We are now entering our second year in France and our first tax return. My wife was employed by a County Council and the understanding in the quite recent past was that her pension was a Government Service Pension, and, as such, was liable to tax in the UK and not in France (although it has to be recorded in the French tax form). Now HMRC says that some local Government pensions are paid through Capita, and that, because Capita is a company, tax should be paid in France as with all other pension categories. Has anyone else met this issue and, if so, what have you done about it?
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How odd. I have an LGPS pension and have always paid tax at source in the UK, with a declaration on the 2047 form in France. I thought the whole point was that we pay tax in the UK because the government / local government is the source of the pension funds. Could you ask the county council pensions departments? I know that mine have a lot of pensioners resident abroad.
This is a tricky one, and you may have to seek further advice. This is a link to HMRC’s international manual and it does have at note 4 that ” Care will be needed where an application for relief from UK tax shows CAPITA as the payer of the pension.”. But it gives no clue as to how you exercise that care! So looks like you need a formal letter to HMRC so you get a formal response
I do think it would be useful first to ask the relevant county council pensions office if they use Capita.
Perhaps this is a silly question but wouldn’t one know if pension came via them because they would provide pay checks and P60? Mine are clearly marked CSPS.
And the anual statement P11D etc
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LGPS is for local government and administered by local trustees and therefore taxable in France. A government pension like military, NHS and police is paid by the government and is taxable in the UK but declared in France but you receive a credit for the amount of tax as it’s taxed at source in the UK. You should apply for an NT tax code in the UK so your pension is paid gross. This will save you claiming tax paid in the UK and then declaring and paying tax in France.
I have recorded a podcast recently which covers some of this info… feel free to get in touch if you need any help.
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What do you mean by “local trustees” Dave? I was told 15 years ago that my LGPS pension was taxed at source in the UK, as were all the other retired local government officers that I know. Are you saying HMRC got it wrong?
All UK pensions are taxed at source in the UK unless you have applied for an NT tax code. The only pension not taxed at source is the state pension which is paid gross but still taxable income.
LGP taxed at source in UK declared on form 2047, UK OAP taxed here in France. It has been that way for 15 years for me.
If your scheme is paid by the government then it’s taxed in the UK and if it’s not paid by the government then it’s taxable income in France.
Either way… you won’t pay tax in both countries under DTA.
If France are happy with your declaration and have been for 15 years then it would be down to you to continue as it is or investigate it further.
You can double check on the HMRC manual if the pension is government or not.
In my experience most LGPS schemes have not been paid by the government. That said there are so many and these schemes are vast and vary and if you’ve checked it out I’m sure it’s as you say it is.
My County Council is one of the largest in the country and very efficient. I have every confidence in their Pension Service.
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Which I linked above as it is the definitive source.
And no, not all pensions are taxed at source unless you have applied for an NT code. My OH never applied for a NT code and his annuity was automatically taxed here.
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Depends if he has purchased life annuity or pensions annuity to how it is taxed in the UK and what his tax code is.
Thanks to all posters on this thread. My take home message is, firstly, that tax is probably in theory payable in France alone and that the UK will, in time, refund any overpayment. Secondly, it is not worth losing any sleep over this minutiae. Thirdly, it doesn’t seem very important what you do provided you do it consistently. Could be worse!
At this he end of the day, this is how I look at where I should pay my taxes. If it’s at all possible for me to pay taxes in France, then I feel that it is imperative that I should do so. France is my home, and it has accepted me, so why should I pay my taxes elsewhere, unless it is unavoidable.
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When I got my Local Government Pension fourteen years ago (four years after we became permanent residents in France) I was told by the provider (a County Council) that the rules were that it would be taxed at source in the UK. I had no choice in the matter and it arrived in my account having been taxed at source. That has never changed and Capita are not involved in that pension scheme. I think the answer to the OP should come from the pension source in due course, though my advice would be to phone up and ask.
We did ring up and they didn’t know!
Did they say if Capita managed their pensions? I had a look online and found that my CC had taken over managing pensions for a bordering authority from Capita in 2019!