We speak to Jennie Poate, Financial Advisor at Beacon Global Wealth about the sometimes complicated regulations for expats who have pensions and want to move to France. One of our readers wanted to know what to do with a lump sum from a UK Pension and Jennie took us through the possibilities.
Helping you enjoy living the dream in France…
What to do with a pension lump sum as an expat in France
Question: I have about £100,000 lump sum from my pension in the UK. When I move to France I wonder if there is a savings account or vehicle that I can put my money in that will pay me interest?
Answer: As a UK tax resident, you can draw 25% PCLS or Pension Commencement Lump sum tax free.
However, as a French resident you have an obligation to declare the income and pay tax on it. There are several ways this can be taxed but the usual is that a 7.5% fixed rate tax would be levied plus a now new 7.1% CSG or ‘social charge. So, if you move to France before you effect the drawdown, on that basis, already £14,600 is payable in tax. There are other ways this can be paid so check with your accountant or adviser as to the best route.
It would be prudent to keep some funds in an ‘emergency’ account running alongside your current account so that if for instance the boiler breaks down you have instant access to funds.
There are several tax-free bank deposit accounts; the nearest equivalent being a cash ISA. The interest rate is a government set rate currently (June 2017) 0.75%. There are two types of account and you can hold them both:
Livret A: in which you can place a maximum of €22,950 per person plus accrued interest
Livret de Développement Durable: In which you can place a maximum €12,000 per person plus accrued interest.
All banks and the post office offer them. They aren’t spectacular at giving you interest but keeping a level of available cash is always a good idea.
With the remainder of the cash, there are several things to consider. Do you want income? If so how much? Do you want a nest egg?
If you are investing more than €30,000 and are under the age of 70, then the following option could be considered: A ‘Contrats d’Assurance Vie’ or life investment policy.
The short version of what is means, is that it is an open-ended investment policy that can potentially hold multi-currencies and different types of investment according to need and the level of risk you want to want to take.
It has great tax advantages for the policyholder as well as inheritance benefits.
There is no limit to how much you can place in one of these vehicles, but they usually require a minimum of £20,000 – £30,000 and some offer the opportunity for monthly contributions.
They are often considered an 8-year policy as the tax benefits ramp up at that stage, but they are generally open ended. Some companies have a penalty clause for early closure
Want to know more? Contact Jennie direct for more information, there’s no obligation.
The information on this page is intended only as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.
The financial advisers trading under Beacon Wealth Management are members of Nexus Global (IFA Network). Nexus Global is a division within Blacktower Financial Management (International) Limited (BFMI).All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licenced and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B