New UK resident and want to start my first pension

Trunks1983

Hello,

I am a soon 36 years old French guy and have decided to jump over the see and move to London on July 2017.
I have then created a Limited Company and work fulltime into a company as a IT Developer.
I don't know a lot about investments, pensions, mortgage, ISA ... just try to get some info in order to make the rights decisions.

My annual company income is around £135,000 / year and I pay myself £46,350 (pay + dividends) for tax efficiency.

If I do no calculation mistakes, according to my income, I can split the money like this :
- Pay + Salary : £46,350
- Pension : £40,000 (annual limit)
- Save : £25,000

- UK Property rent : £1,400 / month
- Rent my principal property in France (renting cover the mortgage)

Then I have a lot of questions.
Should I consider Personal Pension or SIPP?
Should I have several pensions. Which one?
What is the average expected returns?
Do you recommend IFA?
What happens if I exceed the 1M£ lifetime allowance?
I plan to stay in UK until my retirement, should does it worth to buy a property or invest the money? (maybe the property price will lower because of the Brexit)
What should I do with the £25,000 remaining?
When should I retire?
If I retire before 35 years NI contributions, would I receive partly the State Pension?
My partner (not married) doesn't work since years (health issue), I am the only one that bring money, will she have any pension or should I pay for everything?

I know, it is lot of questions, but want to make the right decisions.
Thank you so much.

EdSwippet

Welcome. I will have a go at answering a few of your questions.

Trunks1983 wrote: »

Should I consider Personal Pension or SIPP?

Either will be fine. They differ in the investment options offered, but both will do the job for you perfectly well. In general, a Personal Pension is probably simpler to manage at the outset, because it will have good 'default' fund options which you can just use. No investment selection required.

Trunks1983 wrote: »

Should I have several pensions. Which one?

A single one will be fine.

Trunks1983 wrote: »

What is the average expected returns?

That depends entirely on what investments you hold in your pension. As a rough idea, stocks have historically returned 7% nominal return, so 4% real and 3% lost to inflation. Returns on bonds are lower, but they are 'safer' (that is, less volatile).

Trunks1983 wrote: »

Do you recommend IFA?

Not at the beginning. It's all very simple to start out.

Trunks1983 wrote: »

What happens if I exceed the 1M£ lifetime allowance?

There is a 25% tax penalty for amounts above the £1M, and you then pay regular income tax on the rest. This usually works out to be 40% or 55% in tax. Below the £1M you can take 25% tax-free. You then pay regular income tax on the rest, so perhaps around 15% or 30% here.

Trunks1983 wrote: »

When should I retire?

Nobody but you can answer that!

Sibbers123

Make sure the pension provider is happy accepting employer contributions.

By the sounds of it, you haven't been declaring your rental income from France in the UK. You should be doing this on your tax return. This messes with your tax efficient profit extraction plan as it will kick the dividends in to the higher rate tax bracket.

To be blunt, some of that £25,000 should be invested in some tailored professional advice. It will be worth every penny.

Trunks1983

Thank for both replies and answering to some questions.

So either Personal Pension could provide decent returns as well and manage everything for me.
SIPP let me more flexibility on products I chose.

www myexpat fr/la-fiscalite-immobiliere-des-expatries-non-residents/ (sorry can't post link as I am a new user)

"Expatri! ou non, r!sident fiscal ou non, la loi est claire : les revenus immobiliers de source française sont dans tous les cas soumis à l’impôt en France ! En effet, les expatri!s dont la r!sidence fiscale ne se trouve pas en France restent soumis à l’impôt sur leurs revenus issus de sources françaises. De même pour les impôts locaux li!s à leurs biens immobiliers (les taxes foncière et d’habitation et la taxe sur les locaux vacants)."

"Expatriate or not, tax resident or not, the law is clear: real estate income from French sources are in all cases subject to tax in France! Indeed, expatriates whose tax residency is not in France remain subject to tax on their income from French sources. The same applies to local taxes related to their real estate (property and housing taxes and the tax on vacant premises)." (Google English translation)

So it seems that France income stays only taxable in France.
That's why, I plan to invest into an another property there (mortgage full period fix rate around 1.5%).
With furnished rent and mortgage tax relief, I can expect near of 0% tax there.

For the remaining savings, I plan to meet a IFA to have advice from him. Maybe it'll worth to use it later for a supply in order to buy my principal home here as I plan to stay 2 decades or more.

Thank you

EdSwippet

Trunks1983 wrote: »

So it seems that France income stays only taxable in France.

