Living abroad tips and hints for money savers

seven-day-weekend

Droopsnout, as I understand it, your Teachers' Pension is taxed in the UK, your State Pension you will receive gross and declare it in France for tax purposes.

So you benefit from two lots of personal allowance (one from each country) and end up paying less tax than if you'd had it all taxed in one place.

I think I'm right, but someone will correct me if I'm wrong!

Oh and somebody mentioned nationality. There is NO WAY I would change my nationality. I was born a Brit and I shall die one. I know someone who is wanting to change to Spanish Citizenship because it is cheaper to renew the passport! All I can say is, if their nationality meant that little to them, I wouldn't want them to take the citizenship of my country!

Just my take on it.

droopsnout

Thanks, s-d-w. That was my understanding of the tax situation, too.

The nationality thing is interesting. I often felt that I was born in the wrong country, and I am quite happy to take on French citizenship, as I opted out of my native country. It seems to me to be the honest thing to do.

However, it's not something I'm going to leap into, for two or three reasons.

Cook_County

I am not sure what the confusion is here all of a sudden about tax!

1. The pensions everyone is discussing here were earned while working in the UK. This makes them UK source and potentially taxable by the UK.

2. All tax treaties state that pension income is however ONLY taxable in the country of residence.

3. There are exceptions in most tax treaties to rule number 2; particularly for pensions for government service - which typically remain taxable in the country from where they are paid (in this case the UK).

4. The UK State pension, the Xmas bonus, the Winter fuel allowance, the £60 bonus etc are not within rule number 3; so become taxable in the country of residence but not the UK for non-UK residents.

5. If anyone reading this is still UK resident for tax purposes or is not resident in a treaty country then the UK will still tax the entire pension income (although the other country might give credit for some or all of that UK tax).

droopsnout

Again, that was my understanding. Thanks, Cook_County.

Of course, many expats will not be eligible to receive the winter fuel allowance, IIUC.

seven-day-weekend

droopsnout wrote: »

Thanks, s-d-w. That was my understanding of the tax situation, too.

The nationality thing is interesting. I often felt that I was born in the wrong country, and I am quite happy to take on French citizenship, as I opted out of my native country. It seems to me to be the honest thing to do.

However, it's not something I'm going to leap into, for two or three reasons.

Interesting and very valid pov, droopsnout.

However, I don't feel I HAVE opted out of my country.

I have a UK house, bank accounts, a dentist, library and Matalan cards (:rotfl:) and am registered to vote (using a proxy) as a non-resident voter.

Also, we WILL be returning at some point.

I enjoy living in Spain (on the whole), but it always feels like a foreign country to me and I am always aware that I am a visitor to the country . The UK in general, and Wolverhampton in particular:eek: will always be my home.

However, 'home' is a very personal thing and I think the saying 'home is where the heart is' is very true.

gfplux

hello cook_county,
Thanks for that clarification. you obviously know something about this subject. can you confirm or not that you can not use both country's personal tax allowances as suggested by seven- day_week.

droopsnout

seven-day-weekend wrote: »

I don't feel I HAVE opted out of my country.

I have a UK house, bank accounts, a dentist, library and Matalan cards (:rotfl:) and am registered to vote (using a proxy) as a non-resident voter.

Also, we WILL be returning at some point.

I enjoy living in Spain (on the whole), but it always feels like a foreign country to me and I am always aware that I am a visitor to the country . The UK in general, and Wolverhampton in particular:eek: will always be my home.

However, 'home' is a very personal thing and I think the saying 'home is where the heart is' is very true.

All highly appropriate. (Apart from Matalan, lol!!)

I doubt that I ever will return permanently to the UK. I think if I snuffed it, Mrs DS would. But if she goes first, I think I'll stay here.

But you never know. Circumstances can dictate actions that, given a free choice, we wouldn't take.

My Mum is in her 80s, and as an only child I may one day need to return to the UK to look after her, and that could make me resident in the UK.

Yes, I will always be a foreigner to the French here, even if I were to take out French nationality.

However, having lived for 19 years in Leicester, 8 years in Birmingham, 24 years in Lancashire, and despite being born in Doncaster (and still having a house there), I don't feel that any of these places is home. On the other hand, I feel very much at home in my present surroundings.

EdInvestor

droopsnout wrote: »

My UK State pension will be paid by the State, too. Now am I allowed to have it paid gross, then declare it to the French authorities?

It is paid gross to evetryone regardless of where they live.

....Or does it add the State pension to my occupational pension, then tax just the occupational pension on my total income?

This is what would happen if you lived in the UK. But as you don't the UK will not tax your state pension, this is the job of the French Govt.

PS - Where did the £10K allowance figure come from? The Tax Allowance for over-65s (which I'm not!) is £9030 for 2008-9. (My allowance is £6035).

The 10k level is what it will reach in a couple of years' time as it is being uprated faster than inflation for a period. This ballpark figure is often used when discussing pension planning.

EdInvestor

seven-day-weekend wrote: »

There is NO WAY I would change my nationality. I was born a Brit and I shall die one. I know someone who is wanting to change to Spanish Citizenship because it is cheaper to renew the passport! .

Actually, it's not possible to give up the right to British nationality, once acquired. You can obtain rights to other nationalities and stop taking out a UK passport, using the other passport instead, but you will still be a UK citizen who can take out a new passport at any time.

Once a Brit, always a Brit.

Oldernotwiser

EdInvestor wrote: »

The UK's high tax free allowances could be handy here - you can "earn" almost 10k p.a. in pension income before paying tax if you are over 65.

So let's say you had a teacher's pension of 10k taxed in the UK.It would be paid tax free. Then you have your state pension paid in France - which might well be covered by that country's lower tax allowance and also be tax free.

So your net tax payment would be lower, whereas if both pensions were taxed together in either country, you would likely pay more.

Surprisingly, despite the large numbers of Brits retired abroad, it seems that very few have really looked into the financial basics of their new country and worked out how they can be used to their advantage in combination with UK-derived income and assets.

Exactly! it's like getting a personal allowance in both countries.