Pensions Advice

How Is a Final Salary Pension Transfer Process Done at Cameron James?

How Is a Final Salary Pension Transfer Process Done
at Cameron James?

A Final Salary Pension is unlike a Defined Contribution pension transfer. It requires thorough research of your current financial situation and future goals and objectives.

These pension schemes are referred to as being ‘gold-plated’ for the safeguarded benefits and guaranteed income for life that you will receive from your scheme from your Normal Retirement Age (NRA).

As such, when it comes to a Defined Benefit Pension Transfer or Final Salary Pension Transfer, you and your independent financial adviser (IFA) must legally ensure that the transfer is indeed in your best interests.

Many of our existing clients who had Defined Benefit Pension pots asked the same questions around the DB Pension transfer process. In this article, we will present some typical clients’ concerns and our answers to them.

Can I Transfer My Final Salary Pension to a SIPP?

Final Salary Pension is a safeguarded pension scheme with multiple advantages such as annuity (scheme pension), death benefits, inflation-linked, etc. Due to these benefits, Final Salary Pensions are dubbed as being “gold-plated”.

As a result, the FCA wishes to protect investors from potentially making poor decisions and giving up these benefits without having taken professional financial advice. The FCA requires every individual who possesses a Final Salary Pension with a value above £30,000 to take advice from a regulated and authorised independent financial adviser such as Cameron James.

Furthermore, your IFA must also be a qualified Pension Transfer Specialist, commonly referred to as a PTS in the industry. As such, a Final Salary Pension transfer to SIPP is possible, but requires advice from FCA-regulated Independent Financial Advisor to ensure that the transfer is in your best interest.

Should I Transfer My Final Salary Pension?

This question is also one of the most asked questions by our clients. It will depend on your own individual situation, and as mentioned above, it can be a time-consuming process if not done correctly, and it requires a great deal of due diligence.

A Final Salary Pension transfer to SIPP requires a thorough analysis of your financial situation and your future objectives after transferring. It is important to know that the FCA requires all regulated independent financial advisers to start from the position that a transfer is not in your best interests. This is because a Final Salary Pension has safeguarded benefits, and it may be in your best interests and to retain your Final Salary Pension asset and not transfer out or convert.

Watch an explanation by our CEO and Independent Financial Advisor, Dominic James Murray about all considerations you should take before deciding your Final Salary Pension transfer.

How Is a Final Salary Pension Transfer Done at Cameron James?

Another typical question. Clients want to understand exactly what the process and steps will look like before they commit to working with us.

Moreover, we assume many clients generally ask this question to understand and determine the Financial Adviser’s credibility and experience in DB transfers. Since there are a lot of pension scams (in our opinion any advice that is too expensive or places an Adviser’s interests over or above the clients) so it is important to understand how the process works.

At Cameron James, there are a number of steps involved in transferring a final salary pension to a SIPP or International SIPP. The following process answers one of our US residents client questions on the process:

  • The initial DB Report needs to be done by an FCA Regulated Pension Transfer Specialist. We typically use a Company named Pension Advice Specialists (PAS);
  • Kindly note, we have numerous in-house Pension Transfer Specialist (PTS) within the team at Cameron James, and I in fact am also a qualified PTS. However, we believe that a conflict of interest can arise if the PTS advising on the case is also the IFA who will benefit from the ongoing Asset Under Management (AUM) as such we create a Chinese walls system and ensure all FCA DB reports are prepared independently;
  • The transfer itself has to be conducted by an SEC Regulated IAR (Investment Advisory Representative) working for an RIA (Registered Investment Adviser). They are the ones who take on the liability for the transfer etc;
  • The UK SIPP has to be an “International” SIPP, which is a UK SIPP open to non-UK Residents. The amount of International SIPPs which allow US Residents is limited due to FATCA and additional insurance costs etc. For our US Clients, we typically use Novia Global or iPensions;
  • SIPP Provider requires an adviser attached to the account for regulatory/insurance purposes;
  • Pension remains in the UK but is registered to yourself in the US and should be declared on your Tax Return etc;
  • Once you draw down on the pension, the marginal state and federal income taxes will apply.

The above process summarises how a client’s Final Salary Pension will be transferred into an International SIPP for them to manage on an ongoing basis from the US. Several steps and verifications are involved, with extended communication between several stakeholders (client, IFA, existing DB scheme, new SIPP scheme, underlying platform and funds houses).

