When it comes to thinking about your move to France, you may have decided the area that you want to live in, checked schools and transport links. But will organising your finances be further down the to do list when it should be near the top?
Before moving to France, there’s no doubt you will have hundreds of things to organise, think about and do – not just the packing. Jennie Poate, financial advisor at Beacon Global Wealth explains why you should consider your budget and finances so that you have no nasty surprises once you’ve bought your dream home and/or made the move to the good life in France.
Before you move to France:
Consider your income requirements
Be realistic about what you need income wise to live in France. There are already huge amounts of B+B’s and gites. Spending €150,000 on a holiday rental property to earn €3,000 p.a. may not be feasible in the long term.
Consider your income requirements before you move. You may be required to pay tax on your income in France. A good advisor will be able to provide you with an estimate of tax payable and look at ways of minimising or reducing tax. If your income is not in euros, exchange rate fluctuations may seriously affect your regular income requirements.
Plan your Finances
Start planning a strategy for your savings and income before you move. Some UK savings products are really square pegs in round holes when it comes to French taxation. It might be better to consider closing or changing them before you become French tax resident. BUT, take advice from an adviser who understands the French tax system and products that are available. A UK qualified adviser may unknowingly make your tax situation worse if they are not qualified to advise you about French financial products.
Consider how your pension might work better for you
What about your pension? Do you have more than one pension and if so where are they held? And, can you access them yet? Review your pension with your qualified adviser to make sure your finances are best positioned for your move to France.
You are likely to find it is much better for you to use a qualified and authorised independent financial adviser who understands both the UK and French tax systems. This way you can make an informed choice about your pension options. Careful planning here can potentially save you tax in the long run. If you haven’t done so already, get a state pension forecast which will tell you how much you will receive and when. https://www.gov.uk/government/publications/application-for-a-state-pension-statement
Think about healthcare needs
Consider your healthcare needs. Whether you’re retired, working or enjoying life with no active employment you may need to pay for healthcare in the form of top up insurance.
Get in touch with your tax office
Inform the UK inspector of taxes at your local HMRC tax office that you are planning to move abroad by filling in form P85. This will enable the UK tax office to advise of and resolve any outstanding issues before you move.
You can download the form online at: www.gov.uk/tax-right-retire-abroad-return-to-uk
Understand how to deal with tax inheritance rules
Consider your status with regard to the distribution of your estate. Inheritance planning in advance of your move can save considerable heartache later.
For French inheritance tax purposes, you must include all of your assets (property and cash) wherever they based.
The notaire handling your house purchase may only look at how the property ownership should be structured, which may be only part of what you have.
When you move to France
Use a competent tax adviser to prepare your first French tax return. Getting it right first time means you’ll avoid unpleasant surprises later on and allows you time to figure out how the system works. Your tax adviser can also liaise with your financial advisor concerning the timings for moving/closing certain investments. This can help you reduce tax and make the best savings.