There are many things that are happening at the moment globally that we have little or no control over and we have to deal with the consequences of other people’s and politicians’ decisions. Whatever your opinion on Brexit and whatever the outcome, there are some things that won’t change and these are the things we can take control of and act on now. We spoke to Rosemary Sheppard about how to prepare your finances for Brexit.
The UK and France currently have a Double Taxation (DT) agreement in place, which was put in place between the two countries and is not affected by the UK leaving the EU. This means that you should be preparing now and not waiting for the outcome of Brexit to ensure that what you have is still the most tax efficient solution for you as a French Tax resident in respect of your savings, investments and pensions.
With the current exchange rate being so unnaturally low and potentially set to get worse it makes it all the more important to ensure that what we do have is not eaten up by the tax-man in either country.
Preparation is the key – Did you know that once you leave the UK your ISAs and investments are no longer tax efficient and worse than that you could be faced with a Capital Gains Tax (CGT) liability if you were to cash these in after leaving the UK? France will, of course, take into account any CGT that has been paid in the UK on realising any savings and investments, but as the UK give CGT allowances this may not leave you with much to offset against your French CGT bill and on top of that, if you do not hold an S1 form then this could also be subject to prélèvements sociaux at 17.2%. This is relevant to property as well as savings and investments.
An example of this;
In 2000 John put £2,000 into a stocks and shares ISA. This has been allowed to grow tax-free and is now worth £20,000. John moves to France and then decides to cash in his ISA. As far as the UK is concerned there is no CGT to pay, as this has been held in a tax-efficient ISA, but here in France there is no such recognition and the £18,000 gain is potentially subject to taxation at the fixed rate 30%, which includes prélèvement sociaux at 17.2%, meaning John could potentially lose £5,400.
In respect of property there has always been a ‘period of grace’ on selling your main residence in the UK after moving to France, but officially the French view is that the day you move is the day your principle residence changes, in theory making your UK property a second property that could be subject to CGT. If you think that your UK property may take a while to sell the best advise may be to ‘stay-put’ until you have that ‘sale agreed’.
The combined advice of your financial planner, notaire and local tax expert, and thinking ahead BEFORE your move to France could help save you thousands. If you are already here, all is not lost.
If you are unsure if your current investments could be costing you more than they need to, getting advice from a financial advice company that has weathered more than one or two financial storms is essential for your financial wellbeing and peace of mind. Blacktower Financial Management has been established for over 32 years and has worked with its clients through the good and the bad times, offering sound financial advice.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.
Blacktower Financial Management Ltd is authorised and regulated in the UK by the Financial Conduct Authority. Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) through whom we have a registered branch and passport for financial services in France. License number 00805B.