Q&A Corner – Does the UK tax or withhold anything when I take out my entire pension to invest it in France?

Q: Does the UK tax or withhold anything when I take out my entire pension to invest it in France?  

A: It is likely, at first. The UK/France Double Tax Treaty gives France the right to tax your private pension once you are resident there, but usually HMRC will withhold the UK tax at source.

Above the 25% tax-free lump sum (PCLS), pension providers apply PAYE at emergency rates, sometimes withholding up to 45%. To reclaim this, you must submit the France Individual double tax relief form, certified by the French tax office and sent to HMRC. 

Refunds can take 12-18 months, leaving funds tied up. Once repaid, France taxes the lump sum under its own rules and qualifying lump sums usually benefit from a flat 7.5% rate (plus social charges), which is below the UK’s emergency withholding.