Paying tax in France on an English Government Pension

I do hope someone can cast a light on a problem I’ve encountered. I have been contacted by the local French Tax Office and they have told me that I must pay them tax on my British Government Service Pension from 2019 (even though my pension was and is taxed at source). They went on to say that I must pay this tax bill and then apply for reimbursement from the HMRC. Apparently this will now happen every year? Has anyone else come across this? Thanks

did you declare it to the Frnch tax authorities in your annual returns?
A mstake often made is that UK Govt pensioners believe that as the pension is taxed in the UK, they don’t need to declare it to the French fisc, which is quite wrong. It must be declared.

I declared all of my earnings from the UK along with my accounts for the Hotel/ Restaurant I own here. So of course I am well aware that all world wide earnings must be provided to the French authorities. The problem I have is that they are asking me to pay tax on my pension from the UK from 2019 (which was taxed at source) and then for me to ask the HMRC for reimbursement which just seems a case of ludicrous bureaucracy. The question I asked was, has anyone else encountered this?

muted

I think they’re reading the situation incorrectly, if you declared your 2019 gov pension on your French tax return and included a copy of the corresponding P60, then they haven’t got a leg to stand on. I’m tax resident in France with one such UK gov pension that is taxed at source in the UK and it has never been questioned.

It might be time consuming to resolve, but it seems as though your local tax office has got it wrong. The tax on that pension is nothing to do with the French _and it’s nothing to do with Brexit either - it’s a bi-lateral fiscal treaty.

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Not all pensions commonly know as “government” pensions are taxed in the UK. There are some where you should receive them gross and be taxed here. So it could be that your pension is one of these and you need to sort out it being paid gross in future. If it isn’t one of these then stick to your guns.

This gives you the list:

Jane,
Thanks for this. I was civil servant so my pension is classed as ‘Government’

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Thanks Mark, This is why I’m concerned because the Tax Office here have said that not only 2019 has to be paid and then claimed back from HMRC but they have also notified me of how I should pay the tax on my 2020 pension. I wonder if the regulations have changed under the Withdrawl Agreement?

Withdrawal agreement is only post 31/12/20…so can’t be there reason for 2019.

We have had a few issues with tax. Ideally we go to local tax office and discuss, but not sure if that possible at the moment. With a more complex matter (claiming back wrongly calculated social charges) what worked was using the secure message in our online account. And writing a long detailed message with all the references to appropriate bits of their guidance.

(I have gov’t pension too, and taxed at source with no problems)

I doubt the dual taxation agreement has changed Richard. Maybe worth downloading and reading. I had to do that some time ago to understand an issue I had with Ireland. Despite the grandiose name it was quite a short document.

I have a related but different query. My UK accountant has advised me that I am obliged to declare all of my UK pensions (including government pension) on my UK tax return although they are already declared for taxation here in France.

Although they are paid to me gross and tax is not deducted from them per se they are taken into account when computing my tax allowance and thus increase the amount of tax due in the UK on my property income

I am now confused as to whether I should in future declare them to the French tax office as tax paid or not. Can anyone enlighten me?

As I understand it I don’t think you have much choice about where you pay tax on different elements. Apart from property income and specific government pensions I understood everything else was taxable in France. So you declare them here gross.

But I don’t understand how this would affect your tax free allowances. How does your gross pensions reduce this?

That’s my understanding as well Roy. Even though no tax is payable the income can count and “use” up some of you tax free allowance. It’s really all a black art, I leave it to my accountant too because all the rules defy logic. Which I suppose is only to be expected when the purpose of the rules is just to squeeze a bit more blood out of the stone.

Maybe you are in a different league from I? Some of my personal allowance is “used up” by early retirement gov’t pension which is taxed in the UK. The rest is set against income from property rental and I have to pay a small amount of additional tax in UK.

OH two pensions are not taxed in the UK so all his personal allowance is set against his half of the property income rental so he pays no tax in the UK at all.

I really don’t understand what your accountant is on about!

Our scenario is almost identical to Jane’s

Perhaps I did not make myself clear. My question is whether the pension income counts as taxed in the UK because it ‘uses up’ my tax free allowance. It is not taxed (i.e, tax deducted) when it is paid to me and I have therefore declared it to the French authorities as being paid gross.

What is necessary for income to count as ‘taxed’ and therefore not subject to taxing by the other country?

You have to pay tax on it! Reducing your tax free allowance just does not count!

I don’t think that’s the issue Jane, of course it has to be taxed somewhere. I think it’s something like if you have earnings derived in the UK of, say, 100 and a tax free allowance of 20. If 70 is taxed abroad in your country of tax residence (i.e. paid to you gross) you don’t get to apply your whole tax free allowance to the remaining 30. You only get an allowance in proportion. So 70% of 20. In other words, you do note get a tax free allowance on the 70 in France and in the UK. Anyway, I’m at risk of paying a dog (read accountant) and barking myself :slightly_smiling_face:

That at least is clear. I wish that the advice from HMRC were equally clear…

Well I think I shall draw a line under this topic (feel free to continue if there are other issues) as I now have a pretty good understanding of the UK/France Tax regs. I’ve done a whole lot of research on the Gov UK website and spoken to Civil Service Pensions (Capita) and the HMRC Office. As I now understand it this is how it ‘should’ work. If you spend more than 180 days a year in France you are classed as a resident and as such you are required to pay tax through the French tax system. You are required to declare all your earnings to the French Tax Office (Earnings include pensions, money from rental property or wages) You have to complete a form called France Individual DT which you can just download from the GovUK website. What happens then is that the HMRC mark you as not taxable so basically you get whatever earnings you receive as gross and then pay your own tax over here. I’ve been here for 15 years running my own hotel/restaurant and my accountant who manages both my professional and personal tax somehow didn’t know this is how it works!!! Why my local tax office are only concerned about 2019 onwards I can’t explain but I shall try to find out. The upshot of all this is that I have to pay 2 years worth of tax from my UK pension to my local tax man and HMRC (although they don’t call it reimbursement) give it me back via the form “French Individual DT”. Thank to you all for your help and advice. Stay Safe and go and get vaccinated!!!

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