I have a pension that I can cash in when I’m 55 in December, what is the best thing to do with it after the UK has taken the tax, should I just have it transferred into my La Poste account ?
Lots of experts on here so I am sure someone will advise you.
I think that you will have to declare it on your French tax income so do think carefully. I have the same chance with a small pension but have decided to take the very small monthly payments, I declare them and it doesn’t take me over the top for tax.
Apparently if you are a French taxpayer my accountant advises me that they will reclaim the tax deducted by HMRC and once funds are transferred to France there will be a tax liability of 7%.
He slso advised that there are test cases going through French courts which, dependant upon the outcome, may rule that in future any pension contributions are liable to social charges in addition which woyld make total deductions somewhere in the region of 15%.
All this applies to modest amounts…if you have hundreds of thousands then no doubt different liabilities apply.
Thank you Damian John, I’m waiting for last years statement and the amount will probably be in the £50,000, which is why it works out better to take the amount in full rather than in monthly installments
Hi Ann this article in English may help you decide the best way forward - you have choices. Whatever the case your pension withdrawal will be subject to French income tax and social charges. However you will currently be exempt from social charges if it’s a government service pension and/or you hold an S1.
Any tax paid in the UK is not ‘reclaimed’ but you will receive a tax credit in France so as to avoid double taxation.
Lots of info also available on all the French official sites - just Google La taxation des pensions de retraite versées sous forme de capital or prélèvement forfaitaire libératoire depending on your chosen way forward.
I suggest you don’t commit yourself until you’ve found out exactly what your tax liabilities would be in France. It could be that the tax you would pay in France on a lump sum, would change the picture.
Could be wrong but I believe UK taxpayers benefit from very favourable tax arrangements for pension lump sums, which French taxpayers don’t benefit from.
Correct Anna - 25% of the ‘pot’ can be withdrawn tax free to UK taxpayers but no such concession is made to French resident taxpayers.
Isn’t there something on the Tax Declaration… where an “unusual” sum can be declared and spread over a number of years… I’m sure I read that ages ago… but it may well not be suitable and/or changed now…
Perhaps, @Ann_Cook your local tax folk can give you some advice on how such an “unusual” sum might be declared with best results for you… ours are very helpful…
Again - correct Stella - it’s covered in the link I provided above.
Aha… well, we are both A1 and alert this morning… sorry, I did not open your link…
Thank you all, will definitely take a proper look at what to do, when I receive last years statement
I agree with you Anne, although I could have cashed in an Endowment Policy for £3000 when I was 65, but I opted for receiving a once a year payment which has so far returned to me a total of £5290 over a period of 15 years. I have found the pleasing arrival of a few hundred euros is great for fuel bills and or car insurances etc… It makes no difference at all to my tax liability here, but I suppose it depends on your overall situation as all incomes are added to assess this, and not just one item.
So it would appear that I received totally erroneous advice from my tax adviser?
Well maybe I am not understanding correctly but I was told by my tax adviser that if i cashed in my two small private UK pensions (about 30k apiece) I would receive the 25% tax free but the pensikn company would withold 40% emergency tax on the remaining balance. My accountant will then reclaim this and the total will be liable for 7% tax in France with a further future potential liability for about 8% cotisations dependent upon a current court case.
That’s my understanding as well Damian.
Okay…that’s reassuring. Thanks. Would rather not have to say goodbye to 40 percent of 75 percent as I’m not rolling in it.
Damian are you French tax resident?
That is exactly how it worked when my wife cashed in her two similar valued private pensions a few years ago and the UK taxman paid the overpaid tax back within a few months. the hardest part was getting the pension company to release her own money they acted like they owned it, be prepared !!