When it comes to retiring to France from the UK, one of the most imperative requirements for a successful visa application is for your financial circumstances to be in good order. We talked to Jennie Poate at Beacon Global Wealth, a wealth management firm specialising in providing expert financial advice for those looking to relocate to France. Jennie recently met with David and Rachel Highcroft*, an English couple planning their move from the north of England to sunny Charente, south-west France.

David, aged 60, is a retired salesman with a private pension bringing in £933.00 per month.

Rachel, aged 58, was a nurse who planned to give up her position to fulfil their long-term dream to live in France.

Each of them has an ISA valued at £60,000, which pays £3000 per year. Rachel will receive her pension at the age of 65 (currently estimated at £750.00 per month). Both will be eligible for a UK state pension at the age of 60 – they will receive £780 per month each (current estimation which may change). The couple own a property in the north of England valued at £460,000 and live mortgage-free.

They have planned to purchase a €210,000, 2-bedroom cottage in Charente with funds from the sale of their house in England.

With their long-term goals clearly outlined, David and Rachel approached Jennie for support in executing their plans.

Jennie says that “every review of someone’s financial position is unique; advice cannot be one size fits all. To compare UK investments with French taxation policies is akin to apples and oranges, and more often than not, I would recommend full encashment prior to becoming tax resident in France.” She takes us through David and Rachel’s assessment and the questions they asked to make an informed decision about their financial planning for retiring to France from the UK…

How much income do you need to retire to France

David & Rachel: What are the financial requirements for us to be able to apply to live in France?

Jennie: As you’re retiring to France, you need to apply for a long stay visa for those retiring and ‘inactif ’, aka not working. The French government website, www.france-visas.gouv.fr,  has all the details you need.

When you apply for your visa, you must provide several documents. This includes ID, proof of health insurance, accommodation etc. And, you will need proof that you have sufficient income.

As a guide, income should be at least equivalent to the ‘SMIC’ (minimum wage in France) which is €1231 net per person, per month. Though decisions about applications are taken on a case by case basis, this is a good guide to what you should aim for.

David: So, how can we make sure we qualify, as our income from pensions will take a few years to fully maximise. But – we do have the money from the house.

Jennie: The French visa office will take into account the fact your house in France will be owned mortgage free. Simply showing cash in the bank doesn’t necessarily satisfy the visa office. Although it may be sufficient, it’s best not to rely on this. So you will need to generate income from another source to meet the requirements of €2462 per month (per couple). With your joint income from ISAs (£500 per month; €590*) and Dan’s pension (£933 p.m. €1100*), you are currently €762 short per month. So you would need to bridge the difference showing regular income from an investment.

Once you have purchased your property (£177,000*), you will have £283,000 remaining. To achieve income from this amount to make up the €762.00 shortfall, you’ll need a return of around 3% on those funds. The investment would have to work quite hard to achieve those levels of returns if it was in a medium risk investment, for example.

For comparison, a French bank account called a Livret A currently pays 0.50% p.a. tax free (on a maximum investment of €22,000).

We would always check with you what comfort level you have for risk with funds before we would make any investment recommendation.

Rachel: Should we take out a mortgage on the house to increase our investment pot?

Jennie: You could take a mortgage out on the property, as interest rates are low in France. But inflation is currently over 2% p.a. (www.rateinflation.com) and the risk you take is that interest rates could rise. You will also need to cover the mortgage interest and capital repayments as well as fund income. You would have to consider how comfortable you are in having a mortgage commitment in retirement.

David: How can we ensure that we get the income that is required to live in France?

Jennie: Placing your funds into an investment vehicle that can pay out income with lower taxes is an important consideration and given the amount to invest, an ‘Assurance Vie’ is likely to be a good idea. Although it doesn’t give a guaranteed return, in the short term that’s not too much of an issue. Though your capital may erode, you have future income from three other pensions. The investment income fills the gap at a higher rate in the early years and then there will be less pressure in the latter years.

