Social Charges

[Mutts]

We're a married couple in our 50's taking early retirement to France in summer 2006. We'll be living on savings interest and capital until our pensions kick in. I've heard that social contributions will be assessed on earnings for the calender year 2004 and will be approx 8% of gross income. So while we're no longer earning, we'll be expected to pay the 8% on previous earnings. Thus in 2007 we'll pay 8% of gross earnings in 2005 and so on until 2009 when almost zero earnings in 2007 will bring social contributions to a reasonable level.

Can anyone confirm????

My husband will be 60 in 2007 - will that make a difference?

Linda

 

[LesLauriers]

You will have to pay social charges of 11% plus income tax on the interest earned from your capital. This pays your social charges - for which you get nothing in return.

Health charges will apply at 8% of your RFR (income after allowances) over 6849€,

for which you get the basic health cover which provides around 75% of the cost of treatment.

If you have been working in the UK prior to leaving, you should be able to obtain an E106, which will give you this cover, at no cost to you, for up to 2 years, after which you pay as above.

Until one of you is in receipt of the old age pension you will have to pay.

[Mutts]

That's a huge relief! So if our E106 gives us two years and one of us is 60 within that time - there are no health charges?

Are there likely to be any changes to the pension age within the next few years?

Many thanks

Linda

 

[BJSLIV]

The couple gains exemption when either the husband or wife's UK pension becomes payable.

Ie the husband reaches 65 or the wife reaches 60.

Incidentally  for women the pensionable age will start to gradually increase after 2010 so that by 2020 both will become payable at 65.

Thats equality for you!

A calculator to work out pensionable date.

http://www.thepensionservice.gov.uk/resource_centre/calc.asp

[Mutts]

Thanks for replying - I'm one of those affected by the increased in pensionable age.

Shame we can't adopt the French retirement age of 60!

Linda

[Coco]

That's a huge relief! So if our E106 gives us two years and one of us is 60 within that time - there are no health charges?

Be careful with this one, it can be as little as a year, depending on when you leave the UK.   There was a thread on it a while ago but in a nutshell it's as follows:

The tax year in the UK runs from April to April but the benefits year runs from Jan-Dec and that's what the E106 is based on.  So, if you leave the country in say, December 2005, your E106 will be valid until January 2007 (just over a year).  If you leave the UK in January 2006 your E106 will be valid until January 2008 (two years).  An added caveat to this is that it depends how much NI you have contributed in the two years up to leaving the UK as to how long the E106 is valid for but the dates I have quoted are the maximums.

We thought we were keeping things simple by leaving at the end of the tax year but all it meant was that we got two months less cover than we would have got had we left the UK in February as originally planned.  By leaving in the summer of 2006 you will automatically lose 6 months worth of the E106 ie it will be valid to January 2008, not the summer of 2008.

All E106s are supposed to expire in January but as has been shown on this board, there are always exceptions.  You also have to keep an eye on them because sometimes you don't even get your full allowance.  I got one which ran from April 2003 to Jan 2004.  When I asked why mine was for a year less than my husband I was told it was because I hadn't paid enough NI.  At the time I had been paying MORE than my husband so asked them to explain that.  This time they bothered to look at the file and came back and said that there had been a mistake and I was entitled to another year's worth.   You have to keep them on their toes!!