The UK pension reforms that were due in April Protected content now in force and many people living in France may simply say, "so what, I live in France, they are of no benefit to me, are they"?
Well the answer to that is actually that the changes may have a direct effect on you as an individual living in France and that, just for a change, you may be able to benefit rather than lose out, from the changes in a number of ways.
By means of an example as to how you could benefit, one of the most significant changes for residents of France is that they can now take 100% of their pension, should they wish and pay just 7.5% tax! This works out to be a very advantageous arrangement in comparison to the UK tax charge.
By looking at an example it is easy to see how much it could cost you to take your pension in its entirety:
Imagine that your pension pot is worth £100,000, how much will it cost to take all of it? Well, the government make a big thing out of offering a 25% TFCLS (tax free cash lump sum). What they dont advertise very clearly is that you will be taxed at your marginal tax rate on the remainder. So if you are a 20% tax payer it will be 20% of the balance of £75,000; therefore your tax bill would be £15,000 on your cash lump sum. If you are a 40% tax payer (or would have been in the UK) then the tax bill would be £30,000, not quite so attractive is it. On the other hand lets say you are tax resident in France and would like to take it all. No 25% TFCLS here I am afraid, BUT only 7.5% tax on ALL of it. So taking the TFCLS in the UK would be £15, Protected content £100,000 as an example) as opposed to £7,500 in France (if you are entitled), for ordinary and higher rate tax payers, a significant saving.
Another way of benfitting could be to transfer to a SIPPS or QROPS, although these products should not be entered into without significant research, when arranged properly for the client, offer an excellent tax efficient means of taking a pension early and ensuring the future of beneficiaries.
There are, of course, many considerations to take into account and many other options, but finding out more about the options that are available, should be a priority for any individual that is considering retirement abroad and has a UK pension scheme.
If you would like straightforward advice and information, from a UK qualified adviser, on how you may be able to benefit from the new UK pension law reform, you are welcome to contact me, either through Internations or by email at
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