You could also consider buying another property and using the rental income from that to reach your target income requirements. If you buy somewhere in the UK, you’ll be taxed in the UK using your marginal rate of tax. You will still retain your nil rate band of £12,500 pa each, so you would potentially have a tax-free income. This is declarable in France but not taxed again. It also gives you a base in the UK should that be something that you wish to retain for future consideration.

The downside is you would have to manage the property from afar and pay for upkeep. There may also be periods with no tenants and consequently, no income.

Lastly, you could consider a French property for rental/gîte income. If you pursued this option, you wouldn’t be classified inactif or retired in France and would need to apply for a different visa. You would also have to register to pay tax.

Be aware that income as rental is taxed as income tax. It also incurs social charges (like National Insurance) and therefore as a direct comparison, it can look a little expensive on the tax side.

Comparing rental income to investment income in France is a complex area and careful planning is required to ensure that you maximise every opportunity within  your financial strategy.

(David and Rachel, having successfully applied for visas, sold their house in the UK and have moved to France).

Book a free, no obligation financial consultation with Beacon Global Wealth

*based on current exchange rate of 1.18Euros to £1, 2021

*All names have been changed to maintain confidentiality.

This communication is for informational purposes only and is based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Beacon Global Wealth Management are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL).  Beacon Global Wealth Management is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) – Licence No. 386/20. Beacon Global Wealth Management is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) – Licence No. 5101

The post Financial planning for retiring from the UK to France appeared first on The Good Life France.

So, you’ve reached retirement age. After a life time of getting up to the alarm clocks call, going to work every day, maybe caring for your family, and saving for this day – you might be wondering what options you have. And these days, you have plenty of choices including some that are not your usual retirement options but are definitely worth considering.

Retire to another country

If you’re looking to retire abroad, France is a great option. You’ll need to check the residency and visa requirements as they can be different for different countries. Part of the fun is searching for the right location. Will it be the sun-kissed south, or historic Paris, chic Nice or the tranquil Loire Valley? France has a hugely diverse landscape including seaside resorts, lush countryside, mountains and cities. The weather also differs markedly from one end of the country to the other. Sun lovers head south, keen gardeners might want to consider looking to the north.

Once you have decided where to move, it’s a good idea to start your adventure by renting first to make sure the destination is compatible with your idea of retirement. If it works out well, then it’s time to go house-hunting. There are plenty of estate agents, including those that specialise in agents who speak English such as Leggett Immobillier, in case you haven’t got around to learning French yet. If you’re uncertain about the affordability of moving to France, you might consider checking it out with a financial advisor who can help you determine the costs of living when retiring in France and how to make your savings work best for you.

Volunteer vacations

Why not take a trip that’s so much more than a holiday? Volunteering vacations give you many possibilities and a lot of flexibility about where to go and what sort of volunteering to do. For many a volunteer vacation is a really rewarding experience and there are lots of options in France. If you’re fit and healthy, there’s tons of choice, and you could really help make a difference whilst learning new skills and keeping active in the process.

From volunteering with children or animals to helping a small business on a project basis, helping out at a library or looking after a chateau, it’s a chance to get creative with your retirement. On the whole, volunteer positions aren’t paid, though there are exceptions to the rule. Companies like Workaway are a good place to start looking.

Make a business out of your passion

Starting a business can be a great way to bring a whole new element to your retirement. This might sound like a strange suggestion, after all, for most people the point of retiring is to stop working. However, starting a business can be a way to supplement your income as well as to share a lifetime of skills with others, or a way to do something you’ve longed to do and never had time before.

The post Unusual Retirement Options appeared first on The Good Life France.

I’ve been giving financial advice to English speaking clients who live outside of their home country for more than 23 years. And for 13 years, I’ve been based in France. The people I help are certainly a varied bunch of folks. Some have settled into their new country and new lifestyle very well. Others not-so-well. And, a few of these not-so-well people have returned to their home country.

Over the years I have looked in depth why this was the case. What made some expats give up and go back. And, I’ve found there was a constant thread running through the settled ones. They planned their finances. And then sat back and enjoyed retiremen. I’m talking about people who have now retired to another country and rely their pensions and investments to pay their bills.  95% of my clients tend to fit into this category.

