New Zealand Tax

New Zealand operates a comprehensive taxation regime under which New Zealand Tax Residents are subject to income tax on their worldwide income – in the simplest terms, any money you earn is taxed. New Zealand has a Double Tax Agreement with the UK, so you should not be taxed twice on any UK income.

New Zealand operates a self-assessment system where taxpayers are responsible for completing and filing their own tax returns if required. Employees have tax deducted from their earnings as they are paid by their employers. The tax is paid to the Government under a system known as “pay as you earn” (PAYE).

Taxpayers who derive their income from sources such as businesses, rental or investments pay tax in three instalments during the year with a fourth annual square-up payment. This is referred to as the provisional tax regime.

If you are earning a wage in NZ, you’ll find that approximately the same amount of your income disappears automatically to the tax man as in the UK. The main difference is that there is no personal allowance; but on the up-side, there are no stamp duties, estate duties, or National Insurance contributions – but there is an ACC earners’ levy in New Zealand on salary and wage income which covers the cost of non-work related injuries. This is levied at 2.01% (in the 2016-2017 tax year) of salary and wage income and is taken along with PAYE for employees.

The New Zealand tax year runs from the 1st of April to the 31st of March the following year. The UK tax year runs from the 6th of April to the 5th of April the following year.

The income levels at which income tax is assessed are:

Individuals (from 1st April 2012):

  • 10.5% on income up to $14,000
  • 17.5% on income between $14,001 and $48,000
  • 30% on income between $48,001 and $70,000
  • 33% on income over $70,001

Individuals (from 1st April 2012), including the ACC earners’ levy:

  • up to NZ$14,000, the rate is 12.20%
  • between NZ$14,001 and NZ$48,000, the rate is 19.20%
  • between NZ$48,001 and NZ$70,000 the rate is 31.70%
  • over NZ$70,000 the rate is 34.70%, up to a maximum of $1,934.05.

Companies:

  • the company tax rate is 28%

Complying Trusts:

  • income retained by the Trust is subject to the flat rate of 33%
  • income distributed to beneficiaries (with 6 months of balance date) is taxed at the rates for the individual beneficiaries (as listed above)

If you settle in New Zealand, you’ll need an IRD number. This is a tax identification number, which you’ll need for banking and income. You’ll pay a higher rate of tax if you don’t supply an IRD number to your bank or employer.

To get an IRD number, download the IR595 form from the Inland Revenue website, www.ird.govt.nz. See www.ird.govt.nz/how-to/irdnumbers for full details.

However, should you require individual tax advice we can thoroughly recommend Chris Heffernan at Leech and Partners Ltd ( also a Brit) as he is an expert in both NZ and UK tax and will be happy to help you.

Have a look at our Top 10 Tax Tips but for more detailed tax information order our Financial Information Guide which covers the following areas:

  • Tidying up your UK Tax Affairs when you emigrate to New Zealand

  • New Zealand Income Tax Rates

  • New Zealand Tax Resident

  • New Zealand IRD Numbers

  • New Zealand Tax Exemption for New Residents

  • Who Needs to File a New Zealand Tax Return?

  • New Zealand’s GST Tax

  • New Zealand Tax on Pensions

  • New Zealand Capital Gains Tax and Tax on Investments

  • Setting up a New Zealand Trust

  • Inheritance Tax in New Zealand

Have a look at the HMRC website on moving abroad and the IRD website for moving to NZ

As mentioned before, we work with experts in all financial areas and tax is no exception. If you wish to discuss your individual tax situation we recommend Chris Heffernan (a fellow Brit) at Leech & Partners Ltd  who will be happy to help you to avoid some of the mistakes that other immigrants have made in the past and to advise on any tax planning opportunities that might exist.