Now that you have understood the overview of how a Final Salary Pension transfer to SIPP is completed, we will break down the physical advice process in greater detail in a step-by-step guide.

Kind note, UK DB pension regulation changes frequently, and we must follow UK pension rules, so the below process changes from time to time.

Client Physical Advice Process & Steps:
  • Initial Consultation to fill out Fact Find and Letter of Authority (LOA), held over Zoom;
  • Fact Find and LOA sent to the client on DocuSign;
  • Once returned, LOA was sent to the Pension Scheme. Ten-day turn around for them to accept the LOA on your account;
  • Once LOA is Processed, we shall request all the required actuarial calculations required to complete your DB Transfer Report, if not already received in your transfer out and valuation pack;
  • We will draft for you your DB RWL 1, which is effectively your LOA for the DB Report. We shall also draft for you a Pre-Advice Confirmation Report, highlighting your possible generic options, SIPP providers, Investment Platforms, costs, regulations etc, if a transfer were deemed suitable for you by the PTS. Kindly note, this step is generic and not authorised DB advice;
  • Once you sign the DB RWL 1 on DocuSign, we shall send you your Pre-completed Application Pack to start your DB Pension Transfer Report with PAS or another partner on DocuSign;
  • Once signed, the Report Takes C.18 days to complete;
  • Once completed and a transfer is advised, we will send over to you all the pre-completed Novia International SIPP or iPensions Platform SIPP forms and the Ceding Pension Scheme Transfer forms; and
  • Once signed, we shall submit these to the Ceding Scheme, and Novia or iPensions and the transfer process will begin.

Apart from those processes above, one of the most important things that you should do yourself before initiating your Final Salary Pension transfer is to research the financial adviser’s eligibility.

We always advise our clients to check on our SEC disclosures (click here to see an example of our IFA SEC disclosures) and our RIA. This is to ensure that we are a regulated and well-regarded firm in the industry, which means that your pension transfer is in the safe hands of UK pension transfer specialist.

Trust Cameron James to Handle Your Final Salary Pension Transfer to SIPP

We are transparent with all of our clients and answer their questions to reassure them and guide them through the process of Final Salary Pension Transfer.

In particular, we let clients understand that we are an FCA-regulated and well-regarded pension transfer specialist in the industry. We believe you have questions about defined benefit pension, especially if you are looking to transfer your Final Salary Pension overseas

Choose your convenience date below and start speaking with our regulated independent financial advisers to answer all of your questions regarding UK pension transfers. Initial consultation at Cameron James is always free of charge.

You can also head over to our YouTube Channel to learn more about Final Salary Pension Transfers and further educate yourself.

Final Salary/ Defined Benefit

How Much Does a UK Pension Transfer Cost?

How Much Does a UK Pension Transfer Cost?

Cost is an important aspect of any financial planning decision. When it comes to UK Pension Transfers, your Financial Adviser should always be transparent about the total net costs based on Pension transfer rules from the beginning of your conversations.

We would always strongly recommend asking to have your total initial and ongoing pension transfer costs confirmed in writing before proceeding with any pension transfer. Otherwise, you risk wasting a substantial amount of time and energy beginning a Pension Transfer advice process (Final Salary, Defined Benefit, or DC) only to discover hidden costs, commissions, or exit penalties further down the line. 

Many clients we speak with tell a familiar tale. They had been working with an IFA for up to 3-months completing all the necessary forms and paperwork, and it was only in the final round of forms that required their signature that the full costs were finally outlined.

The below is a recent example of answers from our CEO, Dominic James Murray, to a client’s questions regarding initial costs.

How do I Know If Your Initial Advice Fee is a Good Value?

“Professional service fees are a pain. As CEO, I get that more than anyone. I do not enjoy paying lawyers, accountants etc, but when I need a job done professionally it is the best option if the task is important.

I would suggest you complete a full market comparison to get a better feel for our costs, and whether they are reasonable or not. For reference, I sit on the pension transfer committee at the Financial Times and Cameron James is consistently cheaper than the majority of the market and is actually one of the cost leaders.

Kindly see our latest commentary for the Financial Times regarding the rising costs for clients: DB transfer fees have reached ‘record high’, warns XPS

Our initial fees of 3% for portfolios under £250K are fair and reasonable when you consider the fact that we only work on clean share classes (no extra commissions) and have no lock-in or exit fee attached to any of the products we use. This is unlike the majority of the IFA market in Europe or worldwide, who do not follow FCA rules on treating customers fairly (TCF).