Understandably so, retiring to another country is more often than not a decision made purely on emotions. After a long working life, there’s a desire for less work, for a new lifestyle and climate etc. But, to make a success of retiring abroad, then facts as well as emotions also have to enter into this retirement equation.

Financial planning works best when planned in advance

I equate financial planning to visiting the dentist. You tend to go to the dentist for two main reasons. Either you have a horrendous toothache now. Or you don’t want a horrendous toothache in the future. Those who have planned in advance have visited their dentist regularly. The dentist has put a plan in place to look after their teeth and to avoid future toothache. Those that don’t visit regularly invariably turn up at their dentist’s door with a swollen face and a horrendous toothache. They up leaving with less teeth.

Good regulated Financial Planning is essential to avoid Financial toothache.

So how do you make sure your bills and other expenses are paid for as tax-efficiently as possible when you have retired in France?

Know what works best for you

If you have moved (or are thinking of moving) to France from the UK, then you need to know that France has a completely different tax system and completely different inheritance rules. So, to get the right advice it is essential that you talk to an International Financial Adviser who understands the rules and regulations of both the UK and France.

Some people living in France are happy to keep their investments in UK deposit accounts, which make little or no interest. The low interest rates available rarely beat the inflation rate. So in real terms their investment is essentially moving backwards. Some people living in France are happy to keep their investments in UK ISA’s and Premium Bonds. Though these investments were tax-free for them in the UK, now that they’re living in France with a French tax regime, the capital gains made on these investments are taxable at 30%. And, they’re declarable every year wehther funds are withdrawn or not.

Making a decent return on your investment

Low interest-rates mean that to make noteworthy return you may need to take a measured amount of risk within your risk profile. At the same time you should be seeking to remain as tax-efficient as possible. That’s why speaking to your International Financial Adviser about the options available for your Savings and Investments as a French tax resident is worth your time. For example, the UK pension freedom act (2015) presents you with lots of options for your pension retirement savings. You are no longer forced to purchase an annuity at historical low rates. In fact, UK annuities are currently being looked at as some companies may have potential irregularities. Your International Financial Adviser can also tell you about the best options available for your UK Pension savings even if you’re French tax resident.

Not sure if you can afford to retire in France?

To help make your retirement to France the best it can be, the correct financial advice is vital. This free Retire in France guide will help you understand your options when choosing a financial advisor to help you plan your dream retirement to France.

Paul Flintham is an International Financial Adviser with Beacon Global Wealth Management in France

Email: enquiries @ bgwealthmanagement.net; Web: beaconglobalwealth.com

Beacon Global Wealth Management are members of FEIFA (the) Federation of European Independent Financial Advisers: https://feifa.eu

Sponsored Post by Beacon Global Wealth Management.

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 licensed and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B.

The post Can you afford to retire in France? appeared first on The Good Life France.

When it comes to thinking about your move to France, you may have decided the area that you want to live in, checked schools and transport links. But will organising your finances be further down the to do list when it should be near the top?

Before moving to France, there’s no doubt you will have hundreds of things to organise, think about and do – not just the packing. Jennie Poate, financial advisor at Beacon Global Wealth explains why you should consider your budget and finances so that you have no nasty surprises once you’ve bought your dream home and/or made the move to the good life in France.

Before you move to France:

Consider your income requirements

Be realistic about what you need income wise to live in France. There are already huge amounts of B+B’s and gites. Spending €150,000 on a holiday rental property to earn €3,000 p.a. may not be feasible in the long term.

Consider your income requirements before you move. You may be required to pay tax on your income in France.  A good advisor will be able to provide you with an estimate of tax payable and look at ways of minimising or reducing tax. If your income is not in euros, exchange rate fluctuations may seriously affect your regular income requirements.

Plan your Finances

Start planning a strategy for your savings and income before you move. Some UK savings products are really square pegs in round holes when it comes to French taxation. It might be better to consider closing or changing them before you become French tax resident. BUT, take advice from an adviser who understands the French tax system and products that are available. A UK qualified adviser may unknowingly make your tax situation worse if they are not qualified to advise you about French financial products.

