What a helpful reply, thank you so much. I do understand it much more now. I’ll go and look at your link and the calculations.
Just an update for the post. Following the letter from URSSAF and the subsequent bill for PUMa. We have had a reply to our letter from 2nd January where we photocopied our S1 certificates . They have said following the review of our dossiers that there will be nothing owed now. Letter was dated 16 January and takes until now to be received.
The lesson is keep record copies of each and every document for years.
I trust others are finding it OK.
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We, and friends who received the URSSAF bill, think that UK derived rental income might have sparked this … URSSAF thinking that it is derived from French property. We wrote and queried it, enclosing our S1s, and got a reply to say that we didn’t have to pay. So success. And yes, keep copies of everything!
I did actually get an email from URSSAF saying that we didn’t have to pay it! We actually don’t have S1s and never have had. I’m not totally convinced that they have got it right but I’ve printed out the emails and will hang on to them!
UK rental income is taxable in the UK and not in France so you shouldn’t be paying tax or social charges on it in France. However, it is still capital income so if you are liable to supplementary PUMa cotisations it will be included in the calculation along with our other capital income from capital gains or French rental income.
You don’t pay these if you have an S1 as you’re not ‘a la charge de France’.
You also don’t pay these if you have pension income.
The above are two separate reasons to be exempt so sending a copy of your S1 OR proof that you are in receipt of a pension will get the charge scrapped.
Hi Debra
I know this is slightly off subject but you do need to declare UK rental income in France if you are tax resident in France. We had a discussion on here a couple of months ago and I attach the link below. I know the title is about French property but the topic moved to talk about UK property. The thread contains some useful information.
Of course, if you’re resident in France all global income is declarable in France unless it’s exempt in both countries and is stipulated as such in the double taxation agreement. It’s declared as already taxed in the UK so a credit is generated to cancel out any French tax or social charges but it pushes your French taxable income up into the correct bracket.
They have declared it - that’s what has generated the supplementary PUMa cotisations as only capital income is assessed for them, as I said above - and they get the capital income details from the tax office.
Where did I give the impression it wasn’t declarable? I said it’s not taxable or liable for social charges here, not that it’s not declarable. The point is that it IS liable for supplementary PUMa cotisations.
People get mixed up between social charges (CSG, CRDS etc, charged at a total rate of 17.2% and entitle you to nothing but are simply a solidarity payment) and PUMa cotisations (which are what you pay towards your healthcare). The latter are not the social charges that UK rental income is exempt from.
You said in the post I replied to
“UK rental income is taxable in the UK and not in France so you shouldn’t be paying tax or social charges on it in France.”
There may be both to pay depending on the taxpayers circumstances.
No. UK rental income is not taxable in France. Social charges are defined in the double taxation treaty as a tax. Neither tax nor social charges are chargeable on UK rental income. Ever. Fact. It may cause you to pay tax at a higher rate on any French taxable income but not on the UK rental income.
However, PUMa supplementary cotisations will be generated by it because they are charged on capital income from whatever source. They are not a tax.
Debra, I hope you can help out a rusty old tax adviser who hasn’t practiced for nearly 11 years. I’m an accountant and I love my numbers so here’s an example for you.
I am resident in France and have a business that generated profits of 20,000€ in 2016. I also rented out a house I own in the UK and on my French tax form I declared rent of 24,000€ and UK tax paid of 2,500€. These seem like reasonable numbers to me.
If I was doing an income tax calculation using UK rules it would look like this:
9,710 x 0% = 0
17,108 x 14% = 2,395
17,182 x 30% = 5,155
Total tax to pay = 7,550
Minus UK tax = 2,500
Tax due in France = 5,050
Had I not declared my UK income then the calculation would look like this:
9,710 x 0% = 0
10,290 x 14% = 1,440
So because I declared my UK income in France I have extra tax to pay in France of 3,610€. The UK tax paid is not sufficient to cancel out the tax due in France.
Have I done something fundamentally wrong? Is the calculation method totally different here?
Thanks
Oh and the rates I used I found here
Yes. That’s not how it works. On your French tax return your UK rental income is declared gross as micro fonciere and the same figure entered into another box as income already subject to tax in the UK. (You don’t declare UK tax paid, just the gross income). The tax and social charges generated for this income are cancelled out as a result of entering the amount in that second box. If you don’t enter it in that second box this won’t happen.
You’d pay more tax on your French income than if you hadn’t declared the UK income because it is still used to move your French income up into the correct tax bracket. You don’t get a tax free allowance in both countries. This is all the UK rental income does - ensure that you pay the correct tax rate on your French taxable income.
If you look at your avis d’impots you can see the way they do it. Your revenue is listed and then any income which is only subject to tax in the UK is shown credited back again, so no tax is generated. For the social charges you can see they are actually charged and then credited back again.