They will charge you a hidden commission of up to 8%, and the bond wrapper will then lock you in for up to 8-10 years to recuperate the initial commission paid out.


We see this time and time again. Around 30% of our new enquiries each month are from existing expatriates who have previously taken out commission-based advice, and are now extremely unhappy with the level of service.

The biggest complaint is that their IFA no longer contacts them (because they’ve already been paid their commission up front in one go) and as such the growth of the pension has dramatically suffered because the IFA has not been managing it well or paying attention.

We also have no interest in trying to push in-house model portfolios, so we can earn more commission, which is called ‘double bubble’ in the industry. Our portfolio advice is a low-cost blended portfolio with active and passive from the world’s largest fund houses, with no extra kickbacks or trail to us. Again, unlike 80% of the market.”

Should I Compare Costs when Completing a UK Pension Transfers?

Yes, I would encourage you to shop around and compare us to the competition. I think you’ll probably find, as most of our clients do, that after doing that we are a very sharp outfit and far more transparent in my professional opinion than most IFA firms in this industry.

This can be a valuable process as it helps affirm why you are working with Cameron James, which can help you start to better understand the value of our fees and transparent charging schedule.”

Is it Possible to Speak with any of your Existing Clients as a Reference?

“I would be happy for you to contact some of my existing clients who have already completed their pension transfers with us and have been working with us for some period of time.

I can also confirm that our existing clients do not look back and question our costs. In fact, the majority of them go on to refer us to a number of their friends and colleagues, as the underlying growth we achieve for our clients is excellent.

Additionally, once you have reached the end of your pension transfer process (which can take some months) I think you will see the sheer amount of work and people hours that are required to get these transfers complete. It is not a case of just ‘signing one form’.

UK Pension Transfer Costs at Cameron James

As you can see, we are very open and transparent about costs at Cameron James. We deliver clients with a high-quality service and think they should always know exactly how much they are paying, in a simple and easy-to-understand format.

Want to discuss the costs of your pension transfer? Click the Calendly button below to schedule a Free Initial Appointment with Dominic or one of our IFAs to learn more about your situation and how we can help.

Pensions Advice

Suspended Funds – DB Pension Transfers

Suspended Funds In Your Pension?

An Investors Worst Nightmare

Five weeks after the Woodford Fund Suspension, clients of Hargreaves Landsdown were told that they could switch their investment to a rival platform. Having initially been told that their holdings were Z-class shares and that this share class was not available on rival platforms. The FCA has proposed new rules that would require platforms to offer clients the option of this type of ‘in specie’ transfer so investors can still own the same investments, even when they switch to a new provider.

The story for Expat clients on the remainder of the funds outlined in this article is more complicated. To in specie transfer, a suspended fund is fraught with difficulties. It may not be possible to complete an in specie transfer, and you must hold the illiquid asset and remain with your original investment provider. This often means that the client cannot move any of their portfolios to another provider until this suspended asset has become liquid again.

What Are Suspended Funds?

Fund managers may decide to suspend a fund if the number of withdrawal requests reaches such a level that they are unable to manage the fund’s liquidity. Effectively, everyone wants their capital out at the same time. Many of you will recall the ‘Run on Northern Rock’ in 2007 as people queued at cash machines to withdraw their money (BBC News).

If one of the funds you have invested in has been suspended, the first thing to establish is whether it has been ‘fully suspended’ or ‘partially closed’. In the first set of circumstances, you won’t be able to sell any of your holdings until the suspension is lifted. In the latter case, you will still be able to sell your units and or switch to another fund. In either situation, this is typically not a positive sign. We would advise speaking to one of our Advisers to understand your options and what you may be able to do to minimise any potential losses.

Woodford Fund Suspended

Neil Woodford is possibly the UK’s best-known fund manager. Unfortunately, he is now responsible for the UK’s highest-profile fund suspensions – Neil Woodford Fund Suspended. Woodford Investment Management’s Woodford Equity Income Fund was suspended on June 3, 2019, and it is now believed that the fund will remain suspended until at least December 2019. Prior to the suspension, a large number of investors in the fund opted to sell or switch their holdings. The fund had lost almost two-thirds of its value in a two-year period.

