HELPLINE: 
The hardest decisions of the journey to reverse
In the third article of his series on cross-border wealth strategy, Daniel Butcher of DTB Wealth Management examines the UK pension decision facing British expatriates in France — and explains why it belongs third rather than first.
With the portfolio structured and the move mapped, most clients reach the decision they have been quietly postponing: what to do with the UK pension.
Daniel Butcher, founder of DTB Wealth Management, says it is rarely one decision. “There is no universally correct answer. There is only the answer that fits the rest of the strategy — which is precisely why it comes third, and not first.”
For a British expatriate moving to France, three routes are worth examining. The pension can be drawn under the existing UK arrangement. It can be taken in full. Or it can be consolidated into an International SIPP and paid under an NT code. QROPS, for years the standard recommendation, has been effectively closed to French residents since the overseas transfer charge was extended in October 2024, and the firm no longer proposes it for clients moving to France.
“The International SIPP combined with an NT code is where most of our clients settle,” says Daniel. An NT — no tax — code is issued by HMRC once the position under the France–UK double taxation treaty is established. The pension is then paid gross in the UK and taxed in France, frequently at a lower effective rate.
Timing decides how well that works. “The application must be made before the first payment, not after it,” says Daniel. “Reclaiming tax that has already been deducted is slow, and entirely avoidable. The timetable is set by HMRC, not by the client.”
Full encashment is the route most often misunderstood. Taking the entire fund as a single payment can, where the conditions are satisfied, be taxed in France at a fixed rate rather than at marginal rates. “It suits one particular profile and nobody else,” says Daniel. “It is irreversible. It belongs inside a strategy, never in a moment of impatience.”
The same caution applies to the 25 per cent lump sum. It is tax-free in the United Kingdom. It is not automatically tax-free in France. “Clients take it believing that nothing follows,” says Daniel. “Something usually does, and by then the money has been spent.”
Defined benefit rights are assessed separately and under a different set of rules again. Whichever route is taken, each one alters the tax position, the currency exposure and, eventually, the estate that will pass under French succession law. That is why this decision sits between the portfolio and the income strategy rather than at the beginning of the work, and why it is rarely settled in a single meeting.
Next month: arriving in France, and how an existing portfolio becomes a Luxembourg assurance vie.