Consider how your pension might work better for you

What about your pension? Do you have more than one pension and if so where are they held? And, can you access them yet? Review your pension with your qualified adviser to make sure your finances are best positioned for your move to France.

You are likely to find it is much better for you to use a qualified and authorised independent financial adviser who understands both the UK and French tax systems. This way you can make an informed choice about your pension options. Careful planning here can potentially save you tax in the long run. If you haven’t done so already, get a state pension forecast which will tell you how much you will receive and when. https://www.gov.uk/government/publications/application-for-a-state-pension-statement

Think about healthcare needs

Consider your healthcare needs. Whether you’re retired, working or enjoying life with no active employment you may need to pay for healthcare in the form of top up insurance.

Get in touch with your tax office

Inform the UK inspector of taxes at your local HMRC tax office that you are planning to move abroad by filling in form P85. This will enable the UK tax office to advise of and resolve any outstanding issues before you move.

You can download the form online at: www.gov.uk/tax-right-retire-abroad-return-to-uk

Understand how to deal with tax inheritance rules

Consider your status with regard to the distribution of your estate. Inheritance planning in advance of your move can save considerable heartache later.

For French inheritance tax purposes, you must include all of your assets (property and cash) wherever they based.

The notaire handling your house purchase may only look at how the property ownership should be structured, which may be only part of what you have.

When you move to France

Use a competent tax adviser to prepare your first French tax return. Getting it right first time means you’ll avoid unpleasant surprises later on and allows you time to figure out how the system works. Your tax adviser can also liaise with your financial advisor concerning the timings for moving/closing certain investments. This can help you reduce tax and make the best savings.

Jennie Poate is a UK and France qualified and authorised financial adviser, working for Beacon Global Wealth Management. She is happy to answer any queries you may and she and her team would be delighted to help you plan your move to France.

Jennie can be contacted at: jennie @ bgwealthmanagement.net  or info @ bgwealthmanagement.net

www.beaconglobalwealth.com for information and factsheets

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 licensed and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B.

The post How to plan your French property purchase and your move to France  appeared first on The Good Life France.

Talk of income tax in France is something that can cause the jitters. But if you’re thinking about buying a second home in France, or making a complete move, the advantages from a tax perspective may represent great value. Jennie Poate, Head of Operations, France for Beacon Global Wealth Management explains…

Income tax in France

There always seem to be horror stories doing the rounds about tax in France. But if you’re planning to move here as a retiree or early retiree and already have some (or all) of your income stream planned, then you could well be surprised.

For example: if you’re married, you are taxed as a household and will have two tax-free allowances added together before income tax becomes payable. This is certainly handy if, like most people, one of you has a higher income than the other. All pensions receive an abatement or allowance of 10% before tax is payable – every little helps.

As an individual in the UK you would pay 40% tax above the £43,300 threshold.  Even as an individual in France you wono’t reach this height until above €70,000. So even higher earners can pay less tax.

The rates for income tax in France

Income: Tax Rate (as at May 2018)

Up to €9,807: 0%
Between €9,807 – €27,086: 14%
Between €27,086 – €72,617: 30%
Between €72,617 – €153,783: 41%
Above €153,783: 45%

As an example, suppose two adults have a joint income of €40,000. Tax liability is worked out on the basis that each has €20,000. The first €9807 of each person is zero rated, tax is charged at 14% on the remainder.

There are also exemptions, discounts and reductions available – it can seem like a highly complex formula when you’re trying to fill in the paperwork and work out what’s what. Getting qualified tax advice can save you money, time and heartache (not to mention a headache).

Planning ahead is always a good idea

You shouldn’t just research the area or house you want to buy; you should also have a clear idea of how much income you need to live on in France, and how much of it will be taxed.

You also want to make sure that any savings you have are taxed as little as possible. The start of this planning from a financial point of view should begin before you move to France.

Using a financial adviser with in-depth knowledge of both the UK and French systems from a tax, pension and investment point of view could save you money as well as a big tax bill later on.

Although there is a lot of information on the Internet about taxes in France. It’s often outdated at best and at worst downright wrong. Having something bespoke and tailored to your needs and wishes will ease your financial transition into your new life.

