UK teachers pension - lump sum declaration


(Julie Elizabeth Butters 2) #1

Has anyone taken their UK teachers pension whilst being resident in France? (I moved here 14 yrs ago). I’m trying to get my head around the best option to avoid paying un-necessary French tax on the UK tax free lump sum part, from what I have understood from research the lump sum has to be taxed in UK because it is a government pension. If any ex-teacher has gone through this recently and can help me make head or tails of my options I will be forever grateful as my head is swimming with conflicting advice/info


(Graham Lees) #2

Shhhhhh!


(Julie Elizabeth Butters 2) #3

??? Don’t understand Graham


(Patrick O'brien) #4

Hi,
As an ex-fireman I am in the same situation as Julie and can assure her that her pension , including lump sum, is exempt from tax in France. The system for exempting it is somewhat complicated however , as it is first included in the tax calculation and then the tax is reduced by a credit equal to the extra tax calculated on it.
This is done so that the french tax rate for other french taxable income takes into account the total income.
Where a lump sum is involved , it could increase the tax rate significantly if simply added to the normally declared pension, so it may be advisable to declare it at 1AT on the 2042 and under “pensions et retraites versés en capital” 1AT at section 1 page 1 on 2047. This will ensure that the tax rate on the lump sump sum is fixed at 7.5% . If the lump sum is not huge , and your normal tax rate (shown on your avis) is well under 7.5% , best just add the lump sum to your annual pension at 1AL on both forms.


(Julie Elizabeth Butters 2) #5

Thanks Patrick - this helps - the lump sum is £34.000 , I understand I can divide this across 4 years - so just putting in 8.000 per year, not sure if this helps or not, normally we don’t earn enough to pay tax but this plus my monthly pension moight take us over


(Peter Goble) #6

Julie, I’ve been drawing a Teacher’s pension since I took early retirement from university teaching over 25 years ago, and when we came to France it was taxed here after being taxed in UK, so I was taxed twice. It’s down to HMRC to make the adjustment, but you have to claim it from them.

The situation was addressed by my completing a Form issued by HMRC under the Double Taxation Treaty between UK and France, and I got a tax refund of £3900 from UK to cover three years of overpayment.

You should speak directly with the UK people on the HMRC helpline they have set up to help people in your situation, otherwise you will go round in circles of bewilderment.

I don’t remember being taxed in UK on my lump sum, but it was in the early 1990s and things may have changed since then. Contact the Teachers Pension people on the phone, they are very helpful, I find.


(David Martin) #7

If it’s a Government pension, as those paid through Teachers’ Pensions are, it should be taxed in the U.K. not France Peter. There is an appropriate place to declare Government Pensions on the 2047. Lump sums are dealt with differently as, although they are tax free in the U.K., they are treated as income in France and therefore liable for tax. As Julie already knows there are ways to declare this to limit the tax to about 7%.


(Julie Elizabeth Butters 2) #8

Thanks everyone - it really is a minefield - my pension isn’t huge as it is and I dread losing so much if I don’t need to. Fortunately I am starting in Jan - so I do have time next year to get to the bottom of this before deciding where I need to declare - starting with HMRC sounds like a good starting point - throw Brexit into the mix and goodness only knows where I will end up!


(Patrick O'brien) #9

Hi,
Best to take in £8000 chunks over 4 years and declare added to your normal annual pension (don’t forget to fill box 8TK) . Some of the posts on this thread are inaccurate -no wonder you are confused . I suspect Mr Goble was not directly employed by a local authority , as I assume you were, so his case is irrelevant to your situation.