Optimising Pension Transfer For UK Expats Moving To France
LEARNING OBJECTIVES
We provide high quality, relevant and up-to-date retirement advice to British Expats in France.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
Your UK pension options in France
The differences between a SIPP & QROPS
Understanding the Overseas Transfer Allowance
Cross-border financial considerations
Optimising pension transfers for UK expats moving to or living in France involves navigating financial regulations, tax implications, and ensuring the best financial outcomes.
This article provides an overview of the choices, tax consequences of a transfer, areas to be cautious about, and sources of assistance.
UK Expats In France
With over 150,000 British expats living in France, the financial planning landscape is well laid out. The majority of Brits move to Paris, Aquitaine, Brittany, the Dordogne, or Provence-Alpes-Côte d’Azur. The cost of living and climate can vary considerably but the love of France and all it has to offer remains strong.
Ensuring your finances are in order is often overlooked by UK expats when it should be a key component of their relocating strategy.
Living in France and receiving a UK pension its important to understand areas such as income tax rate, social security payments, and the impact of the UK's double taxation agreement. You can find a detailed guide for expats in France here.
UK Pension Transfer
If you hold one or more UK pensions its important to understand the pension options available.
Whilst a UK pension offers several benefits for a UK resident, an international solution can be far more beneficial.
Choosing the right person to transfer to will depend on your position and requirements. There are two options:
International SIPP
An International SIPP is a UK SIPP that's been created for non-UK residents. It operates in the same manner as the UK pension scheme with additional benefits including flexible access, invest in Euros, retain regulation and protection of the UK, low trustee costs and receive pension income gross of UK tax.
A thorough look into International SIPPs and the benefits can be found here.
QROPS Qualifying Recognised Overseas Pension Scheme
A QROPS is an overseas pension that meets certain criteria set out by HMRC. Transferring a UK pension to a QROPS involves removing your pension from the UK entirely. A Maltese pension trustee is the preferred destination.
The key benefits include removal of your pension from UK IHT, ability to withdraw your pension income in euros and gross of maltese tax.
We take a deep dive into QROPS for French residents here.
French Tax Implications
There are two main french tax considerations. The treatment of the transfer and taking income from your pension.
Transfering your UK pension to an International SIPP is considered a UK to UK pension transfer and non taxable.
Transferring your pension to a QROPS, does not incur any tax liabilities however the QROPS will have a 10 year reporting requirement to HMRC.
As both an International SIPP and QROPS are recognised pension schemes, there is no capital gains tax applied. Tax is only applicable upon withdrawal. Withdrawals fall in line with your personal income tax as well as having french social security applied. (S1 holders are exempt)
All income will need to be declared on your annual tax return as you are tax resident in France.
Overseas Transfer Allowance
Starting from April 6, 2024, a new 'overseas transfer allowance' (OTA) has been implemented, replacing the previous lifetime allowance checks.
For the tax year 2024/25, the OTA is set at £1,073,100. Any transfer of funds from a UK pension scheme to a QROPS exceeding this amount will incur a 25% tax charge on the excess.
If you moved your pension funds overseas before April 6, 2024, different rules under the previous lifetime allowance may apply to your allowance.
French Expat Financial Advice
Taking into account the mentioned elements, as a UK expatriate, you can streamline your pension transfers when relocating to or residing in France, ensuring financial security and tax efficiency during your retirement.
The Wealth Genesis are cross border pension transfer specialists assisting clients throughout France with their financial planning needs. We are regulated to provide advice throughout the whole european union with all our advisers being qualified in both France and the UK.
Schedule a free Discovery Meeting using the diary below to speak to a financial adviser who can help optimise your pension transfer.