Mr Woodford specialises in picking less favourable stocks that have the potential to grow in value. As less desirable stocks are cheaper, he typically buys them in large quantities. Unfortunately, he chose the shares of numerous companies that have experienced difficult times, and as the value of the Income Fund fell, many investors started withdrawing. It has also been suggested that Mr Woodford was banking on these stocks rising once a Brexit deal had been finalised. So the fact the UK did not ‘Brexit’ as planned on March 29, 2019, exacerbated the losses.

Some of the companies the Woodford fund invested in include:

  • Construction group Kier – Share price fell by 41% in one day
  • Doorstep lender Provident Financial – Share price dropped 81% over two years
  • The Automobile Association – Share price fell by 88% over four years

As investors withdrew funds, the proportion of the fund’s investments held in unlisted companies increased. Shares in companies that are not listed on a major stock exchange are generally ‘illiquid assets’ and challenging to sell. Mr Woodford was then forced to dispose of some of the fund’s more liquid investments – such as shares of FTSE 100 companies – to release investors’ cash. On May 31 and June 3 – the last two business days on which the fund traded, as usual, the amount withdrawn from the fund was £296 million, which represents 8.2% of the total fund size. Of this £296 million, Kent County Council’s pension fund was seeking to sell £238 million. The fund will now remain suspended until Mr Woodford can re-position the fund so that it invests in more liquid stocks. Sometimes one investment fund will invest in another. Hargreaves Lansdown’s Multi-Manager Income & Growth Fund, for example, has around one-third of its funds invested in the suspended Woodford fund.

The UK Financial Conduct Authority (FCA) opened an investigation into Mr Woodford’s company. The regulator reported that it wished to consider new rules that would restrict the ability of a fund manager to invest and hold illiquid assets (FT, 2019).

Standard Life Property Fund Suspended

Standard Life’s UK Real Estate Fund and its other associated UK property funds were suspended in July 2016. It was the first of several property funds to be suspended as investors, worried by the Brexit referendum result, sought to withdraw from these funds.

Standard Life re-opened the fund in October 2016, saying it had raised sufficient liquidity to cover future redemption requests. Property is most certainly an example of an illiquid asset – it is difficult to sell quickly and sometimes tricky to value accurately as well. Many analysts fear that a no-deal Brexit will lead to a new wave of commercial property funds being suspended. Standard life property fund suspended was a reminder to many how illiquid property can be.

Trafalgar Multi-Asset Fund Suspended

The troubled Trafalgar Multi-Asset Fund was wound up in January 2017. With the remaining assets in the Cayman-domiciled fund paid to the trustees representing the investors. The Trafalgar Multi-Asset Fund Suspended was investigated by the Serious Fraud Office (SFO) in London (BBC News). The SFO deemed it part of a broader issue of pension liberation scams. Many investors in this fund were persuaded by cold callers to transfer funds out of safe final salary schemes.

The issues regarding the Trafalgar Multi-Asset Fund Suspended ran deep. The liquidators said that it was one of the most obvious scams they had seen with all the typical forms of ‘layering’ to misappropriate investor funds. The QROP provider STM Fidecs came under scrutiny in the fall out of the suspended Trafalgar Fund. STM Fidecs were subject to a large number of complaints to the Gibraltar authorities.

The SFO reported their finding to the UK Government in 2017 (SFO). Some investors were advised to invest 100% of their portfolio into now-suspended UCIS fund. If you have been affected by the Trafalgar Multi-Asset Fund Suspended, we will be happy to complete a full review of your portfolio without cost. We will advise what you can do moving forward to improve your portfolio performance.

Lucent Strategic Land Fund Suspended

The Lucent Strategic Land Fund was meant to bring commercial relationships, expert knowledge, and the funding to the doors of local business in the UK. The saga of the Lucent Strategic Land Fund Suspended came to boil in June 2016 when the fund was suspended over concerns about the value of the Lincolnshire Lakes property development, which the fund had invested in.

GAM Funds Suspended

Internal disciplinary issues caused problems with GAM’s absolute return bond funds, which were first suspended in August 2018 and then liquidated in July 2019, with the proceeds being distributed to the investors. GAM funds suspended happened after many investors sought to cash in their holding following news that the firm was investigating the fund manager Tim Hayward over risk management and record-keeping issues (The Financial Times, 2019).

Mr Hayward was eventually dismissed for gross misconduct, and GAM’s share price fell significantly during this period (The FT). If you have been affected by GAM funds suspended, then you get in touch to have a free chat with one of our Financial Advisers. You can understand what your options are and how best to regain portfolio value.

