If you’re thinking about transferring your UK pension to France, there are several things to consider. We ask Jake Barber, principal financial advisor at SJB Global: How do you know if moving your UK private/workplace pension abroad is advisable?
Transferring your pension from the UK to France
Transferring a pension abroad has always been challenging and requires specialist financial advice. The answer is often down to where you live and work. If you live in France permanently and have no intention of returning to the UK, then transferring your pension might be the best thing for your finances.
Pension transfers are usually complicated
But you should be aware that rules change frequently when it comes to pensions and transferring them out of the UK. For instance, in April 2024, the UK government abolished the Lifetime Allowance (LTA) and introduced new rules that will limit tax-free lump sum payments both in lifetime and on death, and when transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS).
Previously, all transfers to a QROPS were subject to a tax charge of 25% on the amount over the current Lifetime Allowance (e.g. £1,073,033). Some transfers to QROPS can be made free of UK tax provided certain conditions are met, irrespective of the amount transferred, but in others, you’ll have to pay 25% tax on the transfer.
You’ll now only be able to transfer-tax-free if you’re a resident in the country in which you’re transferring to a QROPS whereas prior to the 2024 change, you could transferring within any EEA country if the QROPS was based in the EEA. In France, there are currently no QROPS providers meaning if you do transfer to France, you will pay an overseas transfer charge of 25%.
When transferring a pension overseas into a QROPS, always ensure it is to a recognised overseas pension scheme approved by His Majesty’s government. Check here.
Make a mistake here, and you could find yourself paying out huge amounts in taxes that could have been avoided.
Get professional advice
If the value of your pension is nearing the £1,073,000 limit, you may still be liable to additional taxes on death and you really should consider talking to a financial advisor about moving your pension abroad before you incur tax liabilities. But you should know that restrictions introduced as a result of Brexit mean that a financial advisor in the UK may not be able to advise you; you need to choose the right advisor who should be both qualified and able to advise you about all the complexities of transferring and drawing on your pension if you do transfer it. Also, be aware of big inheritance tax changes to UK pensions as they now fall under your estate for IHT.
Contact SJB Global for a free, no-obligation consultation at sjb-global.com
