Government Service Pensions - Advice Needed, Discussion and Issues Experienced

From the figures you have given that sounds as if your state pension is being taxed in the UK. I thought that this was supposed to be taxed in France, and you are clearly paying tax on something in France. Are you sure you are not paying tax on it twice?

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Govt pensions ARE taxed in the UK but you must still account to the french tax authorities on the all income received. Under the double taxation treaty, the french tax people will account for the tax paid in the UK but you will not be refunded any tax by them that would have been less if the whole lot was taxed in france.
Itā€™s a quite complex issue really.

Cheers Graham. :slightly_smiling_face:

I donā€™t think it is being taxed in UK Tony as it is sent to me directly here in France by DWS in Euros, but my Government pension is taxed at source there. I think the income tax here is on the sum of all our net income here, and seems to be exacted at a rate of less than 3% of our joint net income. Seems fair and reasonable to us.

Up until last year my government pension, my wifes state pension and her small private pension did not attract any additional tax here in France. However, due to the high exchange rate in 2015 our global income attracted a demand for 800 euros even though taxation on my Govt Pension was well above what it would have attracted in France. This year we have paid an additional 600 plus euros due to the poorer exchange rate.

At the beginning of this year my state pension kicked in which also increased my wifes state pension. If the exchange rate stays similar to today our 2017 global income will attract well over 2000 euros here in France. Even though l will be taxed to the tune of 6000 plus euros in the UK the addition of another 2000 makes our contribution disproportionate to our income. And unlike you Peter we think this is Neither fair or reasonable - Even our local tax official at the FISC who we have dealt with for a few years believes the current system, which calculates the global revenue needs some adjustment.

A quick tip for Andrew - Make sure you get your English version of the Form France Individual back from your local office once they have signed and stamped it. You can then send it direct to HMRC and rest assured they will get it. Unfortunately l have heard some horror stories where the local office kept it stating they were sending it off to Paris or would send it to HMRC and, of course, never arrived.

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I can only concur with what Dan Wood says about the English version of the France Individual form> As one quite wealth friend told me ā€œnever trust anybody else with your brass!ā€
A question Dan. Do you get paid your state pension direct to your french bank account? We have found HM Govt manage to get very close to the bank rate when sending you the money so it is well worth letting them do it direct. Sadly the Govt pensions are another matter. This is palmed out to a third party and the rates achieved are appalling. We habe our Govt pensions paid into our K bank account in sterling then use an fx company (Caxton in our case) to pull it across when we want (usually when the rate has improved on the day a little). We keep detailed records of what we have achieved in euro currency and it is that figure we use to declare our income to the fisc. Any sterling left over on 31st December is then converted to euro notionally to give a final figure for the year. Converting the whole pension in sterling to euro (even when you have achieved a conversion figure) is nonsensical in my view and I doubt that fisc will trouble you over that. The rate we use in the average of the Banque de france rate for the year (although some argue against that) but in essence, provided you can prove to the fisc what you have done I think they wonā€™t challenge you. Keep record in a spreadsheet and print it off at the end of the year (but donā€™t send it to them!)

Thanks again Guys/Girls for the details of your experiences and advice, It is all really helpful.

Since this thread started, I have thought of another potential issue, if anyone can help?

I can move to France at the beginning of 2018 (as previously stated). My Govt Service Pension is I know taxed at source in the UK. My lump sum has been paid to me in the UK in 2017.
If I move to France ā€˜fiscallyā€™ at the beginning of 2018, my wife will still be ā€˜fiscally residentā€™ in the UK, until she can retire for instance in August 2018. She will also get a govt service pension and small lump sum in the UK.
If I move before her and register, will her lump sum etc. be taken into account as part of my global income?
Even though for the period Feb-Sept 2018 we would be fiscally resident in different countries?
I know it sounds complicated, I know people will say get professional advivce (which we are likely to do), but I was wondering if anyone had any ideas, if it would be prudent for us to ā€˜moveā€™ together.
The main reasons that I want to get there as soon as possible, -
1/ It is France!
2/ I receive Contribution ESA which at the moment entitles me to an S1 at age 47. I wanted to reduce the risk of losing it if the Govā€™t change policies.

