taxing rights on real property income to the country where the property is located. Article 15 taxes employment income where the work is physically performed. Articles 17 and 18 cover pensions, with most pension income taxable only in the country of residence. Article 23 provides relief mechanisms (credit method) to avoid double taxation. The DTA does not exempt you from filing obligations in both countries. It determines which country has primary taxing rights and how relief is granted.

    Australian versus UK residency tests

    Australia uses four statutory tests: the resides test (physical presence, intention, family, employment, assets, social ties), the domicile test (domicile in Australia unless permanent place of abode is outside), the 183-day test (present more than half the income year), and the Commonwealth super fund test. Satisfying any single test makes you an Australian tax resident. The UK uses the Statutory Residence Test (SRT), which examines days spent in the UK, UK ties (family, accommodation, substantive employment), and prior-year residence patterns. British tradies moving to Australia typically trigger Australian residency immediately on arrival if they intend to stay, have employment lined up, or establish a home. A proposed Australian residency reform (183-day bright-line test plus secondary factor tests) was consulted on in 2023 but has not been legislated as of May 2026. The existing four tests apply for both 2025-26 and 2026-27.

    UK State Pension: taxation and the frozen pension problem

    Under the DTA, UK State Pension is taxable only in the country of residence. If you are an Australian tax resident, the pension is taxable in Australia and exempt from UK tax. HMRC will usually pay it gross once correct treaty paperwork is submitted. The pension must be included in your Australian tax return at the applicable marginal rate. The UK State Pension is frozen when claimed from Australia. There is no social security agreement between the UK and Australia covering pension uprating. The pension stays at the rate it was first claimed, with no annual cost-of-living increases. This is a significant long-term financial risk. A pension claimed at GBP 221.20 per week in 2025-26 will still be GBP 221.20 per week in 2035 if you remain in Australia. The real purchasing power erodes every year with inflation.

    UK private pensions: transfer to Australia

    You cannot transfer a UK pension before reaching the UK minimum pension age of 55 (rising to 57 in April 2028). Transfers to Australia must go to a Qualifying Recognised Overseas Pension Scheme (QROPS) on HMRC's approved list. Most large public Australian super funds no longer qualify. Typically, this requires establishing a self-managed super fund (SMSF) that meets QROPS requirements. If you are Australian tax resident at the time of transfer, the 25% UK Overseas Transfer Charge does not apply. If you transfer within six months of becoming Australian tax resident, no Australian tax applies on growth. After six months, growth accrued while Australian resident (Applicable Fund Earnings, or AFE) is taxable. A s 305-80 election allows the fund to pay 15% tax on AFE instead of the amount being added to your marginal rate. If you leave the pension in the UK and draw down while Australian tax resident, the entire drawdown is assessable Australian income at your marginal rate with no tax-free component rebate. The cleanest route for most people: keep the pension in the UK until eligible, transfer to a QROPS-compliant SMSF, and elect AFE-at-15% treatment.

    Drawdown without transfer

    Drawing down a UK pension while living in Australia means the entire drawdown amount is assessable income in Australia at marginal rates. There is no tax-free component rebate for UK pension lump sums received by Australian residents. Under the DTA, Australia has primary taxing rights as the country of residence. The UK generally does not apply UK tax on pension payments to Australian residents, but the Australian tax bill can be significant.

    UK self-employed working remotely from Australia

    If you are physically in Australia and meet any Australian residency test, you are an Australian tax resident taxed on worldwide income, including UK self-employment income. If you have broken UK residency under the SRT, the UK generally only taxes UK-sourced income. Remote work performed entirely outside the UK is typically not UK-sourced. Under the DTA, business profits are taxable in the country of residence unless a PE exists in the other country. For GST, B2B services supplied from Australia to UK businesses are generally GST-free (place of supply is where the recipient is located). UK VAT does not apply to services supplied from outside the UK unless there is a specific UK connection. B2C services to UK consumers may be subject to Australian GST depending on the nature of the supply and connection to Australia.

