HELPLINE: 
If you are moving your UK pension to France, these are the smartest ways to minimise tax and risk during the process, says Daniel Butcher, founder of DTB Wealth Management.
DTB Wealth Management recently helped a client to transfer his pension from the UK to an ISIPP and then into an assurance vie, a life insurance policy. This is a common process British expats go through in France, but it is important to understand what exactly is involved and the potential risks. Overlooking key details can jeopardise long-term results or restrict withdrawal access.
“The structure itself – SIPP to ISIPP to AV – is not the risk, but there are five main areas that need to be managed in order to make a successful transfer that is as stable and lucrative as possible,” said Daniel.
The first is to ensure that your capital is held by a custodian bank, which is A+ rated (by Moody’s, S&P or Fitch) such as BNP Paribas, BNY Mellon or Crédit Agricole Luxembourg, which are regulated in investor-protective jurisdictions.
Next, to beat downturns from market volatility, it’s important to create a diversified, risk-profiled portfolio, holding no more than 3% in any one fund. Choosing good investment options from bespoke advice is a key driver to success.
“Poor selection or overexposure to a single asset class can lead to underperformance or losses,” said Daniel. “We ensure that our clients receive tailored investment guidance and help them minimise risk by avoiding fund concentration.”
Obtaining the NT (Non-Tax) code from HMRC can take 6-8 months and delays may trigger unexpected tax. It is necessary because it ensures holders only pay tax in France. Without it the UK withholds 45% which you would have to claim back while paying tax in France.
The solution here is to work with an adviser who has interim ISIPP strategies or tax reclaim procedures. “If the NT code is delayed, we help our clients retain full flexibility by either leaving their funds in the ISIPP, where they are Brexit proof and fully accessible with no restrictions, meaning, you can withdraw your money and get it sent wherever you reside, which is a better position than leaving the funds in the UK pension,” said Daniel.
Hidden or excessive fees are another obstacle for pension holders transferring across to ISIPPs and AVs. “All investment products include fees and commissions that can erode your investment,” said Daniel. “As well as avoiding concentration, we ensure clients select clean share classes and are acutely aware of all fees, particularly hidden commissions.”
At DTB Wealth Management, the fees are fixed, transparent and disclosed. The total setup is: ~£3,500 per transfer, plus £400 per extra pension involved, capped at £1,000, and £400 to obtain the NT code.