How To Plan For Retirement In France
France has long been a favourite destination for British expats, and for good reason. With its world-renowned food and wine, picturesque countryside, and rich cultural history, it’s an idyllic setting to enjoy your retirement. The added benefit of being just a short journey from the UK means you can stay closely connected to family and friends whilst embracing a new way of life.
However, moving to France for retirement isn’t without its challenges. French laws and regulations can be complex, particularly when it comes to finances. Planning ahead is essential to protect your wealth and ensure a smooth transition to your new home. In this guide, we’ll explore the key financial considerations for UK retirees making the move to France.
Retirement Planning In France
Living in France as a retiree can be an enriching experience, but it requires careful financial management to ensure your wealth is handled efficiently. From taxes to pensions, understanding the differences between UK and French systems is crucial.
The Importance Of The S1 Form
For UK expats, applying for the S1 healthcare form is a must. Not only does it provide access to essential healthcare services, it also offers significant tax benefits.
Pension income in France is subject to income tax and social charges, typically 9.1%. However, retirees with an S1 form are exempt from any social charges on pensions. Additionally, social charges on investment income, which is usually 17.2%, is reduced to just 7.5% for those with an S1.
Registering for the S1 form before retiring in France is essential. This small step can result in substantial savings over the course of your retirement while ensuring you have access to quality healthcare.
Managing UK Assets In France
Before relocating to France, it’s important to evaluate the tax efficiency of your UK-based assets. For instance, ISAs and premium bonds lose their tax-free status once you become a French resident. In France, these investments are fully taxable, and withdrawals from ISAs will be subject to French income tax.
To avoid unnecessary charges, consider restructuring yockur assets into investments that are locally compliant and tax-efficient in France. Seeking expert advice before your move can help you make informed decisions and optimise your financial portfolio.
The French Assurance Vie
The Assurance Vie is a valuable tool for UK expats retiring in France. This versatile investment account combines life insurance with investment features, making it an excellent option for long-term savings.
The Assurance Vie allows you to grow your wealth through investments in stocks, bonds, or real estate, all within a tax-efficient framework. You won’t pay taxes on any growth or income until you withdraw funds, and additional tax advantages apply after holding the investment for eight years, making this best suited to long-term residents.
What Happens To Your UK Pension When You Move To France?
Pensions are a critical part of retirement planning, and the rules in France differ significantly from those in the UK. For example, while the UK allows a 25% tax-free lump sum withdrawal from pensions, this is not the case in France. Any lump sum taken after becoming a French resident will incur both tax and social charges (without an S1 form).
Leaving your pension in the UK can also expose you to currency risk, as fluctuations in the exchange rate between Sterling and Euros could eat into your retirement funds over time.
The International SIPP
To mitigate these risks, the International SIPP (Self-Invested Personal Pension) stands out as a fantastic option for UK retirees in France.
This is a pension product which has been specifically designed for UK expats, and as the scheme remains in the UK, you retain the protection of UK pension regulators.
The International SIPP provides protection against currency risk, with the option to hold multiple currencies, and has a strong investment component to the scheme, providing access to a wide variety of investment options and the opportunity to grow your wealth over time.
Navigating French Succession Law
French inheritance laws differ greatly from the UK’s system and can be complex to navigate. These laws dictate how your estate is distributed, which may not align with your personal wishes.
To ensure your will complies with French regulations and protects the legacy you leave for your loved ones, it’s essential to seek professional advice. Proper planning will safeguard your family from unnecessary costs and ensure your assets are distributed according to your will.
Financial Advice In France
Whilst retiring in France can be wonderful, it requires careful financial planning. Understanding French tax laws, restructuring your investments, and preparing for potential challenges are all critical to ensuring your wealth is protected.
The Wealth Genesis is here to help - with advisers based in France and extensive knowledge of the local tax system, we can guide you through the complexities of retirement planning. From optimising your finances to securing your legacy, we’ll work with you to make your relocation successful.
