How UK’s Spring Budget may affect Britons living in France

Changes include issues such as capital gains tax and pension top-ups

The UK budget will affect people in France with UK links
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Article written March 6, 2024, updated March 21, 2024

Several changes in the UK Spring Budget will affect people living in France who maintain links with the UK, relating to issues such as capital gains tax and pension top-ups.

Today’s announcements (March 6) are likely to be the last major financial changes in the UK before the next general election, expected later this year.

Class 2 National Insurance Contributions (NICs)

The government reiterated its intention, mentioned in the Autumn Statement last year, to eventually abolish entirely Class 2 National Insurance Contributions (NICs), thus raising questions as to the rate at which working people living overseas will pay voluntary state pension ‘top-up’ contributions.

Class 2 voluntary NICs, which have also been paid by some self-employed people in the UK up until now, are five times less than Class 3 NICs which are paid by early-retirees living abroad.

The government is abolishing Class 2 as of April 6, 2024 for the self-employed in the UK and intends to launch a consultation on complete abolition later this year.

Read more: How to top up your UK pension while living in France

Property capital gains tax

The higher rate of property CGT will be cut from 28% to 24% benefitting people who sell a UK property that is not their main home.

UK inheritance tax to become ‘residence based’

The government says it intends to move to a ‘residence-based regime’ for inheritance tax and will consult in due course about the best way to do this. It would not happen before April 6, 2025.

The implications for residents in France, who generally do not pay French inheritance tax on inheritances from UK-based family members, are unclear, especially where the other beneficiaries are UK residents. Unlike French inheritance tax, UK tax is normally taken off the estate before the share-out, rather than being applied to individual portions.

New rule on tax for people who move to the UK

The UK is set to abolish the controversial ‘non-dom’ status, which allows some wealthy individuals to claim a special tax status despite living in the UK habitually.

At the same time it is to introduce a four-year period for new arrivals, during which they will not have to declare overseas income to the UK. It will apply to anyone who has lived outside the UK for at least 10 years before moving.

There will be three years of a specific relief against income from employed work carried out abroad by people who have moved to live in the UK.

Change to UK tax on furnished holiday lets

From April 6, 2025 there will no longer be a special UK tax regime for furnished holiday lettings, which will be treated the same as long-term rentals for tax purposes.

It comes as France, also, has been making changes to rules around furished holiday rental, including gîtes.

Read more: Respite for gîte owners in France as harsh tax change is put off

Passport processing

Also in the full budget documents, the government drew attention to improvements in processing time for passports. It said people used to be advised to allow ten weeks for this, but are now told they can expect it to be completed in three.

Use of AI by doctors

French company Doctolib, which recently told of plans to work with GPs in the UK with its high-tech tools including AI, looks likely to face competition from the NHS – the budget says the government will be piloting new AI technology to automate ‘back-office functions’.

This will include the writing of clinical notes and GP letters, allowing doctors to spend more time talking to patients.

Read more: Doctolib to launch medical assistant to free up doctors

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