You are nearly there. You have made the decision to move to France and are gradually ticking off your move to France checklist of things to do.
But if they are not on your list already, you need to consider your finances – especially your tax planning – and what you need to do before you leave the UK and when you arrive in France. This will make it less likely that you fall foul of tax legislation and/or end up paying more tax than you have to.
Before leaving the UK
• Tax – First of all, you should tell the relevant UK tax authorities that you are leaving and let the French tax authorities know you intend to live permanently in France. It is not mandatory to advise HM Revenue & Customs (HMRC) of your departure date. You will need to fill out a Form P85, either from your local tax office or downloaded from www.hmrc.gov.uk.If you submit UK tax returns you should fill in the non-residence pages on your UK tax return to inform HMRC of your change in residence.
Seek advice on what makes you resident in France or the UK for tax purposes. This will determine exactly where you pay tax and on what.
• Banking – If you plan on keeping any UK bank accounts, the bank interest will be taxed (up to 45%) in France. You can usually receive the interest gross if you submit a Form R105 to your bank or building society. You can get Form R105 from HMRC or download it from the website at www.hmrc.gov.uk/forms/r105.pdf.
You can also usually arrange for any UK rental income you receive to be paid gross once you are resident in France. You will need to use Form NRL1i, which can be submitted online to HMRC at www.hmrc.gov.uk/cnr/nrl1.pdf.
• Pensions – UK government service pensions are taxable in the UK not France (though French tax authorities take the income into account to calculate your total French tax bill). The UK state retirement pension is always paid gross, so you need to declare it and pay tax on it in France. With personal pensions and any non-government source occupational pensions, UK pension providers will continue to deduct UK tax at source until HMRC is satisfied that you are French tax resident. HMRC will then advise the provider to pay the income to you gross and repay any UK tax deducted at source.
For all this to happen, you need Form France/Individual from HMRC, which can be downloaded from www.hmrc.gov.uk/cnr/france-individual.pdf. Your local French tax office will stamp it to confirm you are French tax resident and the income is taxable in France. They then send the English part to HMRC.
Give your pension providers, including the Department for Work and Pensions (DWP), your new address and make arrangements for any change in where the pension is to be paid, i.e. bank account. The UK state pension can also be paid directly into your French bank account.
If you are below the UK state retirement age, you should apply for a pension forecast from the DWP. This will look at whether you have made enough contributions to receive a full state pension once you reach retirement age. You can apply for the forecast online using form BR19 at https://www.gov.uk/government/publications/application-for-a-state-pension-statement-form-br19-interactive-pdf.
If you have not made sufficient contributions for a full UK state retirement pension, it is possible to make top-up contributions to increase your pension entitlement by paying voluntary Class 2 or Class 3 National Insurance contributions in the UK after you have moved to France.
• Healthcare – If you receive a UK state retirement pension (or certain long-term benefits), you can get Form S1 from the DWP. This allows you to register with the French state healthcare system and provides healthcare cover on a household basis. Without Form S1, or if you plan on working in France and paying social security contributions, you will need to join the French health care, the protection maladie universelle (PUMA).
When you arrive in France
• Tax – You become a tax resident the day after your arrival, if you plan to reside there indefinitely. You must make yourself known to the French tax authorities and fully declare your worldwide income, capital gains and wealth (if your estate exceed €1.3m). You need to find your local tax office (centre des finances publiques) in order to file your tax return – the French tax year runs from 1st January to 31st December and tax returns should be made by the end of May of the following year.
• Healthcare – You need to take Form S1 to your local CPAM (Caisse Primaire d’Assurance Maladie) office to access French state healthcare. The French system, does not cover the full cost of French healthcare and you should take out top-up insurance. You cannot buy insurance until you are registered with the PUMA. If you do not have access to the PUMA, you need to organise private medical insurance.
• Savings – As well as opening French bank accounts, if you have investment capital you should seek professional advice to establish the most tax-efficient investment structures for French residents.
French tax can be complicated and French tax rules constantly change, so you should take specialist advice to make sure you get your tax planning right and that you do not miss out any opportunities to mitigate French taxes. Ideally speak to a wealth manager who can provide personalised, holistic advice covering taxation, estate planning, savings and investments and pensions.
Blevins Franks is the leading international tax and wealth management advisers to British nationals living in Europe. Contact: Freephone UK: 0800 668 1381, Freephone France: 0805 112 163, or visit www.blevinsfranks.com.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.
This article is for general information purposes only and does not constitute legal, or other professional advice. We would advise you to seek professional advice before acting on this information.