Your personal tax allowance is still valid in the EEA

We have a house in Brittany and plan to retire there when my husband is 65 in January 2020. He has a UK army pension which will be taxed in the UK under the dual tax agreement with France but will he still have his tax-free allowance (we may rent out our house in England and I read in a recent Connexion that rental income is taxable in the UK after personal tax allowance)? S.H.

For the UK, government income and rental income are always taxed in the UK (government income being a pension from the diplomatic service, the government, the military, the emergency services and similar) – but not the state pension.

As you live in the EEA (European Economic Area), you qualify for UK personal allowances, so income tax in the UK will only be levied on however much of the total army pension and rental income is in excess of the allowance.

France does not tax this income, but it does take it into account when assessing the tax rate applicable on French-taxable income – such as UK state pensions, UK interest and dividends – so you may be put into a higher tax band rate.

Currently, UK rental income is not liable to social charges in France.

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