Not "only". This is where you need to consult the UK/France tax treaty. Article 6 says that France can tax your income from 'immovable property', but it does not say that the UK cannot also tax it.

In this case, the UK will tax it if you become a UK resident, because like France and many other countries, the UK taxes its residents' worldwide income. However, it will allow you a full UK tax credit against any French tax you have to pay on your rental income from the house, so that you are not taxed twice. See Article 24 of the treaty, although in practice the UK will generally allow credit for foreign taxes even where not explicitly covered by treaty.

Trunks1983

Thank you very much for remarks, I wasn't aware at all about French income could impact my tax here.
Have to consider it, could have non-insignificant impacts.

Trunks1983

The title of the topic is wrong, but I canùt change it.
I don't have the UK resident status, want to specify that I have just moved to UK (What the specific term for this?)

Sibbers123

Trunks1983 wrote: »

Thank for both replies and answering to some questions.

So either Personal Pension could provide decent returns as well and manage everything for me.
SIPP let me more flexibility on products I chose.

www myexpat fr/la-fiscalite-immobiliere-des-expatries-non-residents/ (sorry can't post link as I am a new user)

"Expatri! ou non, r!sident fiscal ou non, la loi est claire : les revenus immobiliers de source française sont dans tous les cas soumis à l’impôt en France ! En effet, les expatri!s dont la r!sidence fiscale ne se trouve pas en France restent soumis à l’impôt sur leurs revenus issus de sources françaises. De même pour les impôts locaux li!s à leurs biens immobiliers (les taxes foncière et d’habitation et la taxe sur les locaux vacants)."

"Expatriate or not, tax resident or not, the law is clear: real estate income from French sources are in all cases subject to tax in France! Indeed, expatriates whose tax residency is not in France remain subject to tax on their income from French sources. The same applies to local taxes related to their real estate (property and housing taxes and the tax on vacant premises)." (Google English translation)

So it seems that France income stays only taxable in France.
That's why, I plan to invest into an another property there (mortgage full period fix rate around 1.5%).
With furnished rent and mortgage tax relief, I can expect near of 0% tax there.

For the remaining savings, I plan to meet a IFA to have advice from him. Maybe it'll worth to use it later for a supply in order to buy my principal home here as I plan to stay 2 decades or more.

Thank you

France has primary taxing rights. The rental income is also taxable in the UK. You will get some double tax relief if you pay tax on the income in France but I presume France have the equivalent of a UK personal allowance, so highly likely there will be tax to pay in the UK.

Probably a good idea to get some professional advice.

Trunks1983

France has primary taxing rights. The rental income is also taxable in the UK. You will get some double tax relief if you pay tax on the income in France but I presume France have the equivalent of a UK personal allowance, so highly likely there will be tax to pay in the UK.

Probably a good idea to get some professional advice.

Wanna see a IFA Tuesday, will ask some advices about this situation.
Thank you about pointing this.

Albermarle

So either Personal Pension could provide decent returns as well and manage everything for me.
SIPP let me more flexibility on products I chose.

Typically a personal pension will offer you a choice of a very small number of 'lifestyle funds ' where you pick maybe from just three or four options : low risk/return: medium risk/ return; High risk /potential high return etc Or you can instead have access to a larger range of funds , although these are normally linked to the pension provider .

With a SIPP you can have access to thousands of funds across the market ( and individual shares ) but in fact some SIPP providers are now also offering 'easy options ' so as already mentioned the differences are not very significant for the large majority of pension investors .

DairyQueen

Trunks1983 wrote: »

Hello,
If I retire before 35 years NI contributions, would I receive partly the State Pension?

My partner (not married) doesn't work since years (health issue), I am the only one that bring money, will she have any pension or should I pay for everything?
.

You will receive 1/35th of the full state pension for every full tax year of NI contributions. However, this supposes that you have made at least 10 years contributions (this is the minimum required to receive any UK state pension).

Your partner will receive zero NI credits until/unless she works, or unless she qualifies for NI credits through entitlement to a welfare benefit (e.g. child benefit, carer allowance, unemployment benefit), or unless she is able to make voluntary NI payments.

These links may help:
https://www.litrg.org.uk/tax-guides/migrants-and-tax/national-insurance-migrants/national-insurance-and-uk-state-pension

https://www.gov.uk/new-state-pension/living-and-working-overseas

https://www.litrg.org.uk/tax-guides/migrants-and-tax/national-insurance-migrants