2. Take your Pension in Cash
Well, yes, I told him. But, there are tax implications that need to be considered, both with the UK and French tax authorities. In the UK the first 25% is tax free, then the rest is taxed at 20% or 40% (depending upon your UK tax rate). In France it would be taxed at a set 7.5%. The pension may well be taxed in both countries and he would have to apply for a refund from the UK. John will need to decide whether he would want all the cash with a tax charge, or the ability to draw on the funds as and when required. The latter is taxed at his marginal rate of tax in France, but as they would be taxed as a couple, the first €9790 each would be added together and no tax would be taken.
3. Drawdown funds
John could move his pension pot to a different structure altogether. For many UK pension pots, this is certainly an option. BUT only if it is in your best interest to do so, you need to check carefully that you won’t lose certain benefits with your existing policies when you move it. A ‘drawdown’ fund may be a great option and there are several types available including ‘QROPS’ (Qualifying Recognised Overseas Pension Scheme) and ‘SIPPs’ (Self-Invested Personal Pension). With some of these products you can stop and start for income, and take cash depending on need. This can suit your circumstances when you may need more or less income or a cash injection, and the fund is still yours - you haven’t relinquished control.
One benefit of a QROPS is that you may have a higher tax free Pension Commencement Lump Sum (PCLS ) than under a UK scheme – 30% as opposed to 25%.
Pension Income in France
John and Jane were worried about how much tax they would have to pay on their pension income as well as inheritance tax which they heard was high in France.
Pension income in France is taxable but is not subject to the dreaded CSG or ‘social charges’.
The amount remaining in the fund after death is not subject to inheritance tax.
Our meeting over, I studied John and Jane’s requirements carefully, and as with all clients, recommendations undergo several stages including rigorous compliance checks to ensure that their best interests were considered. It can take a while to do this but it’s really important that as an advisor I have all the facts, and as clients John and Jane know that they’re getting the best advice and recommendations for their circumstances and future.
John and Jill are living their dream life in Dordogne and we wish them much happiness.
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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 licensed and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B.
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.