If you’re thinking about transferring your UK pension to France, there are several things to consider. We ask Helen Booth, financial advisor at deVere France: 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).
Pension amounts over the £1,073,000 limit set by the UK Government will now be subject to tax.
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 usually be able to transfer-tax-free if:
• You’re a resident in the country in which you’re transferring to a QROPS.
• You’re a resident of a country in the European Economic Area (EEA), and the QROPS you’re transferring to is based in another EEA country or Gibraltar.
• The QROPS you’re transferring to is provided by your sponsoring employer.
Get professional advice
If the value of your pension is nearing the £1,073,000 limit, 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 your pension from the UK to France – and drawing on your pension if you do transfer it. For instance, some UK Pension holders may find they have an opportunity to mitigate the new OTA (overseas transfer allowance) charge when transferring the pension to a QROPS. Also, be aware of potential changes to UK death benefit tax charges on pending UK pensions and any possible changes that might occur after the next general election.
When transferring a pension overseas into a QROPS or SIPP (Self-invested pension plan), always ensure it is to a recognised overseas pension scheme approved by His Majesty’s government. Check here: www.gov.uk/guidance.
Make a mistake here, and you could find yourself paying out huge amounts in taxes that could have been avoided.
Contact Helen Booth at deVere France for a free, no-obligation consultation at helen.booth@devere-france.fr
deVere is one of the world’s leading independent financial advisories; deVere France provides trusted, independent financial advice to expatriates and international investors based in France: deVere-france.fr
Please note, the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.
