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UK Pension tax-free lump sums

Mikep

By Mikep
in French Finance

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Mikep Newbie

Mikep

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I've just come across a document "French Tax Bulletin - November 2007" on the website of PKF Guernsey - free and full off useful stuff. One point in particular that surprised me was a comment that "French Legislators are said to be considering the issue of a law which will allow the French authorities to tax foreign pensions' lump sums received by French resident taxpayers" . .and . . "anyone expecting lump sum payments would be well advised to obtain payment before the end of the year or before a permanent move to France." (No doubt copyright them - hope it's OK to mention, guys!)

This was news to me, but very useful to know - could save me tens of thousands in tax if it's true. Just thought that there might be others out there who would like to know in good time.Of course, the new law may never be passed . . .

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AnOther Rookie

AnOther

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I think you'll find this is a long standing fact and such monies are simply regarded as untaxed income to be taxed in France accordingly. They have no concept of "Tax Free Lump Sums".

Similarly proceeds from tax free savings such as ISA's etc. and Premium Bond wins are taxable in France.

Lottery wins too ?

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Ron Avery Newbie

Ron Avery

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[quote user="ErnieY"]

I think you'll find this is a long standing fact and such monies are simply regarded as untaxed income to be taxed in France accordingly. They have no concept of "Tax Free Lump Sums".

Similarly proceeds from tax free savings such as ISA's etc. and Premium Bond wins are taxable in France.

That is true Ernie, what most people do is to arrange to receive their "tax free" lump sums before they arrive (officially) in France even if it means being on holiday for a while, you end up paying tax and social charges on the interest received on them if invested anyway.

Lottery wins too ?

Not euromillions Ernie, but if you live in France and win the UK lottery its technically taxable in France.  However, AFAIK you have to be a UK resident to enter it, so your win would be invalidated and no tax would therefore be payable[:'(]

[/quote]
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AnOther Rookie

AnOther

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[quote user="Ron Avery"]

the UK lottery its technically taxable in France.  However, AFAIK you have to be a UK resident to enter it, so your win would be invalidated and no tax would therefore be payable[:'(]

[/quote]An interesting point Ron, according to this article http://www.timesonline.co.uk/tol/news/uk/article384856.ece

"People living abroad can play, but only if they have a British address and bank account"

Open to confusion isn't it, what does a "British address" mean ?

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AnOther Rookie

AnOther

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[quote user="Ron Avery"]The one you live at when you don't really live in France? SKY, Savings accounts,  car registration[Www][/quote]Quite, but I wonder how deeply Camelot would delve into that if you did have a significant win ?

[quote user="Crevette"]Does anyone know if redundancy payments recieved in the UK are tax free in France?[/quote]I don't know for sure but as the concept of tax free anything seems anathematic in France, probably not [:-))]

 

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Will Newbie

Will

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[quote user="Ron Avery"][quote user="ErnieY"]

Open to confusion isn't it, what does a "British address" mean ?

[/quote]

The one you live at when you don't really live in France? SKY, Savings accounts,  car registration[Www]

[/quote]

Ron, kindly stop inferring that people with genuine addresses in both Britain and France are somehow doing something dodgy. It is quite possible to divide your time between the two countries, and legally do things like play the British lottery while paying tax in France.

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Ron Avery Newbie

Ron Avery

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"Ron, kindly stop inferring that people with genuine addresses in both Britain and France are somehow doing something dodgy".

Never have inferred any such thing Will, its those who don't have genuine addresses in the UK that are doing something dodgy as you well know or ought to by now!

If you are not a resident in the UK you cannot play the UK lottery and would lose any winnings if this was to come to light. See the terms and conditions for playing.

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dolly daydream Newbie

dolly daydream

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[quote user="Ron Avery"]

If you are not a resident in the UK you cannot play the UK lottery and would lose any winnings if this was to come to light. See the terms and conditions for playing.

[/quote]

 

Not true.  What is not allowed is to play on-line using a direct debit as you have to have a British address to set this up.  If you were to win, you have to prove you are who you say you are by showing you live at 'that' address (utility bill in your name) as you only have a 'virtual' ticket bought on-line.  So I could not give them, for example, my daughters address as all the bills are in her name.  Anyone can buy a ticket.  If you have the winning ticket you use that as your proof of winning.  So those of you who have a genuine UK address can play on-line and pay by DD.  Those with no UK address need to have a ticket.  Don't know about the tax implications though.

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freddy Newbie

freddy

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[quote user="Mikep"]I've just come across a document "French Tax Bulletin - November 2007" on the website of PKF Guernsey - free and full off useful stuff. One point in particular that surprised me was a comment that "French Legislators are said to be considering the issue of a law which will allow the French authorities to tax foreign pensions' lump sums received by French resident taxpayers" . .and . . "anyone expecting lump sum payments would be well advised to obtain payment before the end of the year or before a permanent move to France." (No doubt copyright them - hope it's OK to mention, guys!)
This was news to me, but very useful to know - could save me tens of thousands in tax if it's true. Just thought that there might be others out there who would like to know in good time.Of course, the new law may never be passed . . .
[/quote]

To answer ther original question about the tax free lump sum there was a recent article by Blevins Franks that states pretty categorically that as of now the lump sum is not taxable in France. See here for the article - http://www.frenchentree.com/retiring-to-france/DisplayArticle.asp?ID=30433 - but that also says that this may be due to change. From the article looks like they have got agreement to this from the french tax auhorities so should be valid.

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Ron Avery Newbie

Ron Avery

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Sorry but to me that looks like more guess work by Blevin Franks and it won't be the first time they have posted incorrect information.  The fact that they recommend that people take their lump sums before they move to France........ just in case,  speaks volumes. As UK generated pensions to French residents are taxed in France, no logic says that an amount of that pension, taken as a lump sum is not taxable.
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lacote0_0 Newbie

lacote0_0

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Blevins Franks also suggest that purchased life annuities are no longer treated as rentes viageres. Is this correct?

"Private Pensions and Annuities

This type of pension is alien to the French system as they do not have

personal pensions in the same way as we do in the UK. They do, however,

have purchased annuities as a form of investment, and confusion between

the two often allowed the ‘annuity’ approach to be taken for this type

of pension income, although this is no longer generally available,

particularly where the pension fund has been built up during the

working life. Thus, personal pension funds are usually taxed in France

as occupational and state pensions, above."

http://www.frenchentree.com/france-tax-advice/DisplayArticle.asp?ID=5269
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