‘I have money in an Australian lender. Will I have to pay tax if I transfer it back to Britain?’
Inquire an expert: A British citizen asks if it is worth transferring the funds from her Australian bank account to one particular in the Uk 
I have experienced just underneath A$ twenty,000 (about £11,000) sitting in Nationwide Australia Lender for more than ten several years. I gained this income although on a working vacation from 1999 to 2000. I positioned it in a “term deposit account” which paid 3.45pc very last calendar year.
As I am not an Australian citizen I pay out withholding tax, which very last calendar year was A$ four hundred. This intended I acquired A$ 462 soon after-tax curiosity from the original A$ 862.
Is it really worth me transferring the income to the British isles?
If I did that, exactly where would be the best spot to place my cash?
JM, by e mail
Withholding tax, otherwise known as “retention tax”, is a tax levied by most countries on fascination or dividends paid out to an individual who is not a resident in that nation.
So a British resident who has a lender account in another country will have tax deducted at supply on any curiosity they generate.
For 2014, the withholding tax in Australia is 10pc on interest and 30pc on dividends , according to Deloitte, the accountancy company.
Iain McCluskey of rival company PricewaterhouseCoopers stated that, if you are the two resident and domiciled for tax functions in Britain, “Your worldwide expense earnings is taxable in the Uk, which includes any bank fascination earned in an Australian account, no matter of whether or not you provide the cash to the United kingdom or not.”
Australia also seeks to tax this desire due to the fact it is revenue from an Australian supply, but thanks to a double tax agreement between Britain and Australia you do not have to spend tax twice.
This is how it functions. Assuming that JM is resident and domiciled in Britain, the Australian revenue is also taxable in Britain, but when the income is declared and tax is paid in the British isles (by declaring the income on a self assessment tax return), the Uk tax because of on the desire is decreased by the tax paid out, at 10pc, in Australia.
Mr McCluskey added: “If JM has not been declaring the desire in the British isles for the years in which she has been a British tax resident, she need to make a disclosure to HM Income & Customs and organize to settle the arrears.
“She might also be entitled to a refund of Australian taxes, if the tax withheld on the fascination has been larger than 10pc.
“Australia has the right to tax the desire at a price of 10pc. JM may want to check with National Australia Lender if the rate of withholding is running at some thing other than 10pc, as they propose.”
So, on the issue of no matter whether transferring the cash to Britain will make any distinction to the tax she has to shell out, the reply is no. But she need to take into account transferring the income into a tax-effective financial savings account these kinds of as an Isa. Our choose of the ideal Isas can be discovered here: Where to uncover the greatest cash ‘Super Isa’ rates.
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