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Having to return to the UK is probably not something you had envisaged and can be very disappointing for those who had dreamed of living out their retirement years in France.
Some of you who relocated to France may recall the experience of making the change from sterling to euros and adjusting to a whole new fiscal system – with totally different taxation regulations and inheritance laws. For some, this may have been a much more involved process than first anticipated and perhaps ended up turning into a very stressful situation.
So if you are now planning to make the move back… where do you start?
If you did your financial planning in the UK before you relocated to France, you will already understand the benefits of planning in advance. However, when making the move back to the UK people often overlook the crucial need for this, possibly because it is a system they are more familiar with and it doesn’t present the same language barriers.
Yet, if you’re moving back to the UK, it is even more important to seek advice while you are still resident in France. There is a lot that can be done to mitigate potential tax charges but action must be carried out before returning to the UK. Effective tax planning when you are back in the UK will in most instances prove to be very difficult – if not impossible.
When they return, UK expatriates will become resident and ordinarily resident from the day of their arrival in the UK. From this date, they become liable to both UK income tax and capital gains tax (CGT).
The following list is not exhaustive but below are just a few examples that can catch out those who have not taken advice or carried out basic financial planning before coming back.
1. If while in France you had money on deposit in the UK, it is likely that this will attract UK income tax liability on your return. If you do nothing about the account, then the full amount of interest earned in the tax year will be assessed as it is what is known as ‘income arising’. There is no apportionment related to the part year when you were a non-UK resident.
2. You will also be liable to UK CGT and if you intend to realise any investment gains, it will be important to consider whether you should do so as a French or UK taxpayer.
3. Many UK expatriates returning to the UK have the mistaken belief there will be no UK tax liability on any income arising or any CGT liability so long as the money or asset is left outside of the UK. This is not the case.
In the same way that people took advice when moving to France and took advantage of windows of opportunity, anyone planning to come back to the UK should find out the tax implications beforehand.
It is important to seek advice from advisors that are familiar with both systems. Not to do so may prove expensive for the unwary.