Jennie is happy to answer any queries you may have. She and her team would be delighted to help you plan your move to France and offer a free, no obligation, initial consultation in order to discuss your requirements.

Jennie can be contacted at: jennie@bgwealthmanagement.net; www.beaconglobalwealth.com for information

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 in this article is intended 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 this information.

The post When it comes to income tax in France good planning is essential appeared first on The Good Life France.

Would you like to make more of your UK pension fund when you become an expat in France?

If so, you might find that a SIPP (a self-invested personal pension) is something that will help you generate the best retirement income possible. This option won’t be right for everyone. It’s important to have a qualified financial advisor review your position, but you may find that a SIPP gives you the potential to make the most of your pension fund whilst you enjoy the good life in France. We asked Jennie Poate at Beacon Global Wealth, expat finance advisors, to explain SIPPs.

Self- Invested Personal Pensions (SIPPs)

A SIPP sounds like it might be really complex, time consuming, stressful. But that’s not the case. All it means is that this is a tax efficient pension wrapper. Its aim is to give you flexibility.

That said, a SIPP can be simple or more sophisticated – which is where your financial advisor comes into the equation. Some people like to be hands on with their SIPP, but most don’t and want to leave investment decisions to the experts.

SIPP explained in plain English

A SIPP is a wrapper that goes around your pension investments. It allows you to benefit from tax breaks for example taking a tax-free lump sum of up to 25 per cent of your pension pot after the age of 55-years old.

Investors are also able to reclaim income tax on contributions (the annual UK allowance 2017 is £40,000). For higher rate taxpayers – the reclaim is very beneficial.

And, as well as paying personal contributions into your SIPP yourself, contributions may be paid by another person on your behalf e.g. a family member or if you are employed, your employer.

A SIPP enables investors to take control of financial decision making rather than leaving it in the hands of insurance companies and fund managers. But while SIPPs offer greater flexibility than traditional pension schemes, they often have higher charges and the time involved in research means they may be more suitable for experienced investors.

Can expats in France hold a SIPP?

If you’re a UK expat living in France, yes, you can consider a SIPP. As with other personal pensions, you do not have to live in the UK to be able to invest in a SIPP.

However, there are a few important considerations to consider if you do not live in the UK and are considering a SIPP.

As SIPPs are held in the UK, and are normally held in Sterling. This means that if you plan to draw an income from your SIPP while you live abroad you will be liable to currency fluctuations, so you may wish to factor this is into your retirement planning. For people who plan to retire abroad and not return to the UK, there may be other options (such as a QROPS) which offer similar benefits, but enable you to invest in different currencies.

Conversely, if you are paying into your SIPP while you live abroad and the value of the pound falls, the amount you are actually investing will increase.

SIPPs abide by UK pension rules and are affected by any changes the UK Government makes to pension rules. One example of this would be the recent changes to the Lifetime Pension Allowance where the Government reduced the allowance from £1.25m to £1m.

It’s important to understand the local French tax rules, as well as those in the UK before making a decision about how to draw an income from a SIPP.

Finally, and perhaps crucially, many expats will speak to a financial adviser when making a decision about their retirement plans. If you are seeking advice from an adviser in the UK, remember that they may not be fully aware of all the opportunities for expats. It is important you speak to an independent financial adviser who understands both the UK and French tax rules.

Whatever you do, it is important to do your homework as there are many different types of SIPPs each offering different investment options.

For expert advice contact Jennie Poate:  jennie (@) bgwealthmanagement.net or via the Beacon Global Wealth website

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.

And the information on this page is intended 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 post SIPPs for expats in France appeared first on The Good Life France.

Would you like to make more of your Pension Fund?

If, like many expats in France, your personal pension fund is one of your largest assets then you’re sure to want to give it the potential to generate the best retirement income possible.

We talk to Jennie Poate at Beacon Global Wealth about the QROPS – Qualifying Recognised Overseas Pension Scheme and how it may benefit expats in France.

QROPS – What is it?

QROPS is an overseas pension scheme that meets certain requirements set by His Majesty’s Revenue and Customs (HMRC). A QROPS must have a beneficial owner and trustees, and it can receive transfers of UK Pension Benefits.

