Take a secure regular income through buying an annuity.
Be aware that taking all of the cash could leave you short of funds later on when needed.
I still want to contribute to my pension
There are conditions and restrictions on non-UK residents contributing to UK pension schemes. If you are planning to work in France, it may be worth exploring the French personal pension options instead (this will be covered in the next issue of TGLF Magazine).
The UK Government is planning to restrict tax relief on pension contributions for those earning over £150,000 p.a. The lifetime allowance will be cut from £1.25 million to £1 million from April 2016. Large penalties arise on the excess.
What about the 55% ‘death tax’?
The 55% tax charge has been abolished. If you die after age 75, and your beneficiaries take a regular income, it will be taxed at their marginal rate (depending upon where they are tax resident) or at 45% on lump sums, though this may change from 2016. This applies to annuities also but not final salary schemes.
I have a defined benefit pension- how do the new rules affect me?
If you have a defined benefit or final salary scheme and want to use the new rules, you have to transfer to a defined contribution scheme. Transfers over £30,000 require you to take advice from a pension transfer specialist regulated by the UK Financial Conduct Authority. This is not to be taken lightly and may be very difficult to achieve.
What about QROPS?
Many Qualifying Recognised Overseas Pension Schemes (QROPS) cannot yet provide full flexibility on withdrawals and only certain providers accept non-UK residents, so choices are limited. Additionally, a rule that 70% of the transfer value made to a QROPS must provide an income for life currently remains in place for non-EU QROPS.
What about tax?
UK taxpayers receive 25% tax free, with other income/withdrawals taxed at their marginal rate of income tax. For us in France there is an income tax levied on the lump sum at 7.5% (there is another method too but this would need to be discussed). If you were to take the whole amount as cash, then the remainder would be taxed at 20/40% in the UK and is potentially reclaimable from HMRC but it would take a number of months to see the light at the end of the tunnel.
Don’t forget that by using an adviser who is competent and authorised to provide advice in both France and the UK means that you are eliminating the risk of getting the wrong advice which may be costly to unravel.
Written by Jennie Poate, Beacon Global Wealth Management.
Contact: [email protected]
The information on this page is intended only as an introduction only and is not designed to offer solutions or advice. The Good Life France and Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.