My partner and I have recently moved permanently to France and we’re living here full-time, with only occasional short visits back to England to visit family and friends. I’ve been self-employed for many years providing advice to UK clients - something I can continue doing via phone and email from here. BUT (I like big buts and I cannot lie) the lovely folk at HMRC have told me I’ll still be tax resident in the UK.
Having looked into the residency tests, I’m pretty sure the French tax authorities will consider me tax resident in France. I want to be tax resident here as this is my home now and I want to pay into the French systems and access the social infrastructure.
I’ve been trying to find an English speaking tax advisor who can help me establish my tax residency and assist me in getting set up, but so far without success. I’ve read that it might be best to just visit the tax office here and see what they say, but I’m not sure what to do for the best and I’m conscious that I need to get this sorted a.s.a.p.
Any advice/pointers would be most gratefully received
If you’re self employed, you pay tax and social security in the country where your bum is when you do the work. If that’s also the country you live in, it’s even more clear cut. It matters not one jot what country your clients are in. I have clients in the UK, Spain, the US, all over the world. But I work from my home in France and that’s all that counts.
Whatever you said to the lovely folk at HMRC, it sounds like they have not properly understood your situation.
That’s pretty clear. So when you submit your next self assessment form you need to tell HMRC you’ve moved to France. If you’ve closed your UK activity you need to write in the date you closed it. You’ll need to fill in the Foreign pages, and they will probably want you to fill in this form
In France, if you were here during 2019 you need to submit a declaration of your income since the date you arrived.
Saying that, France takes a very dim view of anyone who lives and works here but doesn’t have any kind of business registration, isn’t paying into the French social security and isn’t paying income tax. So it might be a better idea to get yourself registered ASAP, and declare your income from that date. But that’s up to you.
PS Just noticed it’s your first post - HIYA and welcome to the forum.
I just had another thought.
Perhaps what HMRC were telling you, was that you will still be classed as UK resident for the whole of the last tax year because you moved too late to qualify for split year treatment.
Might that be it?
If that’s the case, it’s a pain but it doesn’t really matter - if I’ve understood correctly (it fries my brain) you will in effect be considered dual resident for the second part of the year, so the fact that HMRC is still classing you as resident, doesn’t prevent France from also classing you as resident for the part of the year you were here. The dual tax treaty is applied so you don’t pay tax twice on the same income.
As from next year, HMRC won’t class you as resident any more unless you spend too long there as per their statutory residence test.
Yes but they surely know perfectly well that a self employed person living and working in France is not tax resident in the UK. It’s a common enough scenario and also, it’s laid down in the France-UK tax treaty.
When you move during a year, France counts you as resident for the period you were resident and non resident for the period you weren’t, but HMRC make it very complicated. I think perhaps you only get split year treatment if you move early enough in the tax year. If you move too late in the tax year, they might class you as resident for the entire year. My guess would be that that’s it.
I read that damned manual sitting in hospital while my mother was dying. The whole thing fried my brain so much that I deliberately moved to France on the 7th April. I was a self-employed consultant at the time.
I have just re-read the advice we received before we moved to France, about split years. There are a number of cases that can apply to justify a split year. The case that we put into effect was that our home is now in France. The drawback for this Case 3 is that it only works, if, in the rest of the split year, we did not go back to the UK for 16 days or more.
That meant we made the move towards the end of February 2019. I did go back to the UK after that, but for less than a week.
Our split year basis was accepted by HMRC once they got our next tax returns, and we have had tax refunds as a result.
This is crossing with your other thread and I suspect you “forgot” some key information that changes things. Were you/are you trading as a UK Ltd before the move? If not ignore me - if you were I know where the confusion crept in
If an Ltd - company returns are required by HMRC until you close the business/shut the company down at Companies House. In turn unless you become a registered employee of that Ltd in France you have to do UK personal returns until you stop taking money out of the Ltd be they dividends/salary whatever - the same as if you rent out a UK property. That has absolutely nothing to do with residency you do a French declaration as a tax resident - your UK one is based on financial interests in the UK- you declare in the UK they hit you with dividend tax - you then declare again in France (noting the dividend tax) your dividends as unearned income in France and pay a chunk of social charges on them as well - but you continue to fill in UK tax forms. Taking salary out is more complicated and is best avoided based on you have no excuse/legal reason to remain UK salaried…
If you want “simple” - shut any UK Ltd down immediately take any cash left in it as Dividends or Directors Loans repayments (assuming you put cash in years ago). That stops UK tax returns from that date/year. Don’t buy a company car then tell your accountant to shut the company down 2 months later they go mental… not that I tried that dodge.
But you can be resident in France whilst still having UK tax liabilities - residence isn’t the only factor.
Hi @JoCo and many thanks. I’ve been looking at the split year cases, so your comments are timely and helpful.
One thing I’m not sure about… since the current UK tax year runs to 05/04/20 and the French tax year began on 01/01/20, and I moved to France on 03/09/19, do you know how the timing of the transition from one system to another will work - and the split year treatment, if it applies? When is the cut-off point?
For France, technically you become tax resident on the date you begin your permanent residency. So your first declaration would normally include worldwide income between that date and 31 December of that year.
For all UK tax purposes, calculating split years and such, you use the UK tax year.
You might want to give some thought as to how to you would declare to France any earned income you may have had in between the date you give as your date of arrival, and the date your business was actually registered in France (apologies if I’ve jumped to a wrong conclusion but from your other posts I got the impression you haven’t applied for your siret yet?). When you come to declare your income; professional self employed income earned in France has to be entered on the “Pro” tax form, which is a separate form that yousubmit in addition to the basic form that everyone fills in, and you need a siret number in order to be able to complete a “pro” income declaration.
You said in your first post you’ve been returning to the UK for visits, so looking at it pragmatically it might be simpler to declare your income/pay NICs in the UK up to the end of last year at least, and bring your official moving date more into line with the date you start your business in France? I’m just thinking that since September 2019 is rather a long time to say you’ve been working here self employed without a siret number.
Hmm… so, given the dates and where we are now, it would seem to make sense to declare my business as active in France from 01/01/20, as that would make it nice and neat for the tax year. Can I nominate an arbitrary date like that, or should it match a date when we returned from a visit to the UK?
There are no incorrect assumptions on your part. My business entails advising my clients via phone and email, so it’s been ongoing and unaffected by my move (some of my customers don’t even know yet that I’ve relocated). I must admit I hadn’t realised the urgency of registering my business here in France, and had assumed that I’d have until the end of the UK tax year to do so (largely because HMRC told me they’d still regard me as tax resident in the UK)
Thing is you can’t just pick a date to declare your business active. INSEE (France’s national statistics office but it also has a function equivalent to Companies House in the UK) has to approve your application and issue your siret number before you can legally start trading. The date on your INSEE record is the official start date of your activity and it is set in stone. That’s also the date your healthcare starts and your various tax and social security liabilities start. From that point on you need to comply with French regs - keep the correct financial records, issue your invoices in French with all the obligatory mentions légales, submit your declarations if you’re a micro entrepreneur, etc etc. None of this can be done retrospectively so 1/1/2020 isn’t feasible.