If you’re a UK expat living in France or planning to move, understanding how your UK pensions will be taxed is essential for effective financial planning. France and the UK have a double taxation treaty, meaning that you should only be taxed in one country on your pensions, but the type of pension you have will dictate where and how you’re taxed. In this guide, we’ll break down the different types of UK pensions, their tax treatment in France, and how Harrison Brook  can help you navigate the complexities of pension planning as an expat.

Types of UK Pensions and Their Tax Treatment in France

State Pension

The UK state pension is subject to French tax laws rather than UK tax laws, thanks to the double taxation treaty between the two countries. If you’re a French resident, your state pension will be taxed solely in France. It is added to your other income and taxed at your marginal income tax rate.

Government Pensions

If you’re receiving a UK government service pension (such as a pension from public service employment, military, or civil service), this pension remains taxable solely in the UK, even if you are a French tax resident. However, it is important to note that you must still declare your UK government pension on your French tax return.
Although the UK government pension is not taxable in France, it will be used in the calculation of your effective tax rate (taux effectif). This means that while the pension itself won’t be taxed, it may raise the tax rate applied to your other income in France.

Workplace Pensions and Personal Pensions

Workplace pensions (such as defined benefit or defined contribution pensions) and personal pensions (including SIPPs) are taxed in France rather than in the UK. These pensions are added to your total income and taxed at the applicable French income tax rates.
The tax treatment of lump sum withdrawals from personal pensions can be more complex. While UK pension schemes typically allow up to 25% of the pension pot to be taken tax-free, in France, such lump sum payments are generally taxed as income at your marginal income tax band. However, France offers a special fixed-rate tax regime for lump sum withdrawals of the entire pension in one go, it is called “prélèvement forfaitaire”. Under this regime, you may qualify for a fixed tax rate of 7.5% (excludes social charges unless you have a S1 in place) on the lump sum, provided that certain criteria are met. If not, the withdrawal will be taxed at your marginal income tax rate.

QROPS (Qualifying Recognised Overseas Pension Schemes)

Some expats choose to transfer their UK pensions to a QROPS, an overseas pension scheme that complies with HMRC rules. Transferring your pension to a QROPS could provide more flexibility with currency exchange, investments, and withdrawals, particularly for expats living outside the UK. France does not currently have its own domestic QROPS schemes and following the 2024 UK Autumn budget changes, this means as a French resident if you use a third country QROPS jurisdiction (E.g. Malta) you would be subject to a 25% ‘Overseas Transfer Charge’ (OTC). 

Income Tax Rates and Social Charges in France

Income tax rates in France for 2024 are as follows:

• 0% on income up to €11,294
• 11% on income between €11,295 and €28,797
• 30% on income between €28,798 and €82,341
• 41% on income between €82,342 and €177,106
• 45% on income over €177,107

In addition to income tax, you may also be subject to social charges (contributions sociales) on your pension income. The social charge rate for pensions is usually 9.1%.

Exemptions: If you hold a S1 form (a certificate of entitlement to healthcare from another EU country), you may be exempt from paying social charges on your UK pension income. This is especially relevant for retirees who receive healthcare benefits from the UK, allowing them to avoid these extra charges on their UK pension income.

How Harrison Brook Can Help

At Harrison Brook, we specialise in helping UK expats like you navigate the complexities of pension planning and tax obligations while living abroad. Our expertise includes:

• Tailored Pension Advice: Whether you’re planning to retire in France or are already living here, we can help you understand how your UK pensions will be taxed and identify opportunities to minimise your tax liabilities.
• QROPS Transfers: If transferring your pension to a QROPS is the right option for you, we’ll guide you through the process, ensuring you understand the benefits and potential risks.
• Pension Consolidation: Managing multiple UK pensions can be cumbersome and confusing, especially with differing tax treatments. We help expats consolidate their pensions to streamline their retirement planning.
• Wealth and Investment Planning: We take a holistic approach to your financial situation, ensuring that your pension forms a part of your broader wealth management strategy. 

Conclusion

Living in France offers many lifestyle benefits, but understanding how UK pensions are taxed here is crucial to ensuring you maximise your income in retirement. Each type of pension – whether state, government, workplace, or personal – has its own tax treatment under French law. Harrison Brook is here to provide you with expert, personalised advice to make the most of your UK pensions and retirement planning. Get in touch today to find out how we can help you create a tax-efficient strategy for your retirement.