I’ve been looking but can’t see exactly my question answered. I’ve recently moved to France in my thirties on a local contract but have considerable savings in the UK in both a stocks and shares and cash ISAs.
I didn’t get very far with French banks and I was thinking of liquidating my ISAs and opening an Assurance Vie as well as other local products. However, I spoke to a tax adviser my work hired today (who isn’t that familiar with ISAs) and she said if I can make it so that my ISAs rollover and that they are being reinvested, I may not need to pay any income tax on the gains in France.
Is this true? If I don’t touch my ISAs, will I not pay any capital gains?
If so, I guess I can combine all my cash ISAs into one cash ISA for a fixed long term period like 5 years? But for the stocks and shares ISA, can I do something similar? Do the French have the equivalent certain annual capital fee allowance?
The minute you liquidate your Isa’s, or move them in any way you are realising any increase you have made and will have to pay capital gains tax if above the threshold.
The tax theory is that each year you declare the value as part of your French tax return and pay tax on the increase. I know some people just keep them untouched and don’t do this until they withdraw funds, but not sure how acceptable this is to the fisc.
ISAs are simply a UK tax wrapper. Stocks/shares/unit trusts are the actual investment. Cash ISA I think are simply savings accounts outside the UK.
So the cash ISA it’s taxed on your annual gain. There’s no risk on them so it’s added to your overseas income annually
You really need a proper financial/taxadvisor - but don’t confuse them with ISAs - they’re unit trusts now your not in the UK. A lot depends on whether France/EU is a permanent move or a 5 year move. If it’s not permanent talk to the ISA providers about their rules for non residents as well. You can’t reinvest the lot of you close an ISA now and return to the UK down the line.
An assurance vie is just a French tax wrapper - less choice of funds and the cash versions are awful. But there’s a fair range of investments available.
I have no idea about ISAs but one other potential spanner in the works, which I hit, is that the people you’re dealing with, post Brexit, may not have the right to deal with a EU resident, or may perhaps not want to deal with non residents at all. I wanted to change some investments recently and encountered this problem. I got it sorted (I think) but it restricted my options.
So my advice is get advice before you say anything to them.
Yes, be sure that the holder of your ISAs know ‘who you are’ - ie, your residency status.
Are you resident here or UK?
There is much on this on the HMRC website. Rule of thumb I understand is that an EU resident may hold an ISA but cannot add funds to it nor open a new one.
Lots to consider here… The ISA is a tax wrapper that isn’t recognized in France. So technically you hold each asset personally. If you have accumulation funds that don’t pay dividends or you don’t sell them then you have made no gain, if you own equities or income funds that pay dividend then the dividend will be liable for CGT in France. If you hold fixed interest assets the coupons will be liable for CGT and the same for bank interest or money market assets.
So you should declare the account on 3916 and gains on 2047.
If you plan to return to the UK then I would keep them instead of moving them to a French solution as you can only pay back £25,000 a year now back into the ISA when you go back.
It’s not strictly correct but common that people just declare the ISA as a capitalization contract on 3916 and don’t declare what happens inside the ISA. Not correct but I’ve seen it happen and not attract problems for people that do plan to go back,
But of course the benefits of an assurance vie or PEA may be better for you if you plan to stay in France. Depending on your tax position in the future an international assurance vie if you went back would be considered an offshore bond and there are benefits and allowance to draw 5% a year tax deferred. Also you could then keep GBP instead of exchange and into EURO.
You may also qualify for impatriate status which means you benefit from 50% reduction on tax for gains outside France in the first 5 years.
In terms of managing the ISA you’ll find a FAQ guide on most providers that tell you what you can and can’t do as a non resident. You can’t invest more money or open new contracts. You may not be able to consolidate into one ISA either. There will be restrictions on what assets you can buy as well. Might only be able to change to EU funds like UCITS or SICAV.
To be honest it all comes down to what your future objectives and goals are to decide the right course of action.
I am a fully qualified Uk adviser and European financial adviser. I specialize in cross boarder financial planning and if you want to speak further feel free to book an intro meeting on the link below.
Many thanks for your responses! Thanks David, I will contact you!
Did anyone speak to their bank about keeping their cash ISA open long term (and not taking any money out) and what was their response?
I need to do anything before the end of the tax year as from then on I will be a French tax resident. Not sure how long I will be on France, on a local CDI contract but the company does have a habit of moving people every few years…
Should be able to keep it open but not add to it… might even be a good idea if you have surplus cash to use your allowance and top up. We can review your investments and it might be a good idea to sell all assets to cash and re purchase. This will crystallize the gains inside the ISA and your CGT liability will start from the repurchase. You could rebalance and change investments to accumulating assets and change the income assets. This will reduce your reporting and CGT liabilities when you are fiscally in France
before you say anything to them.