Quadris Funds Suspended

The Quadris Environmental Forestry Fund was suspended in July 2017 after the fund was declared in default by its US lender. The fund invested heavily in teak plantations in Brazil. The fund was wound up in May 2019 and investors did not get any of their money back.

Quadris Funds Suspended related to illiquidity. The fund managers advised investors that the fund could remain suspended until 2032 as the fund invests in forest growth cells (The Telegraph). This does not necessarily mean that investors have lost all of their money, but it is not a good sign. If you have been affected by the Quadris Funds Suspended, book a free consultation for our Financial Adviser to review your portfolio and advise what you can do about this.

Strategic Growth Fund Suspended

The Belvedere Management Group Strategic Growth Fund was suspended in May 2013 without the fund managers explaining in detail the reasons behind its troubles. It may, in part at least, have been connected with the fortunes of a South African private equity firm in which the fund invested. A number of deVere Group clients were recommended to invest in this fund.

This fund was eventually closed, and the remaining investors received very little of their investment back. In March 2014, DeVere Group paid £70,000 in compensation to a deVere client who was advised to place 80% of his portfolio into the fund and who then saw its value plummet from £89,000 to around £20,000 (This is Money). Has your portfolio been impacted by the Strategic Growth Fund Suspended? Our Advisers have experience in reviewing policies with toxic or illiquid assets are well-positioned to advise how to draw a line in the sand and move forward with your portfolio with daily traded liquid assets.

Any News On Suspended Centurion Funds?

Centurion Fund Managers suspended redemptions from its traded life policy fund in September 2011, citing changes in discount rates on the purchase of life assurance policies in the US and what it called a “lower than anticipated level of policy maturities”. The Cayman-Island based fund was eventually wound up, and it is believed investors may have lost 70% of their capital (The FT).

Can You In Specie Transfer A Suspended Fund?

Five weeks after the Woodford Fund Suspension, clients of Hargreaves Landsdown were told that they could switch their investment to a rival platform. Having initially been told that their holdings were Z-class shares and that this share class was not available on rival platforms. The FCA has proposed new rules that would require platforms to offer clients the option of this type of ‘in specie’ transfer so investors can still own the same investments, even when they switch to a new provider.

The story for Expat clients on the remainder of the funds outlined in this article is more complicated. To in specie transfer, a suspended fund is fraught with difficulties. It may not be possible to complete an in specie transfer, and you must hold the illiquid asset and remain with your original investment provider. This often means that the client cannot move any of their portfolios to another provider until this suspended asset has become liquid again.

What Can You Do About Suspended Funds?

Prevention is better than cure. Taking time with your Adviser to ensure your portfolio is in line with your risk profile is essential. So too is working with a company with a longterm track record of performance and daily traded funds. If you are unfortunate enough to have money in a fund that is suspended, steps you and our Adviser can take include:


  1. Find out if the fund has been partially closed or fully suspended
  2. Subscribe for email updates – Be the first to know about any developments
  3. If you make monthly contributions to the fund, we would advise choosing another investment vehicle in which to place your money
  4. Find out if there is a campaign group, or similar, made up of investors who have suffered the same fate as you

The above are the first four steps our Financial Advisers go through when clients contact us with suspended funds in their portfolio. Following this, our Adviser will start concentrating on how you can begin to move forward again and make up for any portfolio losses.


If you are reading this Suspended Funds article, likely, you have already had a bad experience with your previous Financial Adviser. We understand this. As such, we wish to assure you that none of our Cameron James Advisers previously advised clients to invest in any of the above funds. Or any fund that has ever been suspended. We pride ourselves on a robust investment process which mitigates against this happening.

It is essential to speak with a professional to understand what your options are. This is why we offer a free review of all portfolios with suspended funds. We will outline what your options are, and then you can decide from there.

qualified international sipp adviser
Pensions Advice

Inheritance Tax France – Ultimate Guide

French Inheritance Tax 2023:

What UK residents need to know

For UK residents who own assets in France, the French inheritance tax (or “succession tax”) can be a significant concern. The French Inheritance Tax applies to the assets of anyone who dies while domiciled in France, as well as to the assets located in France of anyone who dies while domiciled outside of France but who has French nationality.

It is important to note that not every expat who resides in France is automatically deemed domiciled in France. Specialist tax advice and domicile reports are required in order to ensure that this is the case. For many individuals, including some who have lived in France for over 20 years, UK Domicile may still apply.

