Has tax on UK pension changed?
My UK state pension is paid into our UK account and if the exchange rates favour us, we transfer some to our French bank account. When we arrived in France in 2001 we were told by our local tax inspector it was not liable to French tax as we had already paid our tax in the UK. Now our tax office says there has been a change in law (they mentioned a UK/France convention) and from the 2016 tax year I would have to start paying tax on it. Have you heard of this? T.H.
There has been no change in law, and this situation highlights the fact that people in tax offices do not necessarily know international tax law. It is unfortunate you were misinformed.
The double tax treaties set out the rules as to which country has what right to tax whom and what and in which circumstances. These treaties apply the same principle: you retain fiscal residency of the country you are in until and if you fall under the rules of the country you move to. These treaties override national laws. The latest French/British one was signed in 2008.
Once one is a French fiscal resident, all of one’s income, worldwide, is declarable in France, and apart from UK government service pensions and UK rental income, it is taxable in France.
In the absence of UK ‘government’ and rental income, one ceases submitting UK tax returns. For HMRC to be able to apply this, form SI 2009 Number 226 (two copies, one English and one French) is submitted to the French tax office with the first French income tax declaration and they generally send the English version to HMRC, or return it to you to send to them. Therefore your UK pension is taxable in France and not the UK.
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