After years of dreaming of a slower pace of
life near the French coastline, Mr and Mrs Thompson, both in their late
50s, have decided to relocate from Gloucester, UK, to the Vendée
region of France. They are selling their UK home for £725,000 and
purchasing a French property for €500,000.
To understand the financial considerations
around currency exchange, tax planning, residency, and long-term wealth
management, we sat down with Darren Fletcher, Head of Global Sales at Chase
Buchanan Private Wealth, to walk through the financial steps and common
pitfalls of such a move.
Darren, what is the first financial step
the Thompsons should take once they decide to move to France?
The very first step is pre-planning.
People focus on the property but overlook tax residency, financial structures,
and timing.
For the Thompsons, confirming when they will become French tax residents
is crucial. Once they pass the residency threshold—typically 183 days in a
calendar year—their worldwide income may become taxable in France.
So before selling investments, pensions, or
even the UK home, they should map out a timeline with a cross-border advisor.
Good planning can avoid unnecessary capital gains or income tax.
They are selling their UK property for
£725,000 and buying in France for €500,000. What is your advice on managing the
currency aspect?
Currency can make or break a relocation
budget. The Thomsons' sale price in pounds and purchase price in euros means
they are exposed to exchange-rate fluctuations.
They should consider:
- Forward contracts – to lock in the euro rate for their purchase, protecting their budget.
- Market orders – allowing them to target a preferred FX rate rather than converting everything at once.
- Staging transfers – sending funds in tranches if the timescale allows.
Working with an FCA-regulated currency
partner can typically save 2–4% compared to high-street banks, which for
a £725K sale could mean a difference of £15,000–£25,000.
What about taxation—what should they be
aware of when moving from the UK to France?
There are several key areas:
1. UK Capital Gains Tax (CGT)
As this is their primary residence,
the sale of their UK home should be exempt. However, if the property was ever
rented out or used for business, partial CGT may apply.
2. French Wealth Tax (IFI)
France has a real-estate wealth tax on
global real estate assets above €1.3m. Even though their new property is
€500K, they should factor in any real estate they retain in the UK.
Individuals who become tax resident in
France may benefit from a special exemption that applies for their first five
years of French tax residence.
During this five-year period, non-French
(foreign) assets are generally excluded from French wealth tax (Impôt sur
la Fortune Immobilière – IFI). Only French-situated real estate assets are
taken into account when assessing any wealth tax liability.
Key points to note:
- The exemption applies only to foreign assets.
- It covers overseas real estate whether held directly, or indirectly via shares.
After the five-year period has elapsed, the
individual becomes fully subject to French wealth tax rules on a worldwide
basis, meaning both French and non-French qualifying assets may then fall
within the scope of IFI. This regime is designed to encourage internationally
mobile individuals to relocate to France.
3. Double Taxation Treaty
The UK-France tax treaty prevents income
being taxed twice, but it doesn’t eliminate tax—it just allocates where it's
paid. For example, UK rental income remains taxable in the UK but must still be
declared in France.
4. Savings & Investments
ISAs lose their tax-free status once the couple become French tax residents. This is often a shock.
Pre-migration restructuring—such as moving towards more tax-efficient
Franco-compatible structures—is usually advisable.
How should they approach pensions before
the move?
Pensions are a major component of
cross-border planning.
For most British expatriates in France, the
key considerations are:
- State Pension – Still payable in France and uprated annually.
- Government Pensions - Pensions paid to former UK public sector workers: taxable only in the UK under the double tax treaty.
- Defined Benefit (Final Salary) Schemes – Usually best left in the UK, but the tax on French residents depends on how benefits are drawn.
A regular
income paid from a UK DB scheme to a French resident is declared as pension
income on the French tax return. It is subject to French income tax and
social charges, though it may qualify for reduced social charge rates depending on total
household income. Also, exemption from the French social charges is given for holders of UK S1 health forms (UK state pensioners are typically eligible for these).
The recipient of the pension should ensure that an HMRC NT
(No Tax) code is in place so that the pension is paid without the deduction of
UK tax.
A lump sum
payable from a DB scheme is ordinarily free of tax in the UK; however, in
France, this payment is usually taxable as pension income. It is possible to
qualify for a 7.5% flat rate assuming certain conditions are met; otherwise, it
is taxed at marginal income tax rates.
- Defined Contribution Pensions – They may consider consolidating or restructuring for tax efficiency before becoming French residents.
France taxes pension income differently
from the UK, often using an abattement (allowance), and the timing of
commencement can significantly impact their bill.
Getting advice before they become French
residents is crucial, as opportunities reduce after relocation. At Chase
Buchanan, we often speak with clients who wish they had started their
cross-border planning earlier, before those options narrowed.
Beyond tax and currency, what practical
financial steps should the Thompsons take?
A few essentials:
1. French Banking
Open a French bank account early—some
notaires will require it for property purchase settlements.
2. Healthcare Coverage
Once they become residents, they can apply
to PUMA (France’s universal healthcare system). They may need private cover
during the transition. UK state pensioners should apply as soon as possible for an S1 form.
3. Estate Planning
French succession rules differ
significantly from UK rules and impose forced heirship.
A French will, and possibly a UK one, should be part of the relocation plan.
4. Cash-flow Planning
Exchange rates, tax differences, and
lifestyle costs mean it’s important to review long-term affordability. Many new
expatriates underestimate ongoing French social charges (prélèvements sociaux).
What would a typical “financial roadmap”
look like for a couple like the Thompsons?
Before the move:
- Review investments, ISAs, pensions.
- Optimise UK tax position and close tax-inefficient holdings.
- Set up FX strategy for property purchase.
- Prepare French banking and documentation.
During the move:
- Complete the FX conversion for the house purchase.
- Transfer sale proceeds while managing rate risk.
- Begin residency paperwork (healthcare, taxes, utilities).
After the move:
- Update tax residency status with UK and French authorities.
- Rebuild investment portfolio to suit French tax rules.
- Implement estate planning in both jurisdictions.
- Annual review to adjust to evolving tax laws.
Cross-border advice helps ensure everything
works together, rather than addressing issues reactively after unexpected tax
bills.
Conclusion
Moving to the Vendée offers the Thompsons a
wonderful lifestyle change, but navigating the financial, tax, and currency
landscape between the UK and France requires foresight.
As illustrated through this interview with Darren Fletcher from Chase Buchanan, structured advice and early planning can translate directly into tax efficiency, security, and peace of mind.
This article was written by Chase Buchanan Wealth Management - readers can contact a Chase Buchanan adviser via their website here.
