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31st July 2010
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 Living in France, working in the UK – can it be done?Increasing numbers of people are choosing to turn their backs on an overcrowded and expensive UK and instead enjoy a more relaxed quality of life living in France - while continuing to work in the UK.For some, it’s a chance for their children to grow up bilingual and enjoy what many perceive is a superior education – Monday to Thursday commutes back to the UK for the working parent, but lots of quality French family time at weekends. If your family lives in France - even if you as breadwinner don’t spend more than half the year in France - you will be deemed as French tax resident, as you are resident where you main home is. This means that even though your UK PAYE earnings will remain taxed in the UK, you will still need to complete an annual self assessment return in France. UK sourced earned income will normally remain subject to UK income tax in the first instance, and will use your normal UK personal tax allowances. Worldwide income This income will not be taxed again in France, but should be declared in your French tax return so that it can be assessed as part of your worldwide income by the French authorities. Income tax is on a banded system in a similar manner to the UK, and although the top rate is 40%, most households pay less in France than they would in the UK. This is because you are taxed as a household and all income is divided equally between the household with allowances and tax rates applied to each part. A married couple living together in France will be considered as two parts for the purpose of French Income tax. Any children in household also have tax allowances (the first two dependant children each constitute half a part with the third and any subsequent children constituting a whole part). When you move to France you will be required to complete an annual income tax return for the previous tax year. The fiscal (tax) year in France runs from 1st January to 31st December. French tax office It is your responsibility to contact your local tax office (hôtel des impôts) to obtain the relevant forms or complete them online. The main tax form is Form 2042 which should include your worldwide income and gains. As you will have income that arises outside of France you also have to complete form 2047 and perhaps 2042C if any income tax is paid on foreign investment income, as any bank interest - even if in the UK and in a cash ISA - is taxable in France. Any UK PAYE earnings must be declared on your French tax return, although it is not actually taxed again. It is added to any other taxable income such as rental income or bank interest and applied at the appropriate tax rates. The income tax bill would be reduced by the proportion of your total household income that is made up by the PAYE earnings. For example, if your UK PAYE earnings made up 80% of the households taxable income, you would pay 20% of what your French tax liability would have been. French health service if working in the UK A condition of living in France is that you must join the French health service. A Worker’s E106 is available to those who move to France, but who continue to work in another EU member state. It is based on your ongoing National Insurance contributions in the UK. Furthermore, it should last for the duration of your time working in the UK and is not restricted to a maximum two and a half years like a normal E106. You should establish if you are eligible for this by contacting the Inland Revenue’s Centre for Non-Residents on 0845 915 4811. They are unlikely to be able to give you an answer over the phone, but will probably ask you to send them a fax with certain information regarding the proposed employment. They will then be able make an informed assessment and determine your entitlement to a Worker’s E106. Any family members should also be covered as a dependent under your Worker’s E106. Marjorie Mansfield Siddalls (UK Head Office) Tel: +44 (0) 1329 288641 Email: enquiries@siddalls.net Website: www.siddalls.net Authorised and Regulated by the Financial Services Authority. Siddalls is a trading name of John Siddall Financial Services Ltd. Independent Financial Advisers, John Siddall Financial Services is a wholly-owned subsidiary of the IFG Group Plc. See also: Saving tax if you run a UK business from France You can pay less tax in France  Tax liability on French holiday home rental income Tax resident in the UK or France? Tax Zone Home Page Looking for a property in France? Use FrenchEntrée's Property Finders to help you find your property and to help you through the buying process 
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