I have 3 final salary pensions and intend to cash in one of them. I am taking financial advice in the UK but I understand that i must pay my tax in France and if I cash it in there is a mechanism to pay 7.5% on 90% with a 10% allowance. My Uk advisor doesn’t know if I need to purchase a vehicle to cash in. Does anyone know the best way of doing this?
Karen just cash it in (lump sum) however you like, you just need to declare this ‘overseas’ income (sterling equivalent) correctly on your next French returns in the most ‘effective’ way for you - there are 4 options.
This article below from French-property.com explains things pretty well under section 3.4.2.iii. Remember, if you are NOT an S1 holder, you will also be subject to social charges, currently at 9.1% from the first cent - i.e. on top of the 7.5% income tax you have mentioned above.
I’ve tried to keep things simple but, as always, it’s a good idea to take professional advice if you’re in any doubt or you have complex financial arrangements.
You could have a word with @Brian_Furzer (our Pension Specialist)
He might be able to advise …
If Karen is not in the health system in France and has private health, she will not be liable to the social charges:
In addition, if you hold an S1 certificate of health exemption, or you are covered for health entirely by a private health policy, your pension lump sum from whatever source is also exempt from social charges.
the UK the only way you can access all the cash from a Final Salary Pension scheme is to transfer it to a personal pension and make use of specific legislation called Uncrystallised Pension Fund Lump Sum(UPFLS
Do you know if they will just provide mine as a lump sum as I am resident in France?
No sorry Karen I don’t know. Maybe consider taking a decent lump sum and then going into drawdown for a regular income with what’s left?
Correct - apologies for assuming she’s been French resident for more than 3 months.
Essentially, if you’re not affiliated to the CPAM then you don’t pay social charges on ‘replacement’ income - in this case pension income.
I claimed a lump sum a few years ago.
I completed a Return of Funds form instructing the pension provider to proceed with UFPLS claim and a Market Value Reduction was applied to the fund.
The main thing is to ensure that you have submitted UK/France double taxation treaty forms. (See HMRC - SI 2009)
You will not pay UK tax (and can claim back any that is taken) then you have the full sum to declare in France at your next tax declaration.
@Karen_DebaxLatour - you’ve been resident in France for a good 3 years now, according to your previous posts.
You will surely have some documentation by now, re Health Care and Insurance.
I would suggest you speak with @Brian_Furzer who can advise you on the Pensions and your situation .
Another idea - go and speak with your local Tax folk and ask them whether or not Social Charges will apply.
Best of luck