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Hello, we are considering retiring to France on a UK pension, does anyone have advice on whether we pay UK tax, French tax or both. Is it better to keep money in UK or have it paid into French bank account.
 

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I'm a Brit retired in France for some time.

I receive my pensions at my UK bank, and pay income tax as decided by those nice people in the Inland Revenue. I then transfer money to France as required and when I think the exchange rate is good (a very haphazard business - predicting FX rates). I then declare both the UK revenue and UK tax paid to the Fr fisc who then calculate how much Fr tax to pay, and deduct the UK tax already paid. Works well with dividends too.

I suppose I should declare myself non UK resident and then get pensions and interest paid gross....I will one day!

I know Brits who have not declared themselves to the Fr tax authorities and have remained "unknown" for more than 10 years, so far.

DejW

Hello, we are considering retiring to France on a UK pension, does anyone have advice on whether we pay UK tax, French tax or both. Is it better to keep money in UK or have it paid into French bank account.
 

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I'm a Brit retired in France for some time.

I receive my pensions at my UK bank, and pay income tax as decided by those nice people in the Inland Revenue. I then transfer money to France as required and when I think the exchange rate is good (a very haphazard business - predicting FX rates). I then declare both the UK revenue and UK tax paid to the Fr fisc who then calculate how much Fr tax to pay, and deduct the UK tax already paid. Works well with dividends too.

I suppose I should declare myself non UK resident and then get pensions and interest paid gross....I will one day!

I know Brits who have not declared themselves to the Fr tax authorities and have remained "unknown" for more than 10 years, so far.

DejW
I'm not yet retired but receive two small private pensions from the UK. This was/is taxed by the French authorities and reimbursed by the UK once shown proof of paying France. After two and a half years and quite a few forms later they have stopped taxing me in the UK. I'm told that I still will have to fill in UK tax forms until they decide I don't have to.
Strangely enough they reimbursed what I had paid to the UK and France as I didn't reach my UK income tax threshold but they may ask me to return some of it according to the letter from them.
 

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I'm not retired yet either, but also have a small private pension from the UK. Although I receive a tax coding every year from the UK, I am declared non-resident for UK tax purposes.

My pension's below the UK tax threshold and comes in once a year in arrears on my birthday direct to my French bank account at the prevailing exchange rate. I declare it here, but I'm still below the threshold for taxation and also don't pay cotisations on it.

The negative impact it has is that it takes me out of RSA for the three most expensive months of the year (Jan/Feb/Mar) so I have no income those months and therefore effectively reduces the value of my pension by a third, and I have a small amount of Taxe d'Habitation to pay (in addition to the telly licence).

hils
 
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Where your pension is taxed depends on whether it's a private pension or a government pension. One is taxed in the UK, the other is taxed in France.

Either way, when you move out of the UK be sure to file the necessary paperwork to declare yourself non-resident in the UK so that the tax authority there knows you have moved.

In France, you have to declare any and all pensions you receive (you declare your worldwide income), but for all income from foreign sources, there is an additional form you file that details the foreign source income and indicates if there is tax already withheld or paid on the amounts. Certain foreign income is not subject to French taxation, and other foreign income is included in your tax calculation, but then credited for any French taxes that result from that income. The trick is that you have to indicate the treatment for specific sources of income on your tax declaration.

We've got a forum regular who should be along soon who can explain what the details are about the pensions from the UK. But it's a common situation and fairly easily resolved once you get used to the tax declaration forms.
Cheers,
Bev
 

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Hello, we are considering retiring to France on a UK pension, does anyone have advice on whether we pay UK tax, French tax or both. Is it better to keep money in UK or have it paid into French bank account.
As other people have said, it depends on the type of pension. If it is a UK state (old age) pension, then it is taxable in France and the UK government can pay it directly into a French bank account in Euros at the most favourable rate of that day.

You need to complete various forms to enable the process. If you are in the UK at the moment you need to complete form P85 to declare you are leaving the UK for tax purposes. This will "tidy up" the UK tax side.

http://www.hmrc.gov.uk/cnr/p85.pdf

Once you are in France and make your first French tax declaration you need to complete form France Individual (both French and English versions). The French tax office will stamp the English version to prove you are being taxed in France on your pension and you send this back to the UK to get the appropriate tax code so that your pension is no longer taxed at source and you will get a refund of any UK tax already deducted.

http://www.hmrc.gov.uk/cnr/france-individual.pdf

As for whether it is better to keep money in the UK or not, then that will depend on whether you visit or want to use sterling. Many people find it beneficial to keep a UK bank account (since it is impossible to open one once you are resident in France). Also, if you have one, it can help to have a UK credit card since these are more costly in France (and often operate differently).
 

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Agree entirely with TinaB.... keep a UK bank account at all costs. I like to think I'm well integrated into France after 12 years, French wife etc. However, I still need to buy presents for UK family, and keep up some UK subscriptions. If ever I need to pay UK tax etc then I must pay it in £. You lose out on FX rates by using a French credit card to buy mail order from the UK.

Also, sometimes UK visitors to us want to give us some money, so they write a UK cheque which can be costly to process through a Fr bank.

Yes, I think that most UK pension providers will pay into a Fr euro account. Frankly, I prefer to manage the transfers myself at a rate when I chose. Perhaps I get it wrong, but I can chose when I make the transfers.

