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Where Taxpayers and Advisers Meet

UK SIPP Lunp Sum - French Tax Resident

JEFF26R
Posts:18
Joined:Mon Mar 08, 2021 3:16 pm
UK SIPP Lunp Sum - French Tax Resident

Postby JEFF26R » Mon Mar 08, 2021 3:32 pm

If I am a French Tax resident and 55 years old, and have a UK SIPP that has never been accessed, if I take the whole pot in one lump sum, I understand the pension provider will stop emergancy tax from the transfer | closure.
How may I be sure that I will be entitled to all of the tax back from HMRC?
How may I request this tax refund from HMRC?
How long is the refund likely to take?
Would no UK tax be due as long as I do not return to be a UK Tax resident for 5 financial years from the SIPP closer?

JEFF26R
Posts:18
Joined:Mon Mar 08, 2021 3:16 pm

Re: UK SIPP Lunp Sum - French Tax Resident

Postby JEFF26R » Tue Mar 09, 2021 9:07 am

Before someone is kind, and informed enough, to reply. I have tried the HMRC site for claim a refund, but after I answer the two questions, it does not appear to tell me anything, it seems stuck?
The site says
You usually have to pay tax on your UK Pension.

Your answers
1. What did you pay too much tax on?
A pension
2. Which type of pension did you pay too much tax on?
A UK pension and you live abroad

darthblingbling
Posts:417
Joined:Wed Aug 02, 2017 9:09 pm

Re: UK SIPP Lunp Sum - French Tax Resident

Postby darthblingbling » Tue Mar 09, 2021 2:26 pm

Under domestic legislation payments from UK pensions are taxable in the UK. The double tax treaty may however override this if you are tax resident elsewhere.

If you are tax resident in France and not the UK then it would appear that the SIPP drawdown is taxable in France only.

You would either allow the SIPP provider to withhold tax and you then claim the tax back on your tax return, or you can complete form DT Individual to make a treaty claim so that your SIPP provider is given an NT tax code that will effectively stop tax from being withheld.

If you do later return and are deemed to be a temporary non resident then the drawdown may be taxable in the UK in the tax year of return. In your case the drawdown would be treated as French sourced and you could claim an FTC for French tax paid.

If it's a chunky sum of money you may want to seek professional tax advice who will also be able to help you with the various claims.

JEFF26R
Posts:18
Joined:Mon Mar 08, 2021 3:16 pm

Re: UK SIPP Lunp Sum - French Tax Resident

Postby JEFF26R » Tue Mar 09, 2021 5:45 pm

Thanks for the reply, yes it is a chunky sum, so where would I find the right kind of professional to assist? - I don't like the "may"...

If I were to complete form DT Individual to make a treaty claim so that my SIPP provider is given an NT tax code that will effectively stop tax from being withheld, would this then mean I could withdraw the lump sum in one transaction, and they would not stop any UK tax?

On another related point, I am confused about what would happend in death if I left the UK SIPP and did not close it down.
I understand that on my death it would pass to my beneficiaries, but are there any extra considerations if I were a French Tax resident, and the beneficiaries were too?
Could it make a difference if my Domicile of origin (being UK) was used, or if my Domicile of choice (France), was used?

https://www.youinvest.co.uk/faq/what-happens-my-sipp-if-i-die

iwmtaxadvisor
Posts:23
Joined:Wed Sep 09, 2020 5:12 pm
Contact:

Re: UK SIPP Lunp Sum - French Tax Resident

Postby iwmtaxadvisor » Mon Jun 28, 2021 2:24 pm

I do agree that professional advice is required. You can contact me privately for a list.
A few points, if I may.
1. Bear in mind when you are looking at your best option, that if you draw the whole pension it will be taxed as income in France.
2. When we last looked at the UK French treaty we came to the conclusion that the 25% lump sum in the UK would be taxed in France at 7%, but rates will now be different.
3. One assumes you are actually old enough to draw upon your UK pension.
4. One questions too whether the tactic helps your final goal (which might be net spend for life). If you have low income in France apart from this pension, you may want to run the numbers for taking the UK pension slowly and using up your French allowances. The planning work should start with a statement of what you are trying to optimise.
5. I am still uncertain, I'm a little abashed to say whether the Lifetime Allowance charge is covered by the UK French Treaty. At the moment, I'm guessing not, since it seems to me not to fit happily into any Article. If asked, I'd want to do more research. The question may be moot anyway since the sum you have in mind may be covered by the LTA.
6. When it comes to death benefits, start with the Estate Duty DTT https://www.legislation.gov.uk/uksi/1963/1319/schedule/made and work through that. There are eight different ways to pay death benefits from a drawdown, so since an answer would be long, permit me to give you a likely bottom line - the gift should be taxable in France, one can't analyse the likely tax in France without knowing the whole estate and who inherits what, but broadly, if you were going to leave the pension intact in the UK you might consider leaving it to a trust or specific beneficiaries to get the result you want. Each case requires an individual model to be constructed if one wants optimal results. There are no short cuts when it comes to non-resident tax planning.
- look for us on Google "iWMTaxAdvisor"


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