    Cross-border property: rental income and CGT

    Under Article 6, rental income from real property is taxable in the country where the property is located. An Australian resident with UK rental property must declare the income in both the UK (where it is primarily taxable) and Australia (where worldwide income is assessable), claiming a FITO for UK tax paid. The UK Non-Resident Landlord Scheme may withhold 20% on gross rent unless you apply for approval to receive rent gross. Capital gains on UK residential property are taxable in the UK even for non-UK residents. Australia also taxes capital gains on foreign property for residents. Claim a FITO for UK CGT paid against your Australian CGT liability on the same disposal. For the reverse scenario (UK resident with Australian rental property), rental income is taxable in Australia with withholding potentially applying to non-residents, and the income must be declared in the UK with a foreign tax credit claim.

    Departing Australia Superannuation Payment (DASP)

    DASP is available to individuals who entered Australia on a temporary visa (except subclasses 405/410), whose visa has expired or been cancelled, and who have already left Australia. It is not available to permanent residents, Australian citizens, or New Zealand citizens. Apply via myGov linked to the ATO, providing passport, bank details, and proof of departure. Tax is withheld at DASP rates, which are higher for working holiday makers. For British workers who came to Australia on a temporary visa and are returning to the UK permanently, DASP allows you to claim back accumulated super (less withholding tax) rather than leaving it locked in an Australian fund until preservation age. Permanent residents and citizens cannot access super via DASP regardless of where they live.

    Statute references

    • UK-Australia Double Taxation Convention 2003
    • International Tax Agreements Act 1953 (Cth)
    • ITAA 1997 s 305-80 (Applicable Fund Earnings election)
    • ITAA 1936 s 6(1) (Australian residency tests)
    • UK Statutory Residence Test (Finance Act 2013, Schedule 45)
    • HMRC QROPS list and Overseas Transfer Charge rules
    • UK Non-Resident Landlord Scheme

    Frequently asked questions

    I moved to Australia from the UK six months ago. Am I still a UK tax resident?+
    That depends on the UK Statutory Residence Test (SRT), which examines days spent in the UK, ties to the UK (family, accommodation, substantive employment, UK days in prior years), and whether you have been UK resident in any of the three preceding tax years. If you left the UK, broke your ties, and spend fewer than the threshold number of days in the UK, you can be non-resident from the date of departure in a split year. The SRT operates independently of Australian residency tests, so you could be resident in both countries simultaneously until the DTA tie-breaker resolves it.
    Can I transfer my UK workplace pension to an Australian super fund?+
    Only to a Qualifying Recognised Overseas Pension Scheme (QROPS) on HMRC's approved list. Most large public Australian super funds no longer qualify as QROPS. Typically, this means setting up a self-managed super fund (SMSF) that meets QROPS criteria. You must be Australian tax resident at the time of transfer to avoid the 25% UK Overseas Transfer Charge. If you transfer within six months of becoming Australian tax resident, no Australian tax applies on growth. After six months, growth accrued while AU resident (Applicable Fund Earnings) is taxable, but a s 305-80 election can have the fund pay 15% tax on that growth instead of adding it to your marginal rate.
    I own a rental property in the UK and now live in Australia. How is the rental income taxed?+
    Under Article 6 of the DTA, rental income from UK property is taxable in the UK. As an Australian tax resident, you must also declare the income in Australia and claim a foreign income tax offset (FITO) for UK tax paid on the same income. The UK may apply the Non-Resident Landlord Scheme, withholding 20% on gross rent unless you apply for approval to receive rent gross. On disposal, the UK taxes capital gains on UK residential property even for non-UK residents. Australia also taxes capital gains on foreign property for residents, so you claim a FITO for UK CGT paid.
    My UK State Pension is frozen. Is there anything I can do about it?+
    No mechanism currently exists to unfreeze the UK State Pension for recipients in Australia. There is no social security agreement between the UK and Australia covering pension uprating. The pension stays at the rate it was first claimed (or the rate at which you emigrated) with no annual cost-of-living increases. Campaigning organisations continue to lobby for change, but as of 2025-26, frozen remains the legal position. Factor this into retirement planning, because the real value of the pension erodes every year.

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