DejW

As other people have said, it depends on the type of pension. If it is a UK state (old age) pension, then it is taxable in France and the UK government can pay it directly into a French bank account in Euros at the most favourable rate of that day.

You need to complete various forms to enable the process. If you are in the UK at the moment you need to complete form P85 to declare you are leaving the UK for tax purposes. This will "tidy up" the UK tax side.

http://www.hmrc.gov.uk/cnr/p85.pdf

Once you are in France and make your first French tax declaration you need to complete form France Individual (both French and English versions). The French tax office will stamp the English version to prove you are being taxed in France on your pension and you send this back to the UK to get the appropriate tax code so that your pension is no longer taxed at source and you will get a refund of any UK tax already deducted.

http://www.hmrc.gov.uk/cnr/france-individual.pdf

As for whether it is better to keep money in the UK or not, then that will depend on whether you visit or want to use sterling. Many people find it beneficial to keep a UK bank account (since it is impossible to open one once you are resident in France). Also, if you have one, it can help to have a UK credit card since these are more costly in France (and often operate differently).
 

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The matter of keeping a UK bank account (or any "back home" bank account, for that matter) really depends on your particular circumstances.

I simply "never got around to" closing out my UK checking account way back when I was first seconded to Europe - and several years later it came in very handy when I got a temporary job working for a British company and being paid in sterling. I've kept up the account now for a good 20 years, but now find that my purchases from the UK are becoming far less common. I'm seriously considering closing out the account and transferring the funds over here to my French bank simply to have the money more easily available as I need it. It simply comes down to whether it's worthwhile to maintain the foreign account (which pays little or no interest) when I could have the proceeds in an interest bearing account here. Even with French taxes, the interest produced could probably compensate for the few purchases I make directly from the UK these days.

I still have accounts back in the US that are more problematic to transfer - in part due to my tax situation but largely to have a handy source of cash for my visits back to the States. As those are becoming less and less frequent, I have been considering what to do with the accounts for the longer term.

Easiest approach is to hold onto the foreign accounts for at least the first year or two that you are in France and see how much use you make of them. You'll have to report them with your French tax declaration - but it's a simple listing of the accounts.
Cheers,
Bev
 

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Discussion Starter · #9 ·
I'm not retired yet either, but also have a small private pension from the UK. Although I receive a tax coding every year from the UK, I am declared non-resident for UK tax purposes.

My pension's below the UK tax threshold and comes in once a year in arrears on my birthday direct to my French bank account at the prevailing exchange rate. I declare it here, but I'm still below the threshold for taxation and also don't pay cotisations on it.

The negative impact it has is that it takes me out of RSA for the three most expensive months of the year (Jan/Feb/Mar) so I have no income those months and therefore effectively reduces the value of my pension by a third, and I have a small amount of Taxe d'Habitation to pay (in addition to the telly licence).

hils
Hello.
you mentioned 'Taxe d'Habitation to pay (in addition to the telly licence)' sorry to deviate but these I have not accounted for - do they come to much?
 

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Hello.
you mentioned 'Taxe d'Habitation to pay (in addition to the telly licence)' sorry to deviate but these I have not accounted for - do they come to much?
The Taxe d'Habitation is a local tax and it varies (sometimes greatly) from one town to the next and is based on the "rental value" of your home - which may or may not have anything to do with the actual rent you are or are not paying. The Taxe d'Hab is then adjusted for your financial circumstances, based on your last year's French tax declaration. Usually winds up that you pay "full freight" your first year, but the amount is adjusted starting the next year - however the tricky bit is that it's assessed at the end of the year for whoever was residing in the property on January 1st of that year.

The telly licence runs about 133€ (or rather that's what they've announced for 2014).
Cheers,
Bev
 

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Discussion Starter · #12 ·
The Taxe d'Habitation is a local tax and it varies (sometimes greatly) from one town to the next and is based on the "rental value" of your home - which may or may not have anything to do with the actual rent you are or are not paying. The Taxe d'Hab is then adjusted for your financial circumstances, based on your last year's French tax declaration. Usually winds up that you pay "full freight" your first year, but the amount is adjusted starting the next year - however the tricky bit is that it's assessed at the end of the year for whoever was residing in the property on January 1st of that year.

The telly licence runs about 133€ (or rather that's what they've announced for 2014).
Cheers,
Bev
Thanks Bev
 

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Hello.
you mentioned 'Taxe d'Habitation to pay (in addition to the telly licence)' sorry to deviate but these I have not accounted for - do they come to much?
Depends where you live and on your income.

My own personal experience ranges from €950 for a 55 sq metre two bed apartment next to Bale (or Basel), to €580 for 90 sq. metre 3 bed semi with large garden and 200 sq metre garden 25 km from Swiss border. This was for both Taxe d'Hab and TV combined.

Good luck
 

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Hello.
you mentioned 'Taxe d'Habitation to pay (in addition to the telly licence)' sorry to deviate but these I have not accounted for - do they come to much?
As noted above, it's a variable. But it occurs to me that you DO know there's also Taxe Fonciere to pay as well (for property owners)? And there's no such thing as "free" banking here?

Just trying to think of other monetary differences between UK and France: the upside is that the car CT is only every 2 years (rather than annual MOT), and there's no Road Tax. I'm sure there are masses of others, but those are the ones that occur just now.

hils
 
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