Top Financial Tips for Aussie Expats Living in the UK

According to the 2021 census, approximately 87,000 Australians live and work in the UK. Many of them are aged 18 to 35 and on a Youth Mobility Scheme visa. Living in England, Scotland, Northern Ireland, and Wales allows you to visit world-class tourist destinations like Windsor Castle, Loch Ness, the Giant Causeway, and several other countries in Europe. But it also presents a fantastic opportunity to grow some wealth, thanks largely to an exchange rate that currently sits at around GB £1 to AUS $1.90. If you’d like to return to Australia on a much firmer pecuniary footing than when you left. Here are some top financial tips you should consider.

1. Open a bank account

When you are in the UK, you will need to open a bank account, and there are plenty of brick-and-mortar institutions, including Barclays, Lloyds, and HSBC, where you can do that. Whichever bank you open an account with, it is worth transferring regular amounts of your pay to your Australian account. That way, you won’t spend it and will be able to return home to a nice little lump sum – which you can put towards potentially planning for a family.

HSBC is the only established mainstream bank in the UK that offers international accounts. They allow you to transact in up to 10 foreign currencies from one single account, so as they presently have 36 branches in Australia, they are an option you should consider.

2. Consider Buying Property

A recent report from the Office for National Statistics revealed the average monthly cost of rent in the UK is £1,276. Over a two-year (24-month) period, this equates to about £30,624 or $58,185. Given that the average house price is £282,000 and that you ‘only’ need between 5-10% deposit to secure a mortgage. It might be a savvy move to buy a home in the UK while you are there. Alternatively, you might want to purchase something to move straight into when you return back to Australia.

Whichever way you decide to go, it is a good idea to see Aussie expat home loans with Get a Better Rate as their mortgage brokers specialise in helping Australians abroad. You can always rent out a room to help you pay the mortgage or, indeed, the entire property, in the case of it being based in Australia.

3. Contribute to UK pensions

Just like in Australia, all employers in the UK must provide a workplace pension scheme – known as ‘automatic enrolment’. While their contribution has to be a minimum of 3%, you can choose to save towards a private UK pension. Pensions are similar in concept to Superannuation. However, there are some notable differences.

One of them is that you receive tax relief on contributions you make from your salary to your pension of up to £40,000 every year. Overall, this can save you between 20% and 45% in income tax annually, depending on whether or not you partake in a salary exchange. If this is something you are interested in doing, it is a good idea to speak with a specialist UK pension advisor. Ideally, you should choose a fund that can be transferred to your Australian pension.

4. Set-up Tax-Free ISA

Known as an individual savings account (ISA), an ISA is a tax-free investment account that enables you to save money without paying income tax, capital gains tax, or dividends tax. It is open to any UK resident over the age of 18 and currently pays between 4.35% and 4.83% interest, depending on the length of term you choose to have. You can save up to £20,000 a year tax-free, and typically, you’ll get a higher rate of interest if you have a longer fixed term.

5. Premium Bonds

Premium Bonds present another excellent opportunity to potentially generate revenue. Linked to the Treasury, this government security does not provide interest. However, it does offer you the opportunity to win monthly cash prizes of between £25 and £1 million. If you are over 16, you can hold between £25 and £50,000 worth of premium bonds, which have no expiry date and are not subject to capital gains tax. According to the NS&I, who issues them, this investment provides you with a 1 in 840 chance of winning £25 every month. Best of all, there is no weighting, meaning that every ticket has an equal chance of success.

Unlike with the national lottery in Australia, there are no rollovers. Every month, two people will win the top £1 million each. If you win a prize, you can choose to have the money sent to a nominated bank account or automatically reinvested to provide you with more premium bond tickets. Should you decide to close your premium bond account at any time, you will be able to do so without incurring any financial penalties. The value of your tickets will simply be deposited into your bank account.