The jargon explained:

In a nutshell what it means is that you can transfer your UK pension out of the UK and into an overseas pot which may be more tax efficient if you choose the right product. Since the UK Government introduced a new 25% tax on pension transfers to QROPS – you need to make sure you pick the right QROPS product.

In December 2016 the UK government removed all French pension schemes from its list of approved QROPS. For expats in France, though your choice of countries for QROPS has narrowed if you want to avoid paying 25% tax (and who wouldn’t want that?) if you transfer to a QROPS within another European Economic Area (EEA) of jurisdiction for instance Malta or Gibraltar, you will still gain tax-efficient benefits.  If you’re an expat in Monaco, a non-EEA country, by transferring to a QROPS within Monaco, you won’t be subject to the 25% tax.

What are the benefits of QROPS for expats in France?

Transferring your UK pension to a QROPS can provide significant tax advantages for instance on income and gains which no longer apply. Funds in your QROPS aren’t included in your Lifetime Pension Allowance (LTA) so growth in the fund is except from LTA tax penalties. QROPS can be used to manage estate planning as funds may be distributed according to your wishes, where as a UK Pension may only be inherited by a spouse.

How do you choose the right QROPS

Get expert advice. Before you decide to transfer your UK Pension into a QROPS, we’ll meet with you free of charge and provide you with excellent information so that you can make an informed decision. There are lots of factors we consider. We aim to save you tax and maximise your income and protect your assets. A QROPS transfer may not be right for you and if that’s the case, we’ll tell you that and we’ll see if there’s something else that’s more suitable – or not.

Jennie Poate is a qualified advisor with Beacon Global Wealth Management: beaconglobalwealth.com

This communication is for informational  purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained  in this communication is correct, we are not responsible for any errors or omissions.

Beacon Global Wealth Management are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL).  Beacon Global Wealth Management is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) – Licence No. 386/20. Beacon Global Wealth Management is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) – Licence No. 5101

The post QROPS for expats in France appeared first on The Good Life France.

During election campaigning in France, President Macron stated that he wanted to review taxes and make reductions for businesses and individuals.

One of the most unpopular taxes in France is the wealth tax. Under current rules (2017) as a French resident, taxable wealth includes worldwide assets such as property, jewellery, cars and investments.

Several months into his reign and Macron seems to be keeping to his promise that he plans to rein in France’s wealth tax. The current structure imposes a 0.5% starting levy on assets over €900,000 (£762,000, $990,000), increasing gradually to a top rate of 1.5% to anything over €10m.

Under the new rules Macron is proposing, any non-property related wealth would be exempt from the tax.

What do wealth tax changes in France mean for expats?

“It makes using tools such as ‘contrat d’assurance vie’ far more attractive than before and will help France retain wealthier residents and attract new ones” says Jennie Poate, financial expert at Beacon Global Wealth. “An Assurance Vie is a wrapper that holds financial investments, like a Life Policy in some countries. The French name makes it sound like a life insurance policy but it’s not, it’s an investment product. For expats in Franec it can be a good way to maximise tax savings, capital is available for draw down and a variety of different fund options are available according to the risk the person wishes to take. This varies from interest bearing products to stocks and shares. In the future property investment may be less attractive as that will be included in the wealth tax calculation. The expectation is that investment into long term policies will rise dramatically if the option to reduce wealth tax by investment into an ‘Assurance Vie’ over property is available.”

If you need obligation free, independent financial advice in France, Jennie Poate of Beacon Global Wealth is happy to help. Contact jennie@bgwealthmanagement.net

The information on these pages 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

The post Wealth Tax France Update for 2017 appeared first on The Good Life France.

What do I do with my UK Pension when I move to France?

