UK Pensions in France: A Guide for Expats
What should I do with my UK pension when moving to France? Robert Kent explains.
One of the most common financial questions asked by British residents in France is what to do with their UK pension. Should you leave it where it is, consolidate it, or cash it in?
Many people assume that pensions remain a ‘UK matter’. However, once you become a tax resident in France, your worldwide income is generally subject to French tax. That includes pension withdrawals, even if the pension remains held in the UK.
This is why pension planning is one of the most important areas of cross-border financial advice. It is rarely complicated, but it is very easy to get wrong.
The UK tax-free lump sum
Under UK pension rules, most defined contribution pension holders can normally withdraw up to 25% of their pension pot as a lump sum, tax-free. This is often referred to as ‘tax-free cash’.
It is worth highlighting that ‘tax-free’ is a UK concept. It does not automatically mean tax-free in France. If you are a resident of France at the time of withdrawal, France will assess the lump sum under its own tax rules.
However, focusing too heavily on the UK 25% rule can distract from a more important question: what is the French tax treatment of pension withdrawals, and are there any special rules that can reduce the tax cost? Is there a money-saving opportunity?
Tax residency and timing
The key issue and most important factor is your tax residency, at the moment the pension payment is made. If you withdraw pension benefits while you are still a UK tax resident, UK tax rules still apply. If you withdraw after becoming a French tax resident, the French tax system becomes relevant.
This can create unexpected outcomes. For example, a pension withdrawal taken a few months too late can shift from being taxed under UK rules to being taxed under French rules. That difference can be substantial.
Temptations to consolidate pensions
When people move to France, they often want to simplify their financial affairs. A common approach is to consolidate several UK pensions into one pot. This can be sensible for administrative reasons, but it can also remove flexibility. Keeping pensions in separate pots can allow withdrawals to be spread across multiple tax years.
Consolidation can encourage large withdrawals in a single year, which is where French taxation can become painful.
In many cases, the desire to simplify can lead to an unnecessary tax cost.
A french tax opportunity – that many people miss
One of the most important points for UK pension holders living in France is that certain pension lump sums may benefit from specific French tax treatment. Some qualifying pension lump sums may be taxed at a fixed rate of 7.5% with a 10% allowance, giving an effective rate of just 6.75%, rather than paying marginal tax rates, which may be significantly higher. Use of this rule, therefore, can be very advantageous, particularly for those with significant income, whose pensions would otherwise be heavily taxed.
However, this favourable treatment is not automatic. It depends on the type of pension payment, its structure and the taxpayer’s circumstances. It also requires careful planning, timing and correct reporting.
One of the main rules of the legislation is that the pension must not be split. If withdrawals have been made or cash taken, this usually ceases to be an option.
This is exactly why pension planning should be done before a large withdrawal. Many people ‘cash in’ a pension without realising that the 6.75% regime exists, or without structuring or timing the withdrawal correctly to qualify. Once the withdrawal has been made, the opportunity may be lost.
This is one of the clearest examples of how cross-border planning can legally and legitimately reduce tax, provided it is done correctly.
Withdrawing too much in one year
Even where a favourable regime applies, it is still possible to create unnecessary tax costs by withdrawing too much in a single year.
France applies progressive income tax rates. The more income you receive in a year, the higher your marginal tax rate becomes. Large pension withdrawals can quickly push taxpayers into higher tax brackets. In addition, France applies surtaxes on unusually high-income years.
Charges for high incomes
France applies an additional tax known as the contribution exceptionnelle sur les hauts revenus (CEHR). This applies when your revenu fiscal de référence (reference taxable income) exceeds:
- €250,000 for single taxpayers (single, widowed, separated or divorced)
- €500,000 for couples taxed jointly (married or PACS) No increase is provided for dependants.
The surcharge applies at the levels in the table below. These percentages are applied in addition to the normal income tax bill. A large pension lump sum can therefore trigger not only higher income tax, but also this additional surcharge.
“The desire to simplify by consolidating several UK pensions can lead to an unnecessary French tax cost”
Furthermore, France has also introduced the contribution différentielle surles hauts revenus (CDHR). This mechanism is designed to ensure that high-income households pay a minimum effective tax rate of 20%.
The CDHR was initially introduced for income in 2025; however, it has now been extended into 2026. This reinforces the importance of caution when considering unusually large withdrawals in a single year.
Some advisers have suggested that CDHR does not apply to pension lump sums because they are ‘exceptional one-off payments’. France has mechanisms to address exceptional income, such as the quotient method, which can reduce the impact of certain one-off payments.
However, an income being described as exceptional does not automatically mean it is excluded from surtaxes. Whether CDHR applies will depend on how the pension withdrawal is treated under French tax law and the precise nature of the pension arrangement.
Threshold Single Couple
€250,000 or below 0% 0%
Between €250,001 and €500,000 3% 0%
Between €500,001 and €1m 4% 3%
More than €1m 4% 4
A common mistake
We recently dealt with a client who had several UK pensions and wanted to simplify matters. Their goal was to consolidate everything into one pension pot and take a large withdrawal in a single year. The creation of a single pension pot simplifies life, giving people less to manage; however, doing so without understanding the consequences can lead to punitive, unnecessary taxation. Keeping their pensions separate gave them extra flexibility, allowing them to draw only the amounts they needed and avoid extra taxes. This is a good example of why pension decisions should not be based purely on convenience. It is also important to consider that, in some cases, French social charges (prélèvements sociaux) may apply to pension withdrawals. Again, this depends on the pension, your age, timing and maybe other points.
Handle with care
There are significant financial planning opportunities with UK pensions, and it is vital that these are understood before taking any action, or you may inadvertently trigger unnecessary taxation.
UK pensions offer valuable options, but once you live in France, they need to be handled carefully. The main danger is not the pensions themselves, but the temptation to simplify too quickly and withdraw large sums without understanding the French tax consequences. For many UK retirees, the existence of special French rules means that good planning can yield a far better outcome than expected. However, the benefits are often lost if withdrawals are made without advice.
In pension planning, timing is not a detail. It is often the difference between keeping more of your money or being unnecessarily punished with excessive taxation.
Robert Kent is the founder and CEO of Kentingtons, specialising in French tax and investments – and official sponsor of the French Property Exhibition in Birmingham
Tel: 08451 238423
Checklist before taking UK pension cash
Before touching your pension, consider if:
✔ The withdrawal may qualify for tax below 7%
✔ There will be extra taxation on significant sums
✔ Staggering separate pensions will save you money
✔ Consolidating pensions reduces your flexibility
✔ Whether social charges are applicable and at what rate
✔ You can really manage this on your own with no professional advice
