money matters Pensions and taxes – what you need to know in france

It is important to understand how your Uk pensions are taxed when living in France In fact, you may have tax considerations in both countries Here I look at a few issues you need to be aware of

How Uk Pension Income Is Taxed In France

Pension income from Uk funds is generally taxable only in France, after a 10% deduction (maximum €4,123 per couple), at the scale rates of income tax (up to 45%) It is also liable to France 9 1% social charges (reduced to 7 4% for low income) but Form S1 holders are exempt

Income from Uk gover nment ser vice pensions remains taxable in the Uk (not France) You still include it on your French income tax return but receive a credit equal to the French tax and social charges

Lump Sums

The Uk r ules allow you to take a 25% ‘ pension commencement lump sum ’ tax free but if you take it after becoming resident in France it will be liable to French income tax and potentially social charges

If, however, you are considering taking your entire pension as one lump sum, in certain circumstances you may be eligible for a fixed 7 5% income tax rate in France

Uk Taxation

The Uk has frozen income tax thresholds until 2028

O n a positive note, the Uk’s 2023 budget abolished the pensions lifetime allowance and resulting tax charges –welcome news for those who have built up larger pension savings

by Catrina Ogilvie, Blevins Franks

This is not necessarily per manent though as a future government could reverse this move, and the Labour Party quickly pledged to do so There may therefore be a limited opportunity to transfer your pension out of the Uk and avoid any future lifetime allowance charges

Reviewing Your Pension Arrangements

If you are a resident of France and have a Uk pension you need to review your pension ar rangements and establish what is best for your current and future circumstances Like you they might benefit from moving abroad, and you need to regularly review your objectives That could mean changing your investment profile, reassessing your risk tolerance or developing an alter native strategy that embraces your overall financial situation

Too often pension decisions are taken in isolation, based on options provided by Uk pension companies who are oblivious to your needs and the tax implications of living in France Take personalised advice from a specialist adviser who can provide integrated advice covering pensions investing and cross-border tax and estate planning covering both countries

Tax rates, scope and reliefs may change Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change Tax information has been summarised; individuals should seek personalised advice keep up to date on the financial issues that may affect you on the Blevins Franks news page at www blevinsfranks com