From the link you posted:
‘You live in France for at least 6 months of the calendar year: In that case, you have to pay tax in France on your total income earned in France and abroad.’
but click on the double taxation tab and see:
'Fortunately, however, most countries have double tax agreements. These agreements usually spare you from double taxation:
under many bilateral tax agreements, the amount of tax you paid in the country where you work will be offset against the tax you owe in your country of residence
in other cases, the income earned in the country where you work might be taxable only in that country and exempt from tax in your country of residence’
Rental income is one of those other cases. It’s subject to tax in the country where the property is located. That doesn’t mean it isn’t taken into account when taxing your other income at the correct rate.
There are also cases where income is exempt in both countries and so doesn’t affect the rate at which your French taxable income is taxed. See the UK/France double taxation treaty.
By the way if you were a tax advisor perhaps you need to talk it over with @parsnips as he’s kept up to date with all this and may be able to explain it in language you’ll understand better than mine as I’m a mere mortal 
(plus I’m sure he’ll correct me if I’ve explained it incorrectly or got it wrong in any way, but I did check my own tax return and resulting avis for that last explanation so I’m confident I’ve understood it correctly).
Thank you for explaining. It was just an example and the numbers are fictitious so checking my own avis won’t help me understand. I imagine there are lots of Brits in France with this income profile and it interests me how the tax would be calculated in this situation.
If the UK income is treated as the first slice of your total income in order to determine the correct rates of tax on your French income then the tax outcome is even worse than I calculated. But you say that the tax free allowance (9,710€ in my example) won’t be available in both countries against the UK income so is it allocated to the French income??!! If so, how on earth does the calculation work??!! I am properly baffled now.
I’m sorry to bother you with this and I really don’t expect an answer, particularly as it’s just an example, but I am interested in how it works. Maybe it’s all very simple and I just can’t see the wood for the trees!! Maybe if @parsnips has the time he may be able to give me an answer.
Thanks again.
You get the UK allowance against the rental income in the UK and then when you declare it in France it’s added to your French income so it takes up all or part of the French allowance so that your French income is taxed at the correct rate for your overall income.
So for instance if the tax free allowance in France was 10000 and you earned 10000 here and so would pay no tax on it if that was your only income, if you then received 10000 in UK rental income you’d be taxed on the French 10000.
It’s a simplistic explanation based on how it works in the UK because in France it works differently, (with tax parts per household, and in fact with micro fonciere you’d get an allowance of 30% against it so the full amount wouldn’t be used against your allowance), but does that give you an idea of what I mean?
I think so. In your example you have to pay tax on the French income because you have UK income which is counted first and therefore takes up your tax free allowance. If I apply that theory to my fictitious example I actually get a tax liability of 5,550€ which is even worse than the amount I calculated.
It doesn’t seem equitable to me but when was tax ever fair!!!
If you used the 20000 in your example you’d save even more because of the social charges that aren’t payable. So work it out if the rental income was French rather than UK. You get £11000 tax free from the UK but if it was French rental income you’d be paying the relevant tax on all income above the allowance (not just the business income) but also 17.2% social charges on all of the rental income, no allowance given for that.
Also, remember that tax is per household here so you divide the income by the number of tax parts before applying the tax rates. I’ve heard lots of people say they pay less tax here because of this. At one time my household was 5 tax parts. It’s now 3.5.
So using your example of 20000 taxable French income, and 24000 French rental income, 44000 - 6000 relief on the rental income gives 38000 which is then divided by my tax parts of 3.5 giving 10857 per part. 9807 is zero rated, leaving 1050 to tax at the rate of 14% = 147. Times that by the number of tax parts to give a total French tax bill of 514.50 (for a family consisting of one adult and three children). The social charges at 17.2% of the 18000 taxable rental income = 3096. 3096 + 514.50 = 3610.50 altogether.
It’s the social charges that are the killer and you don’t have to pay those on UK rental income.
Wow that’s really interesting. Thank you so much for your patience. I get it now.
I imagine anyone else reading this thread will be really bored but it’s fascinating for me!!
I’ll leave you alone now 
Thanks again and enjoy the rest of your evening.
If it’s UK rental income then I’ve already used 5143 of my 9807 tax allowance per part, leaving 4664 per part, so 20000 French taxable income/3.5 =5714 - 4664 = 1050 x 14% = 147 x 3.5 = 514.50 - another way to look at it. So the French tax bill is the same either way in my case with 3.5 parts but I save the social charges of 3096 if it’s UK rental income. When I had 5 parts I would still have had 6207 tax allowance left per part so I wouldn’t have paid any French tax. (Couple with 4 children).
However, if I had the same income all as UK rental income and no French taxable income then I’d pay no tax or social charges in France on 44000 income - but if I didn’t have an S1 it would cost me 1679€ in PUMa cotisations. (Never had to pay those so not sure if it would be less than that - do the tax parts affect those too or would I pay more because two of my 3 kids who are still attached to me fiscally don’t have their own cover, one a minor and one over 18? Hmm. Will have to check that one out! ),