Exonerations for pension annuities
My accountant advised that I am due to pay social charges on the annuity part of my pension income
YOU wrote in October about social charges exonerations on pensions. I am 68 in March and have received a UK state pension since 2008.
I have UK pensions from my last employer and an annuity. I am French tax resident since April 2006 and I have an E121.
My accountant advised that I am due to pay social charges on the annuity part of my pension income and even if I did not, I would pay more income tax and be worse off. Is this credible? L.C.
The problem is that the French have one type of annuity, and Britain has two types, a purchased life annuity (PLA) and a pension annuity.
In France, the ordinary annuity (equivalent to the PLA) is taxed with a rebate according to the age of the annuitant and as the income is treated as investment income it is liable to the social charges.
The UK pension annuity, that is to say the annuity that is purchased with funds that come from a former pension plan, is treated in France as a pension and not an annuity. As such, therefore, this income is taxablein its entire value received, but it does qualify for exemption from the social charges.
Accordingly, it seems from your comments that your pension has been treated by your accountant as a (French) annuity, and this should be rectified, further to which you will then be able to claim exemption from the social charges.
