A UK pension was outside the estate in the UK for inheritance. It now forms part of the estate for inheritance tax.
This means for people in France that have UK pensions and are based in France that as it is a moveable asset it will attract succession tax for the beneficiary based on their relationship to you.
It’s likely that any UK pension that’s paid on death will now require UK probate. It’s also likely the pension trustees will deduct tax at source for this but we have only seen the draft notes. We need the full finance bill 2024 to get an idea on how this will be applied.
Also with the changes to non doms means this could have an impact if you have spent 10 consecutive years out of the last 20 years in the UK.
It will all become clearer in time and I’m working with a notaire to understand the implications regarding wills etc.
The double taxation treaty will sit the taxation rights in France but it’s more about the actual process with the UK asset in how this will be applied.
Yes I think I’m going to have to spend mine (or else move back to the UK on my deathbed) as I don’t have a spouse or children, if I leave my worldly goods to my siblings they get clobbered at 35-45%.
Not that there will be much to pass on, mostly the value of whatever house I end up buying.
Hi Sue, passes tax free in UK and France but not sure what the process looks like for probate etc… between spouses there may be an exemption for the trustees to just pay the money. As it’s in the estate however I do think that UK probate will be required or the funds paid to the executor first… not sure on the application of the rules yet.
As an aside, there are three financial advisers that attend the business networking groups that I go to here in the UK and they all said pretty much the same thing last week - “Don’t Panic Captain Mainwaring!”
The info they’ve had from the pensions industry is that Labour’s proposals are likely to be subject to a fair bit of amendment before they come into effect, if only on the grounds of making them workable…
Sorry Dave, this is all much more technical than I am used to. We each have several annuity pensions which are paying each of us regular monthly sums. We have foregone taking the maximum so that the remaining spouse will continue to receive a monthly sum that will continue until the remaining spouse dies. I’m guessing that’s not quite the same as what you are talking about.
I am not @Dave_Lawson, nor do I play him on television, but my understanding is that the Labour pension IHT proposals relate to pension pots where there is a lump sum remaining in the pot at death, not to annuities since those end with the death of the beneficiary so there is nothing left to tax?
Hi, no if you have death benefit on the annuity it will continue to pay on 1st death at the rate selected. This is a crystallized benefit and between spouses no problem at all.
as I don’t have a spouse or children, if I leave my worldly goods to my siblings they get clobbered at 35-45%.