As such, many UK nationals residing in France are extremely focused on French Inheritance Tax, yet fail to adequately understand or plan for their UK Inheritance Tax liabilities. This can cause serious issues for your beneficiaries when they go to complete probate in the UK. Not to mention, potentially leaving you (your beneficiaries) open to potentially large HMRC IHT bills from your estate.

French Inheritance Tax & Cameron James

At Cameron James, we specialise in providing French residents with financial planning advice, which includes UK pension transfer advice and management:

We also help clients to maximise their existing UK pension assets, including achieving gross payments from their SIPP or International SIPP via NT Tax codes and also just generally ensuring old pots in the UK are being invested correctly and not missing out on growth.

We do not provide French tax advice at Cameron James.

As part of our Advice Process, we will complete a detailed review of your situation (France and UK) and if required introduce you to our qualified French and UK Tax partners. 

As such, if you wish to understand how to maximise your UK Pension assets, Investments or Assurance VIE matters, while simultaneously ensuring you are correctly set-up for both French and/or UK Inheritance Tax then we are a great fit for you.

However, it is important to note, that if you have specific concerns regarding French Inheritance tax but are simply seeking a brief 20-minute telephone call to resolve complex issues, then we are unlikely the most suitable firm to address your needs.

We provide strategic financial planning advice tailored to your situation (France and/or UK) and truly resolving Inheritance Tax concerns in either country, can only be achieved through comprehensive analysis and proper planning.

Our services at Cameron James have a minimum advice fee of £3,000.

Recent Changes to French Inheritance Tax

In 2020, the French government made several changes to the inheritance tax laws that may impact UK residents with assets in France. These changes include:

Exemption from Death Duties

The spouse or civil partner left behind is not subject to inheritance tax. As a sibling of the deceased, you may also be exempt from inheritance tax if you meet these three requirements:

  • You are single, a widow(er), divorced or separated at the time of the death
  • You are over 50 years of age or disabled at the time of the death
  • You have lived continually with the deceased for the five years preceding their death

Increase in the Tax-Free Allowance for Children

The tax-free allowance for children was increased from €100,000 to €150,000 in 2020. This means that each child is entitled to a higher tax-free allowance, which can help reduce the amount of inheritance tax owed.

Introduction of a New Tax-Free Allowance for Grandchildren

A new tax-free allowance was introduced for grandchildren in 2020. Each grandchild is now entitled to a tax-free allowance of €1,000, which can be applied in conjunction to the tax-free allowance for children.

French Inheritance Tax Rates 2023

In France, the amount of inheritance tax that is payable depends on the value of the assets being transferred and the relationship between the deceased and the beneficiary. There are four categories of beneficiaries, each with its own tax rate:

Spouses and civil partners

Spouses and civil partners are exempt from the French inheritance tax.

Relationship with Deceased Tax Rate
Spouse or child
0% to 20%
Niece or nephew

Direct descendants

This category includes children, grandchildren, and great-grandchildren. The tax rate for direct descendants depends on the value of the assets being passed down.

Value of Estate Tax Rate
Up to €8,072
€8,072 and €12,109
Between €12,109 and €15,932
Between €15,932 and €552,324
Between €552,325 and €902,838
Between €902,839 and €1,805,677
Above €1,805,677


The tax rate for siblings is the same as for direct descendants, but the tax-free allowance is lower.

Value of Estate Tax Rate
Less than €24,430
Over €24,430

Relatives up to the fourth degree inclusive

They are taxed at a flat rate of 55%.

Other beneficiaries

This category includes all other beneficiaries, such as friends, distant relatives, and unrelated parties. The tax rate for other beneficiaries is a flat 60%.

Impacts of French Inheritance Tax 2023 on UK Pension Members

The changes to the French inheritance tax system will have implications for UK pension members who have assets in France or who are considering purchasing property in France.

For UK residents with French assets, the increase in the tax-free allowance for non-residents from €1,594 to €100,000 is significant. This means that UK residents with French assets will have a higher tax-free allowance and pay less tax on their French assets.

For UK residents who are considering purchasing property in France, the changes to the inheritance tax system may make France a more attractive option. The increase in the tax-free allowance for non-residents, combined with the reduction in the tax rate for siblings and nieces/nephews, could make it easier for families to pass on their assets to future generations.

What is French Inheritance Tax?

