Kevin Maxwell is losing thousands in tax because he cannot move his Australian retirement savings into his UK pension.
The 65-year-old said he and his wife, Annette, face a “ridiculous” situation, in which the only way to access his Australian pension, worth AU$110,382 (£58,308), is to transfer it into their UK bank account, where it is immediately taxed at 25 per cent.
Kevin, originally from New South Wales in Australia, has worked in both countries in journalism and public relations before moving to the UK permanently in 2009 to get support for his son, who is autistic.
When he looked to transfer AU$80,000 (£42,187) of his pension into his Barclays account in December 2024, he lost around AU$20,000 (£10,530) to UK income tax.
He said: “All we want is to move it into my Prudential pension in the UK for use when we retire in a few years, but we cannot.
“A friend asked a tax expert about this, who said there is no simple way to receive Australian retirement savings without paying UK income tax, even if we already paid tax on contributions in Australia.”
However, the system is different for those in Australia who can move their UK pensions into Australian retirement accounts without any extra tax.
“It is extremely frustrating,” Kevin said.
With Australian retirement savings, known as superannuation, employers are required to contribute a set percentage of an employee’s salary into a super fund, which is invested until retirement.
Contributions are taxed at a lower rate than regular income, and the funds grow largely tax-free.
But when a person moves overseas, there is no system that allows those savings to be moved directly into another country’s pension scheme without triggering income tax.
UK pensions work differently, allowing transfers into Australia under specific agreements. That leaves Australians moving to the UK at a disadvantage, with no easy way to combine their retirement funds.
Kevin and Annette moved from Sydney to Bath in 2009 to be close to family and support their autistic son.
Kevin had already spent a decade in the UK between 1989 and 1999 before moving to Australia, where he worked as a journalist for Bloomberg and the Australian Broadcasting Corporation.
After returning, he switched careers into public relations, working for organisations including Associated Press Television in the UK.
Around five years ago, the couple began combining the various savings and pensions they had built up over the years.
They thought it would make sense to move his Australian retirement savings into their UK pension, only to discover the rules made it almost impossible.
In December 2024, he transferred AU$80,000 to their joint Barclays bank account, immediately triggering a 25 per cent tax charge.
He said: “We just handed a quarter of our savings over to HMRC. It is not about avoiding tax. It is about access to money we have already saved.
“It would make sense to allow pensions to be combined without these penalties, but instead we are forced to pay unnecessarily high taxes just to access money we have earned.”
Mike Ambery, retirement savings director at Standard Life, said: “Transferring pension savings between countries isn’t always straightforward – and that’s particularly true when moving money from Australia into the UK.
“The two systems work very differently, and Australian superannuation isn’t treated in the same way as a UK pension by HMRC. That means what feels like a simple transfer can instead be taxed as income, potentially triggering a large and unexpected bill.”
Kevin’s experience shows the wider problem faced by international retirees and expatriates, highlighting how retirement planning can become far more complicated when the system penalises people for having worked abroad.
He said: “We plan carefully, we pay our taxes, and we try to make the system work for us, but it is frustrating to see that moving money in the other direction, from the UK to Australia, can be done easily while we are completely blocked.”
The Maxwells are now settled in Bath and focused on family life. He said: “We left Sydney to be close to family. That was the big driver.”
Yet as retirement approaches, the tax hit on his Australian savings continues to loom large. “It is just one of those things where the rules have not caught up with modern international working lives,” he said.
There isn’t a simple, direct way to move pension savings from Australia into the UK system, Ambery said, so people may need to withdraw the money first before paying it back into a pension.
That can create a real risk of double taxation, with charges in Australia as the funds are taken out and further tax due in the UK when the money is received, depending on someone’s circumstances.
Because of this complexity, many people choose to leave their money invested in Australia and transfer proceeds to the UK when they need them, rather than attempting a full pension‑to‑pension transfer.
Ambery added: “For people moving to the UK from overseas, it’s a reminder that pension decisions can have long-lasting consequences – and that taking advice before moving money across borders can help avoid costly surprises.”
Wealth planner Rob Earle emphasised the importance of seeking professional financial advice and carrying out thorough research before taking any action.
He said: “In many situations, these types of transfers aren’t tax‑free. This is because the UK only provides tax protection on transfers that meet its very strict definition of a “pension‑to‑pension” transfer.
“Most foreign arrangements, including many Australian schemes, don’t always align closely enough with these rules to qualify.
“That’s why speaking with a financial planner early on is so important. They can guide you through the options, check whether the receiving scheme is recognised by HMRC, and help ensure any transfer is suitable and tax‑efficient.”
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