UK to Australia Tax: The 3 Mistakes That Cost British Expats Thousands
James got his Australian work visa. AUD 120,000 salary, sunshine, better lifestyle. He gave notice in Manchester, rented out his flat, and moved in September 2024.
Six months later, his UK accountant called: “James, you’re still UK tax resident. And Australia’s taxing you too. You’re paying tax in both countries.”
James thought moving to Australia was straightforward – new country, new tax system. He was wrong.
Australia’s tax system is complex. Progressive rates up to 45%, plus a 2% Medicare levy. And if you don’t exit UK tax properly, you can end up paying both. On the same income.
Don’t be James. Here’s what he (and most people) miss.
The Truth About Australian Tax Rates
Australia has progressive income tax:
2026 rates:
- $0 – $18,200: 0% (tax-free threshold)
- $18,201 – $45,000: 19%
- $45,001 – $135,000: 32.5%
- $135,001 – $190,000: 37%
- Over $190,000: 45%
Plus Medicare Levy: 2% of taxable income (unless exempt).
On AUD 120,000 (£66,000):
- Tax: AUD 29,467
- Medicare: AUD 2,400
- Total: AUD 31,867 (26.5% effective rate)
Compare UK on £66,000:
- Tax + NI: £16,432
- Effective: 25%
Australia isn’t much lower taxed than UK – and can be higher at certain income levels.
But that’s not the problem. The problem is when you’re taxed in BOTH countries.
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Mistake #1: “I Moved, So I’m Not UK Resident”
The assumption:
“I moved to Australia, got a work visa, have a TFN (Tax File Number). Obviously I’m not UK resident.”
The reality:
HMRC doesn’t care about your Australian visa. They use the Statutory Residence Test (SRT). And moving abroad doesn’t automatically pass it.
Example: Sophie’s Property Trap
Sophie moved to Sydney in October 2024. Great marketing job, beautiful city. But she kept her London flat – couldn’t bear to sell it, thought she’d rent it out.
She rented it to a friend for £1,500/month (market was £2,200). “Helping out a mate.”
That flat counts as a UK tie. Combined with visiting family three times that year (68 days in UK), she had two ties and significant UK days.
Result: UK resident despite living in Australia. UK tax on her Australian salary.
If she’d rented the flat properly at market rate, the tie disappears. If she’d limited UK visits to under 60 days, different outcome.
The Statutory Residence Test
The SRT considers:
- Days in UK during tax year
- UK ties (property, family, work)
- Your residency history
- Whether you’re leaving for full-time work
It’s not “moved abroad = non-resident.” It’s your specific combination of ties, days, and circumstances.
Mistake #2: “Australian Tax Is Just Lower UK Tax”
The assumption:
“Australia is like UK but with different rates. Same system, different numbers.”
The reality:
Australia’s tax system works completely differently in key areas.
Superannuation (Super)
Australia’s compulsory retirement savings scheme:
Employers contribute: 11% of your salary to Super fund
You can contribute: Additional voluntary contributions (tax advantages)
Taxed on entry: 15% tax on employer contributions
Withdrawn: Tax-free from age 60 (if retired)
This is different from UK pensions:
- Compulsory employer contribution (11% vs UK’s 3-8% typical)
- Taxed going in (15%) vs tax-free in UK
- Tax-free coming out (after 60) vs taxed in UK
Example – AUD 100,000 salary:
- Employer Super: AUD 11,000
- Tax on Super: AUD 1,650
- Net in Super: AUD 9,350
Your total package: AUD 100,000 cash + AUD 9,350 Super = AUD 109,350 total value.
Many UK expats forget to factor Super into compensation comparisons.
Medicare Levy
Everyone pays 2% Medicare Levy unless exempt (foreign residents exempt first year in some cases).
Medicare Levy Surcharge: Additional 1-1.5% if high income and no private health insurance.
This catches people out – they calculate tax but forget the Medicare levy.
Tax-Free Threshold
Australia’s $18,200 tax-free threshold is higher than UK’s £12,570. But it phases out for high earners (above $190,000).
Capital Gains Tax Treatment
Major difference: Non-residents lost main residence CGT exemption from 2017 onwards.
If you rent out UK property:
- UK: Partial main residence relief still available
- Australia: No equivalent relief for your UK property
Tax treatment of assets differs significantly between systems.
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Mistake #3: “My UK Property Won’t Affect Me”
The assumption:
“I’ll keep my UK flat and rent it. Easy passive income while in Australia.”
The reality:
UK property affects you in THREE ways that catch people out.
Way 1: It might keep you UK tax resident
If property is available for your use (empty, or rented to friend below market rate), it’s a UK tie.
Combined with other ties (family, frequent visits), can tip you into UK residence even while living in Australia.
Way 2: You pay UK tax on rental income
Even as Australian tax resident, UK rental income is taxed in UK.
The 20% withholding trap: If you don’t register for Non-Resident Landlord Scheme, your agent withholds 20% and sends it to HMRC.
Many don’t realize until they wonder why rent is short.
Register NRL Scheme:
- File form NRL1 with HMRC
- Get approval (4-6 weeks)
- Receive rent gross
- File UK tax return annually
Way 3: Australian foreign income rules
Australia taxes worldwide income for tax residents.
But: UK-Australia tax treaty prevents double taxation. You pay UK tax on rental, claim foreign tax credit in Australia.
Problem: The paperwork is complex. Many get it wrong and either:
- Pay tax twice (don’t claim credit properly)
- Underpay (forget to declare UK income)
Both lead to problems – either waste money or HMRC/ATO penalties.
Way 4: CGT when you sell
UK side:
- Capital Gains Tax applies (18-28%)
- Report within 60 days
- Non-resident = no main residence relief (or limited)
Australian side:
- Must declare foreign CGT in Australian return
- Claim foreign tax credit for UK CGT paid
The interaction between UK and Australian CGT rules creates complexity most people underestimate.
Why Every Situation Is Different
Your exact tax position depends on:
About you:
- Employment type (457 visa, Working Holiday, permanent?)
- Salary level (affects Australian tax rate)
- UK ties and property
Your property:
- Keep UK property or sell?
- Buy Australian property?
- Rental income levels
Your family:
- Spouse/children moving with you?
- Family remaining in UK?
- Visiting UK frequency
Your timeline:
- When moving? (Month matters)
- UK residency history (last 3 years)
- How long staying in Australia?
Your plans:
- Returning to UK eventually?
- Applying for Australian PR?
- Accessing Super before 60?
Dozens of variables. Each combination changes your tax obligations, filing requirements, and optimal strategies.
📋 Get Your Personalised UK-Australia Tax Report
Answer 15 questions about your situation:
- Employment type and salary
- UK property plans
- Family situation
- Move timeline
- Residency history
Get personalized document covering:
- Your UK tax residency status
- Your Australian tax obligations
- Super vs UK pension strategy
- UK property recommendations
- Timeline and filing requirements
- Questions for your tax advisor
A final word: Both HMRC and the Australian Taxation Office (ATO) review returns for years after filing. Get it wrong and you could face back-taxes, penalties, and interest from BOTH countries.
The best time to sort this out was before you moved. The second best time is right now.
Important Disclaimer
This article provides general tax information only and does not constitute tax advice. Tax laws are complex and change frequently. Your specific circumstances require professional guidance. Always consult qualified tax advisors in both UK and Australia before making decisions.