UK Pension Changes and What They Mean If You’re Moving to France
- SJB Global
- 16 hours ago
- 3 min read
If you’re planning a new life in France, understanding how your UK pension will be treated is essential — particularly when it comes to inheritance tax and cross-border planning.
Recent changes announced in the UK Autumn Budget 2024 have significantly altered how pensions are treated for inheritance tax purposes. If you’re relocating to France, or already living there, these changes could directly affect your long-term financial planning.
Here’s what you need to know.
UK Pensions Now Fall Within Your Estate for Inheritance Tax
One of the biggest changes is that UK pensions will now form part of your estate for UK inheritance tax (IHT).
How Inheritance Tax Works in the UK
Each individual has a nil-rate band of £325,000.
Anything above this threshold is taxed at 40%.
For example:
If you have a £1 million pension pot and it is fully liable for inheritance tax, anything above £325,000 could be taxed at 40%. That could result in a tax bill of up to £400,000 for your beneficiaries.
This is a significant shift, particularly as pensions were previously often viewed as an efficient estate planning vehicle.
Domicile Status: Why It Matters When Living Abroad
Another important change relates to UK domicile status, which determines whether you are liable for UK inheritance tax.
Previously, it was difficult to lose your UK domicile status. The rules are now much clearer.
If you have been outside the UK for more than 10 consecutive tax years, you are considered non-UK domiciled for inheritance tax purposes.
This means you would only pay UK inheritance tax on your UK-based assets, such as:
UK property
UK bank accounts
UK-based investment accounts
UK pensions
This opens up potential planning opportunities.
If you are moving to France and are concerned about inheritance tax, it may be beneficial to review what assets you still hold in the UK and whether they could be repositioned outside the UK.
What About International SIPPs?
Before the 2024 Budget changes, many expats considered transferring their pensions into an international SIPP (Self-Invested Personal Pension).
An international SIPP is still a HMRC-registered UK pension scheme, but:
The investment platform may sit offshore
It can allow multi-currency investments
It may offer broader investment flexibility
It can provide more flexibility around withdrawals and death benefits
Payments are not restricted to a UK bank account
For example, you may be able to receive payments into a euro bank account if the SIPP is structured accordingly.
However, international SIPPs must be arranged through a regulated financial adviser — they cannot be set up independently.
What About QROPS?
In the past, some individuals transferred their pensions into a QROPS (Qualifying Recognised Overseas Pension Scheme).
Over time, QROPS became less attractive due to regulatory changes. And under current rules:
If the QROPS is not based in the country where you are resident,
A 25% overseas transfer charge may apply.
For example, transferring a £1 million pension into a non-qualifying QROPS could immediately trigger a £250,000 tax charge.
If your goal is to reduce exposure to a potential 40% inheritance tax bill, this may not be an effective strategy — especially as French inheritance tax rules may still apply.
Inheritance Tax in France: A Different System
France operates under civil law, which includes forced heirship rules.
This means:
Certain heirs (such as children) are legally entitled to a fixed portion of your estate.
You cannot always distribute assets entirely as you wish.
The structure and type of financial product used can affect who inherits what.
Both the UK and France offer a spouse exemption, meaning assets can generally pass between spouses free of inheritance tax.
However, planning beyond that requires careful consideration, particularly for blended families or more complex family structures.
Taking Pension Income While Living in France
There may also be tax planning opportunities when drawing income from a UK pension while resident in France.
For example:
The first withdrawal may qualify for a reduced tax rate in France.
Tax treatment can differ depending on whether you are retired.
Timing and structure of withdrawals can significantly affect your tax position.
Because cross-border taxation is complex, tailored advice is essential before making withdrawals or transfers.
What Should You Do If You’re Moving to France?
The recent UK pension changes are not necessarily negative — but they do require strategic planning.
Every situation is different. Your:
Residency status
Domicile position
Family structure
Asset mix
Long-term intentions
will all influence the right approach.
If you are considering a move to France — or are already living there — speaking to a financial adviser who understands both UK and French systems is crucial before making pension transfers or inheritance planning decisions.
Final Thoughts
Moving to France is an exciting life decision. But cross-border financial planning requires clarity, especially with evolving UK pension rules.
Understanding how inheritance tax, domicile status, pension transfers and French succession law interact will help ensure your move is not only lifestyle-enhancing — but financially secure for the future.