strategy to get away

shiredeon

Having gained tons of info from yourgoodselves i have come up with the following strategy to allow me to move to france, this is from a uk prospective as i am making inquiries into the french tax position,
I have three sources of capital,
1 my uk house 500k
2 my executive pension 150k
3 my opted out of serps pension 50k
4 my flat in manchester which is now let.

1 sell my uk house and buy small flat to live in now about 200k and rent when i leave, put remaining 300k into a hyp.
2 transfer my executive pension into a sipp and leave it for drawdown at a later date, taking the tax free cash 90k and investing into fund of funds,
3 tranfer my protected rights fund into an ordinary pension to take at 65 along with oap, the tax free cash element about 12.5k invest in the fund of funds.
4 flat leave as is.
sorry if i seem a bit impatient but my girlfriend is seriously ill and i dare not leave it much longer or it may be to late.
Just want to know if i am missing something along the way, thanking you in anticipation. nick

cheerfulcat

Your plans suggest that you do not consider the move to France to be permanent; why keep property in the UK? And why expose yourself to currency risk if you don't have to?

I think that you would be better off taking professional tax advice from a specialist in UK and French tax law before you do anything as I fear you could cost yourself quite a lot of money this way. There is no need to rush; you can live off capital for a year or so, giving yourself time to make the right investment choices. It's not ideal but it's better than rushing into things.

dunstonh

1 sell my uk house and buy small flat to live in now about 200k and rent when i leave, put remaining 300k into a hyp.

Just make sure you accept the risk involved with this. You are looking at potential for -20/+20% p.a returns. For income provision, that strategy is above the risk for what most people would consider. Of course, everyone is different and people have different needs and requirements but make sure you understand the risk you are taking and that it is acceptable. You can lower the risk on this quite easily without impacting significantly on the potential for return.

2 transfer my executive pension into a sipp and leave it for drawdown at a later date, taking the tax free cash 90k and investing into fund of funds,

That doesnt make a lot of sense. You would be taking the money out of a tax free environment to put it into a taxable area. As you can invest in exactly the same areas inside and outside of the pension, there is no reason to do this. Plus you would have brought 90k into your estate which could increase your tax liability on death. You would also have taken your 25% so couldnt go back years later when the pension fund is valued higher. Therefore reducing access to your capital in later years.

3 tranfer my protected rights fund into an ordinary pension to take at 65 along with oap, the tax free cash element about 12.5k invest in the fund of funds.

If you like the SIPP strategy, then hybrid SIPPs can take the protected rights part of the fund. You are limited to unit trust funds here but nearly 1000 unit trust funds on a fund supermarket should supply a decent spread and allow diversifcation. However, once again taking the lump sum when not needed doesnt ake any sense.


I think you need to take advice. You have hooked into a couple of ideas from the internet without fully understanding the consequences of the actions or the risk profile of the alternatives. For example, a cautious risk diversified portfolio would have provided more income and growth than a HYP over the last 5 and 10 years. Yet you seem focussed on the higher risk HYP. If that is what you want, it is fine. However, these are decisions you should make after you investigate the alternatives as well. Not just going with the first option you hear of.

EdInvestor

Two things:

a)I thought you already had a (BTL) flat in the UK, which will provode rental income? Are you planning a second property?

b)You must seek more clarity about your EPP. AFAIK there is a possibility that in the process of transfer to Sipp, when it has to be converted from an EPP to a PP, that you might lose your entitlement to 90k worth of tax free cash and end up with only 25%. The only option may thus be a hybrid Sipp at the insurer.

Note you cannot take tax free cash without at the same time converting the rest of the fund either into an annuity or into a drawdown plan (from which it is not necessary immediately to take an income.)

IMHO you really need to take advice on this issue.I can see you are misunderstanding things which may lead you to make an expensive error.And also on optimal arrangments for French tax as mentioned several times earlier.

https://www.williamburrows.co.uk is an IFA specialising in annuities and drawdown.I cannot personally recommned but he has a good reputation.

shiredeon

Thanks for the reply's, taking the cash is in case they change the rules and abolish it, also now my earnings are significantly less than they used to be if i leave it i will only be able to take cash at 25%,
i don't intend to return to uk but ill health and old age may dictate otherwise also i have children that i can leave things to if necessary, i know nothing about property in france other than it is less valuable and rents are lower, but for me property has always proved a good investment,

I don't have to invest all in the hyp in fact i could split it 50-50 with the fund of funds,i was really trying to say that this is the amount i could invest,
Taking the tax free cash and investing will also increase my income, i will check and see if transfering the fund will decrease the tfc.