Thanks again

I think you would register for tax as ā€œ1 partā€ initially until your wife joins you in france then you can re-register with fisc for 2 parts when she is officially resident. I canā€™t see that her income whilst outside france will come into your french tax equation (unless someone knows differentlyof course). You wonā€™t grt the same allowances as a couple of course but that will change when she comes to join you.

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Graham, thanks. :sunglasses:

Evening all. Just a take on our current situation.
We arrived in France in March 2017 as permanent residents. Our only source of income is my husbands government service pension. We went to the tax office today with forms to enter into the tax system. We were able to speak to a very friendly young chap straight away (without an appointment) who told us we did not need to register now. He advised us to come back after 15 April 2018 but before 15 May! We informed HMRC in March 2017 that we are resident in France from March 2017, and my husband still pays tax in the U.K on his pension.
I donā€™t know how this plays out with others in a similar position, but I was happy with the answer we got today. Hopefully itā€™s correct!

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Hi @Daisy_Johnston ā€¦ yes, it is correctā€¦ you will declare in 2018 the income you received in 2017 (from the date you arrived ā€¦to 31st Dec 2017)

The Tax Year runs from Jan to Dec (unlike UKā€¦)

Well doneā€¦ :grin:

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In preparation for dealing with your change in circumstances with the UK tax authorities (even though your Govt pension is taxed at source) one you have a french tax reference you can complete the Form France-Individual ()in duplicate - one in English, the other in French) and take it to your french tax office for validation. The french version they keep but the English version has to be sent to HMRC.
It is still important that you do this since your UK State Pension (and any private ones) are not taxed at source in the UK so you need HMRC to maintain your free pay allowance and not tax you on the UK state pension (the year after receiving the payment) This will be collected (as matters presently stand) by adjusting your tax code to cover the 'underpayment. A measure included on the Chancellorā€™s Budget - but not mentioned in his speech - is a change in rules which allows HMRC to recover underpaid tax in the same tax year as the tax becomes due rather than the following year - which you can easily miss if you are not alert to it. They do this by changing your tax code in that year rather than the next as is presently the convention.
The Form Frane-Individual is available here:
https://www.gov.uk/government/publications/double-taxation-united-kingdomfrance-si-2009-number-226-form-france-individual

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Thank you Graham. This is all very good to know. :blush:

Merci Stella! It was a very pleasant experience. :blush:

@Daisy_Johnston ā€¦ Hi Daisyā€¦ and isnā€™t it a great feeling, when you have tackled something and it goes wellā€¦ :relaxed:

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Hi,
A couple of points on this thread:
1. Not all pensions which people assume are ā€œgovernmentā€ are in fact so -check this HMRC list;
https://www.gov.uk/hmrc-internal-manuals/international-manual/intm343040

There seems to be some confusion around the taxation of government pensions ,
2. Government pensions are dealt with as follows;
Tax is calculated on the sum of all income including exempt UK govt. pensions, then the following calculation is made to arrive at a tax credit in respect of the govt. pension( this credit is equal to the amount of FRENCH tax which would otherwise be due - it has NOTHING to do with the UK tax which has been paid)
Gross Tax on total income X exempt UK govt.pension / gross taxable income (inc. govt. pension) = Credit , this credit is subtracted from the Gross Tax to arrive at the french tax due (before any other deductions like donations to charity etc).

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Hi @parsnips

Interesting link in your first paragraph ā€¦ thanks.

Your second paragraph has got me confusedā€¦ who is calculating the credit you talking aboutā€¦ ??

I took parsnips to be talking about the calculation applied by the fisc?

Thatā€™s how the fisc calculate it -provided it has been correctly declared.

Thanks for the infor Parsnips, I know mine is a service pension (police) .
Have I got this right-
So if my police pension earnings in the UK are taxed in the UK, this is declared in year N+1 in France and I am given a credit against how much i would have been taxed in France? Then I may be liable to pay sone French tax if I get more than their threshold?

Only a couple of weeks til my move, I will update this thread with any progress and expereiences.