More commonly known as ‘French succession tax’ or ‘droits de succession’

Inheritance Tax in France is payable by people who inherit assets or receive gifts from French residents and is calculated on a progressive banding scale. This is unlike UK Inheritance Tax, which has a flat rate of 40% on all assets above £325,000 or £650,000 for married couples.

Should you be resident in France at the time of your death, or at the time you made a gift, then the inheritance will be subject to the French inheritance tax regime. Therefore, citizens of the UK or other countries retiring in France will generally have their estate taxed according to French inheritance law.

You are likely a French resident for tax if one of these applies:
  • You usually spend at least 183 days of each year in France
  • Your spouse and children typically reside in France, even if you spend most of your time in the UK or another country
  • You work in France or receive the majority of your income from a French source
  • Most of your significant assets are located in France

What is French Succession Tax?

The French equivalent of UK Inheritance Tax (IHT)

It is crucial to make clear that French Succession Tax and French Inheritance Tax are the same things; they are not two separate taxes. The official name of IHT tax in France is ‘droits de succession’ and so many English speakers refer to this as French Succession Tax. French Succession Tax is not to be confused with French Wealth Tax which is an annual tax that applies to your assets over €1.3M.

Differences between Inheritance Tax France & Inheritance Tax UK

Heterosexual Couples

Spouses and civil partners in France have the right to inherit their share of the estate free of tax, regardless of the size of the estate. One significant difference here is that both heterosexual and same-sex partners are allowed to enter into a civil partnership in France.

Lifetime Gifts

Another significant difference is that, in France, gift tax could be payable on any gifts made by a person during their lifetime. While in the UK, IHT laws only tax gifts made in the last seven years of a person’s life. This law means gift taxes are likely to be higher for you in France.

French Inheritance Law

France taxes the estate differently depending on who is inheriting each asset. French law stipulates the value of a person’s estate is the value of the assets they own in their name, plus 50% of the value of assets jointly held with their spouse or civil partner.

French Succession Rates

The French taxation regime includes different tax bands rather than taxing it all at a flat rate like in the UK. Each beneficiary is granted some level of the personal allowance. As explained above, spouses and civil partners inherit everything that has been left to them tax-free. There is, however, also a generous personal allowance of €100,000 for the children of the deceased.

Inheritance Tax Rates in France?

There is a progressive banding system for Inheritance Tax France

The person who inherits the assets benefits from a tax-free allowance, then the remainder of their share of the estate is taxed. The level of the allowance and the tax rate depend on the value of the assets and which relative is inheriting.

Example - Leaving €115,000 To Your Child

The Inheritance Tax Rates in France would be a total tax liability of €1,240.95, as calculated below:

  • No French Succession Tax on the first €100,000
  • 5% of the amount between €100,000 and €108,072, which gives €403.60
  • 10% of the amount between €108,072 and €112,109, which gives €403.70
  • 15% of the amount between €112,109 and €115,000, which gives €433.65
Assets Left To Other Relatives

While there is a generous €100,000 allowance for children, French succession tax is less charitable to other relatives:

  • When assets are left to a brother or sister, the tax-free allowance is €15,932. The first €24,430 of taxable assets are taxed at 35% and the remainder at 45%
  • When assets are left to nephews and nieces, the tax system is punitive. The tax-free allowance here is just €7,967, anything above this level is taxed at 55%.
  • If assets are left to people who are not related (sometimes known as concubines in France), the tax-free allowance is €1,594, and the amount above this figure is taxed at 60%. Step-children are not considered to be relatives in this system unless they have been legally adopted.

Children with handicaps receive additional inheritance tax rates in France with a further allowance of €159,325. As such, people with a disability have a tax-free allowance of up to €359,325. This is their €159,325 handicapped child allowance plus €100,000 from each of their parents.Allowance of inheritance tax rates in France was not increased in 2018 or 2019. Indeed the allowances have been unchanged since 2012 and have not increased each year on an index-linked basis.

Inheritance Tax France 2018

French IHT Rates Remain Unchanged

The previous rates of Inheritance Tax France 2018 still remain in force in France. The Inheritance Tax France 2019 allowances have not been increased or seen any index-linked uplift like many other countries. In-fact, the rates of Inheritance Tax France have remained unchanged since 2012.

Inheritance Tax France 2019

There Has Been No Uplift Since 2012

As outlined above, Inheritance Tax France 2019 rates have remained unchanged since Inheritance Tax France 2018. No indexing or increase has been applied since 2012. It can be argued that with no further allowances and rising French inflation, Inheritance Tax France 2019 is comparable more expensive than Inheritance tax France 2018 (Reuters, 2019).

