I’m considering taking 100% of my SIPP as a lump sum rather than leaving any money in the UK. I am a French tax resident and not considering moving back to the UK.
Blevins Franks tell me I should be able to take the lump sum without paying the punitive UK rates of tax, and I will be taxed at 7.5% plus social charges here in France. However, given that I stand to lose quite a lot of money if I get this wrong, I’d be interested to know if anyone has taken this step and what kinds of difficulties, if any, they encountered.
I’m not interested in QROPs. As a former stockbroker and professional investor, I want control of my own money and no strings attached.
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Have you contacted @Brian_Furzer … our Main Man when it comes to Pensions?
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Yes, my wife cashed in 2 private uk pensions in 2016 and had £20k reduction at source after taking into account her tax allowances, this was claimed and paid back by the revenue after 3 months.
The pension income was then declared in France in 2017 and she paid about 9k euro to the imports on the total amount.
So all done aboveboard and a very big saving was made.
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Thanks Michael, that’s exactly the kind of information I was looking for!
Stella, I’ll drop Brian a line. It’s a big step to take so the more advice I can get the better.
I looked into QROPS in the past (and nearly did it) but then realised that there weren’t really the same benefits to it once the pension freedoms came in.
Like you, I’m thinking that when I reach 55 it will be better to just take the whole lot out (I have 4 separate funds so I think I may have to consolidate it somehow first) and declare it in France, though I don’t think I actually have to transfer it here?
I understand it’ll mean 7.5% tax and 7.4% social charges and I’ll not pay tax in the UK (or will, but will get it refunded). If I can do this I’m not sure there is any advantage to QROPS (with the 30% lump sum restriction) anymore?
The choice then will be over how to invest it and where.
It’s the bit about getting the four funds into place to withdraw all at once that I’m concerned about as I understand this 7.5% tax rate choice is a one time choice.
Is my understanding above correct? Any thoughts on the bit about consolidating various funds?
I consolidated a number of funds into the Hargreaves Landsown SIPP. I believe Bestinvest and AJBell also offers similar services. You may even be lucky enough to get a couple of hundred quid cashback if they have a special offer going on. I use all three, only HL for pensions and the other two for ISAs.
So doing that didn’t have any tax effect in either the UK or France and now you can transfer the whole fund out and just pay the 7.5% + 7.4% rates in France as a one time withdrawal of the funds?
I just want to be clear about this because I know if I take 25% out when moving it to a SIPPS that will mean I can’t claim that tax rate again later on moving the rest of the fund. So if I don’t take that and just move the whole lot to a SIPPS, it’s not considered in France that I’ve taken any of it, for tax purposes? A SIPPS isn’t the best place to leave it is it, because you don’t get the same tax advantages on that if you live in France?
I know I need to speak to an IFA before doing anything but I’d like to understand it before I go there 
My pensions were in a number of grouped personal pension schemes. Simply transferring the scheme between providers in the UK doesn’t trigger any taxation liability as long as both the schemes are defined contribution schemes (ie you pay a certain amount, and what you get out depends on the performance of your funds).
Do speak to an IFA. In fact, speak to several!
Mine are the same. They were company pensions which were in an insurance based scheme, then got swapped into a money purchase scheme and then (without even letting me know!) got swapped back into an insurance based scheme again - so I now have three polices with the same company they started with originally. One of those is the contracted out SERPS contributions policy. Then I also have another one with a different company that was for AVCs. So it sounds like I’m in the same position you were and I can move all these into a SIPPS and then if I decide to withdraw the lot, can have it all taxed at the same rate in France (which is better than if I withdrew it all while living in the UK).
Thanks for your help. I think I’ve found someone I can trust when the time comes. I’m a bit concerned about whether the possibilities will change due to brexit (especially if I bring the money to France later, with the doubt about capital transfers and whether they will be taxed in future) but I think the best thing is still to wait until I’m 55 and the pension freedoms kick in.
Sounds as if you’re in exactly the position I was in! I’m glad I could help. I would say, if you want to put all the pensions into a SIPP, it’s best to do that now - and you could have them invested in European unit trusts to give you exposure to the euro while you’re waiting. That wouldn’t be a 100% hedge but it could really help.
Wouldn’t that mean converting it to euros though, with the really bad exchange rate at the moment? I think I’d rather keep it in sterling and wait and see if it goes back up and if it doesn’t, I can always just use it to pay off my UK mortgage, or invest it over there if the UK base rate doesn’t go up so much that it’s better to pay it off.
You don’t have to do it all at once. But given the Eurozone economy is doing so well, and the markets are relatively lowly valued, I’d start moving a bit of money that way. You could possibly move a bit every month and that way you’ll average out the currency impact.
I am intrigued by talk of of 7.5% tax plus social security making about a 15% tax charge.
My situation is different but I would welcome any advise.
I am retired and live and am a tax payer in Luxembourg.
The other difference is that I have a pension fund in a U.K. already in drawdown for many years in Sterling. Meaning I have already taken the 25% tax free.
Presently any drawdown income is added to my taxable income (mainly other pensions) and I then pay tax on the drawdown. This is significantly above 15% as my other incomes uses all of by personal allowances in Luxembourg.
So the more drawdown I take the higher up the tax ladder I go.
I hate my exposure to sterling and am thinking of taking the whole amount in one tax year. On the above Luxembourg Tax system I will pay something like 40% / 50% or more.
Any thoughts are welcome.
Move to France Graham, looks like you could save a lot of money on your tax bill.
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This may or may not be slightly off the actual point being made, but now almost 20 years ago my wife and I were confronted with cashing up two small Pension Plans, which would have netted us about £5,000 cash. This was a lump sum that would have helped us over a hurdle at that time. I was 55years old and my wife 47years old. Ultimately we decided not to cash in but accept a once a year payment of the interest, or whatever the system was.
The yearly figure has not really changed that much over the years but has averaged about £500 a year. On that basis, and neither of us look like falling off our twigs for a few more years at least the return has now been £10,000 (tax paid)
Maybe not exciting, but surprising pleasing to get that close to Christmas present each year.
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