I would like to create an income of around 25k hopefully with the investments inflation proof or as near as possible,

Yes Edd i do have the flat in manchester but thought that if i downsize now and something horrible happens to the housing market i could still leave and let out the smaller propert, after all without the capital in my house i don't have much else,
at a later date i may well sell my uk property and live it up a bit, risk really doesn't bother me as i've taken many risks to get where i am today, unfortunately when things go wrong you suddenly realise you are very mortal and i don't intend to spend any longer doing something i hate with a passion with an uncertain future, hence i am bowing to you guys greater knowledge in the hope i can come up with a way out. hears hoping.

EdInvestor

How much could you rent your house for? Anything like 10k a year? If so and you could get 5k for the flat in Manchester and 5k from investing the 90k TFC from the EPP, you're nearly there, without the delay involved in selling the house. Next year if you can get the PR pension into a HYP in a SIPP, that would generate another 2.5k

Just as a temporaty arrangement, if speed is of the essence.

cheerfulcat

shiredeon wrote:

Yes Edd i do have the flat in manchester but thought that if i downsize now and something horrible happens to the housing market i could still leave and let out the smaller propert, after all without the capital in my house i don't have much else,
at a later date i may well sell my uk property and live it up a bit, risk really doesn't bother me as i've taken many risks to get where i am today, unfortunately when things go wrong you suddenly realise you are very mortal and i don't intend to spend any longer doing something i hate with a passion with an uncertain future, hence i am bowing to you guys greater knowledge in the hope i can come up with a way out. hears hoping.

shiredeon, I am dreadfully worried that you do not understand the nature of the risks you are taking. It's fine taking risks but it is vital that you know the possible consequences of your actions. I fully understand what you are saying - life's too short and so on - but I think that you are only half taking in what people are saying to you.

It was explained in another place that your executive pension may well be more valuable if you don't take the tax free cash. I have mentioned several times the currency risk involved in what you are planning - do you understand just how big that risk is? Can you afford to lose, say, 25% of your income to differences is exchange rates? dh has tried to point out the very real risk of loss on your properties. And fond as I am of the HYP I really don't think that it is suitable for your needs; as we said on your other thread, the French version of the Investment Bond seems far more applicable in your situation.

I would urge you to 1) see a specialist advisor and 2) not do anything hasty.

EdInvestor

Shiredeon

I am a bit confused about the immediate priority.Is it to remove yourself and girlfriend to your home in the south of France ASAP, with 25k cash to live on for the next year?

If so - and if this is a very sad situation which is likely to come to an end in the forseeable future - then your best bet might be just to see a broker and raise 100k mortgage on your main house now and take off with adequate spending money, plus some to spare if the worst comes to the worst, sorting the rest of it later, as and when appropriate.

cheerfulcat

Couldn't agree more, Ed. This is absolutely not the time to be making major financial decisions.

shiredeon

i guess we have five years total, i don't want to waste any more time in uk doing something that i hate, i suppose the bottom line is i need to sell my uk house as that's my major capital and create an income of about 25k as i feel that will give us a reasonable standard of living,
As to where it's invested i don't really care, unfortunately longevity runs in my family(both my grandparents made 100) so i have to be aware i may be around for a while yet.
seems my strategy is somewhat flawed, i was hoping apart from the tax situation which i am taking advice on it would be easy to create an income from the capital i have. cheers

Cook_County

1. I would be very concerned that you may be creating tax liabilities in France for the UK company you own.
2. You need to review your French wealth tax position.
3. You remain liable to UK IHT on death on worldwide assets.
4. You urgently need advice on your Will - before you move to France - to avoid French heirship rules.
5. Similarly clever UK pension planning may not be worth a fig if the French do not recognise the UK structures. What advice have you taken on this?