Hi All…. This won’t impact everyone by no means but something to be aware of if you have a larger pension.
From April 2024 there will be a new OTA - Overseas Transfer allowance.
This means on transfer to an overseas pension anything above the allowance will be taxed at 25%.
This is in line with the abolition of the life time allowance changes within the finance bill 2023.
The current allowance is just over £1,000,000 so for anyone with a larger pension £700,000+ should take steps to investigate the option of a transfer.
As an example I have just moved a pension to a QROPS - £1,600,000 across 3 pensions. After April this would have resulted in a 25% taxation on everything over £1,073,100…
Surplus £526,900 x 25% = £131,725.
It’s a large saving in this instance so people impacted should reach out.
Thanks for the info Dave.
Is using a QROPS still worth considering for those of us who have (ahem) considerably smaller pension pots?
I am planning to retire to France in the next few years, currently I am still paying into my UK private pension scheme, but of course the exchange rate is a concern for the future if I keep my money in the UK and do drawdown or an annuity. I don’t plan to withdraw a lump sum from my pension.
I appreciate that every situation is different but general guidance would be useful.
Hi Chris, Annuity rates are pretty good at the moment and if you have smaller amounts it would depend on what income you need and where it is going to come from.
Ideally you want fixed guaranteed income to cover your annual outgoings and then flexible pots to draw down from tax efficiently as and when you need it.
A QROPS works very well when you pass money onto a spouse if you are a French resident and it’s after age 75 assuming you are UK domiciled. Or if you have a higher attitude to investment risk and good investment horizon.
You have to be careful as the charges are higher than a Uk pension.
If you do transfer to a QROPS you can retain GBP and invest in that currency and diversify into Euro over time or at suitable rates.
If you plan to buy an annuity you should do this before you become French resident as it will give you more options. An annuity is considered new business and now without EU passporting not all providers can carry out this transaction.
Also it may be a good idea to access you PCLS 25% as that is tax free as a UK resident. There are other drawdown options in France that are favorable to commute the entire pension and recycle into something more tax efficient in France as well.
Some careful planning involved before you leave the UK would be a good idea and you’re more than welcome to book a call with me when the time comes.
I’ve recently recorded a podcast on Uk pensions as a French resident with the survive France team… feel free to take a listen -
Thanks Dave - lots to think about there!
You’re in a great position if you are still UK resident… normally I’m approached by people already in France. You have more options available before you get here.
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I had a SIPP pension pot in the UK - I came to live in France permanently in July 2024. Prior to making the move I sought some advice and the QROPS option came to my attention. I did not like the sound of it to be honest - the fund was to be moved offshore (Cyprus) and it was going to cost a lot - something like 1-2% of the fund. I have no idea if what I eventually did was good or bad. I took my 25% tax free before leaving the UK. After being settled in France I then instructed the SIPP provider to pay me another 50% of the fund - which went through the PAYE system and provided a payslip and eventually a P60 - HMRC adjusted my tax code which resulted in 50% of the 50% (ie 25%) being taxed by HMRC. I then declared the pension income ie 50% in my French Impots declaration which resulted in a French tax of about 7%. I then applied for a double taxation relief to reclaim the 25% UK tax. There is a UK form called DT - France Individual. The French SIP office need to stamp the form to say that French tax has been and and I am genuinely resident in France - and it is then sent off to HMRC who in theory will repay the uk tax under the double taxation treaty. This is all taking time and as I stand today I still await the outcome. Not an idea scenario but it avoided the QROPS. I discovered that both the French and UL authorities do not approve of and I just did not like it - I was not happy with the so called advice to do that, on.ly a bit more time will tell as I await my 25%.