Pensions

[Ruudi]

I have recently come across two points regarding pensions that concern me.
1. The tax free lump sum that you are permitted to commute in the UK will be taxed in France.
2. If you have paid 39 years NHI contributions the 'government' makes up the additional 5 years to give you your maximum of 44 years contributions. But not if you move to France.
Have I got this right? If so I wonder what other Forum members have done?
Regards
Keith

[LaBucherie]

Point 1: Not sure, but I'm pretty sure that it would be taxable in France. Probably best to take the lump sum before becoming French Resident, if possible. We moved in October 2000 and the Impts were not interested at all in anything we received in that year. Our first return was for 2001.

Point 2: You do not receive the credit from age 60 to 65 unless you are UK resident for tax. This is one that I missed when making plans. I checked on the NI/pension position before we decided to move to France and missed this point. It wouldn't have made any difference to our decision, but I was annoyed with myself when I re-read the papers last year!

Regards
David

[martinetchris]

LAST EDITED ON 03-Nov-02 AT 12:57 PM (GMT)

When we were preparing to move to France, we received contradictory advice re French taxation of the lump sum, so Pannell Kerr Forster (Guernsey) checked with the French authorities (not sure who).

The advice they received was that the UK lump sums would NOT suffer any French taxation even if the payee is already resident in France. They asked for written confirmation and I will check with them whether this was ever received.

But if you have the choice, the safest thing would appear to be to take the lump sum BEFORE becoming French resident, if you can !

Even if it does prove to be French taxable, perhaps the effects can be reduced if you take the lump sum over a number of years (e.g. through an income drawdown pension) ? However, we are NOT experts in this area - so suggest anyone directly affected should take their own expert financial advice !!

Chris and Martin

PS Have just checked PKF's "Taxation in France" book (the edition published in 2001, so a bit old now) - which we have highly recommended to LF readers on many occassions ! Page 260, section 24.1.4 states :

"In principle, and subject to the terms of double taxation treaties, the French authorities will allow a taxpayer to repatriate his (sic) lump sum to France free from any French tax. Nevertheless, as the French pensions system does not normally allow tax-free lump sums, this remains a grey area and it is thus advisable to seek prior advice on the matter."

They also reiterate the advice on it being best to take it before becoming French resident, if possible.

[elaine and john]

>2. If you have paid 39
>years NHI contributions the 'government'
>makes up the additional 5
>years to give you your
>maximum of 44 years contributions.
>But not if you move
>to France.
>Have I got this right?

we hope to move to france next summer, I calculate that my husband has paid 38 years NI leaving school at 14 and 52 next birthday (January)but will check more fully. would it be possible to buy NI Stamp for the final year to make up to 39 years, I realise it would have to be some sort of self employed / contributory and not the employers stamp.

elaine