It’s a question we’re often asked at The Good Life France and we put it to financial expert Jennie Poate. She told us about a real life case study, one that she finds covers a common issue for expats moving to France. We’ll call her clients John and Jane Price. They moved to France in 2016 taking early retirement to live the good life and have the time to do things they enjoy – like cycling on the quiet roads of Dordogne…

Jennie says: I met with John and Jane at their lovely house in the Dordogne, they had bought it outright with cash raised from the sale of their UK property and had a sum of money set aside for renovation and living costs. At 53, Jane is unable to take her pension early (she has a pension pot worth £100,000 with a UK provider and she will need advice in 2 years’ time when she can access her pension early if she wishes to. John will be 55 this year and therefore can access his pension. He also has a pension pot worth £100,000 with a UK Advisor.

John told me that he wants to take his pension now so that the couple have money to live on while they’re renovating their house and settling into their new life. Though they understood that the UK pension rules changed in 2015, they had struggled to find an advisor in the UK to explain what their options are now they’re living in France.

As an expert in both UK and French financial matters, I asked them questions about their financial needs and requirements and then took them through the options available to them.

Annuity

This is where, in exchange for your pension fund, an insurance company will provide a monthly income until death (some products additionally offer a pension to a surviving spouse).  I explained that with this option, he could draw down 25% of the fun tax free, known as a Pension Commencement Lump Sum (PCLS) and a fixed amount of income for life.

Annuity rates have been particularly poor of late as they are based on interest rates. If John took this option in the UK, the PCLS would be tax free. However as he is a French resident, he would have to pay tax.

John asked me if could take the whole fund as cash.

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 either 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.

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 ‘SIPP’(Self-Invested Personal Pension). With some of these produces 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.

If you’d like obligation free pensions advice, please contact Jennie Poate at: jennie@bgwealthmanagement.net

www.bgwealth.eu

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.

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Looking after elderly relatives in France: We check out what assistance is available for expats…

First of all, did you know that in France, children (where finances permit) can be obliged by the courts to support their parents and grandparents?

Putting this obligation aside, having family to stay brings much joy, but having them move in also brings costs –not only food and lodging, but you might also need to undertake home improvements and organize for extra help to care for them. In France, it’s possible to get support for some extra costs for those caring for elderly relatives; we take a look at what’s available and how to apply

Home Improvements

When you need to make necessary improvements to your primary residence to accommodate the elderly and persons of reduced mobility, a tax credit is granted for the installation and replacement of equipment specially designed to assist your new residents.

It is a very specific list of works covered, and they must be carried out by a professional, however you may be eligible for 25% of the cost to be reimbursed against your tax bill.

How to claim: Declare the full amount spent, including VAT, in box 7WJ of your ‘déclaration de revenues’. The cost of works is capped at 5.000€ for a single person household, and 10.000€ for a couple, with an extra 400€ for every dependent.

Tip: Keep the invoice for the home improvements in case you are asked for it.

Health Cover

If your family member is not already in the French health system, but has a CEAM (Carte Européene d’Assurance Maladie ) you can add them to your own health cover as a dependent.

How: Use form cerfa 14411*01 and send it on to the French organisation which oversees your own cover (CPAM, RSI,…).

Home Help

You need to apply for an Allocation Personalisée d’Autonomie  or APA (as at the  local Mairie). After this a home visit is conducted with a doctor and a social worker, to establish the needs of your family member and your involvement in their day-to-day life. This may mean you are remunerated for your assistance, or that external home help can be engaged to help as necessary.

Note: 1 month after you receive confirmation that APA is approved, a declaration should be made of the personnel engaged or the help being received (cerfa 10544*02).

The amount of support you receive will depend on the revenues of the person you are caring for as well as how much help they need.

Tax implications & reductions

As far as the French taxman is concerned your family member is now one of your household for tax purposes; even if their pension or disability income is taxed at source it should be declared on your household tax return, and if not it should be added as the income of a dependent.

If your dependent has no income, then you should reduce your total household revenue by 3.407€ per dependent, per annum (2017).

Your annual taxe d’habitation may also be reduced if your dependent is over the age of 70, lives with you and in the previous year had a declared taxable income below 10.697€ (16.409€ for two people: 2017).

The list of de-taxed installations is a long one, so get in touch to check if your planned works are eligible – info@frenchadminsolutions.com

by Jo-Ann Howell at French Admin Solutions who helps expats settle into life in France.

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