UK France Double Tax Treaty Inheritance

This Treaty Mitigates Against Double Taxation

A double tax treaty currently exists between the UK and France. This UK France double tax treaty inheritance mitigates the possibility of you being subject to double taxation on a range of matters including inheritance tax (Gov.UK). This double tax treaty was last updated in 2008.

There is also a further tax consideration in regards to the French Wealth Tax. UK nationals entering France are exempted from wealth tax for five years on their assets located outside of France. This exemption can be used again if you cease to be resident in France for at least three years, and then become a French resident again at a later stage. This could significantly reduce your wealth tax liability if you have only just arrived in France.

What are the laws regarding lifetime gifts in France?

Gifts In France Are Your Lifetime - Unlike The UK 7-Year Rule

Tax-free gifts can be made every 15 years, and different relatives have different allowances. As with UK inheritance tax, one way of mitigating the tax liability is to gift some assets during your lifetime. Once again, there are various allowances for different relatives. Firstly, anyone can make gifts of up to €31,865 every 15 years free of tax, provided the recipient is aged between 18 and 80.


Inheritance Tax in France

Napoleonic Law

French law requires you to leave a significant share to your children as French succession law includes a system of ‘forced heirship’. This law has been on the statute book for 200 years. This Napoleonic law means that you need to leave at least the following proportion of your estate to your children:

  • If you have one child – 50%
  • If you have two children – 66%
  • If you have three or more children – 75%

If any of your children die before you, then their children (if any) will be entitled to inherit the same sum that their parent would have received had they not died first. If the child who predeceases you had no children of their own, then their share is distributed amongst your surviving children. If you pass away without any children, your spouse can inherit your entire estate, even if your parents are still alive.

If you are resident in France as an Expat when you die, the tax authorities will consider that all of your worldwide assets will be subject to the forced heirship law. Except for real estate located outside of France.

Whether you live in the UK, France or anywhere else, it is essential to make a will. A will ensures your global assets are distributed according to your wishes. This also spares your family any additional aggravation dividing your estate. If you die intestate in the UK, any surviving spouse is the principal beneficiary; but in France, a spouse can inherit no more than 25% of the estate of someone who dies without making a valid will. Children and grandchildren have the first rights to inherit under French intestacy laws.

Is UK Inheritance taxed in France?

There Is A Double Tax Treaty

As outlined above, Inheritance Tax France and Inheritance Tax UK are two separate things. Where you or your beneficiaries will be subject to IHT will depend upon your residency and where a person was domiciled at the point of death. For example, if your father passed away and were deemed to be a UK domiciled for IHT purposes, his estate would be subject to IHT tax in UK irrelevant of where you reside. Please note the UK and France have a double taxation treaty in place to ensure you are not incorrectly taxed twice.

Inheritance Tax France Non-residents?

Did You Make Gifts While Residing In France

If you are non-resident in France, then you may have no French succession tax to pay if you no longer hold assets in France. However, if you don’t reside in France but have assets located in France, the succession tax will likely be levied on those assets. Additionally, if you don’t live, you may still need to consider if you made any gifts while you were resident in France.

Getting the Right Help

Navigating the complexities of French inheritance tax is a significant concern for UK residents owning assets in France. At Cameron James, we are UK Pension Specialists and provide expert UK pension transfer financial advice. This includes helping expats to explore their UK Defined Benefit (DB) and Defined Contribution (DC) pension schemes to SIPP or QROPS. However, it’s important to note that we do not provide tax advice.

When it comes to tax matters, we will always ensure you talk with our trusted tax partner in France or the UK. They possess the necessary expertise to navigate the intricacies of the French inheritance tax system, ensuring compliance and optimising your financial situation.

While we cannot assist with tax advice, our team at Cameron James is dedicated to offering comprehensive support and guidance regarding your UK pension transfers to France. Trust us to help you make informed decisions regarding your pension while a trusted tax advisor handles the intricate details of your French inheritance tax obligations.

Book a free initial consultation today for reliable UK pension transfer financial advice with one of our IFAs, and let’s work together to achieve your financial goals.

Disclaimer: Cameron James are not tax experts and due to the complexities of the tax system and your aims and objectives it is highly advisable that you seek an independent tax opinion. You are fully aware that Cameron James are not Tax Advisers and as such cannot be held responsible should the applicable tax authority raise a claim against you for any future taxes.