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What Brits in Europe need to know about UK’s new minimum income rules

From Thursday April 11th it will become harder for Britons living in Europe to move back to the UK with their foreign partner and family because the minimum salary threshold rises steeply.

Published: 6 April 2024 10:00 CEST
Updated: 11 April 2024 12:37 CEST

What Brits in Europe need to know about UK's new minimum income rules

Returning to the UK is about to become harder for Brits in Europe with foreign partners. (Photo by HENRY NICHOLLS / AFP)

British citizens who intend to move to the UK with a foreign partner have to meet several requirements to make their plans a reality. If they apply for a partner visa, one of the requirements is having a minimum income showing they can support their spouse without relying on the social security system.

Other European countries impose similar rules, but meeting such demand in the UK is particularly difficult, and it will be even more so with the salary threshold increasing on April 11th.

When the UK was part of the European Union, British citizens could move back to the UK with their EU and non-EU partners without such requirements under EU free movement rules. But because immigration policies are a national matter, these rights were not preserved under the EU-UK withdrawal agreement.

Despite not being protected by the EU-UK withdrawal agreement, the UK granted Britons living in the EU a ‘grace period’, until March 30th 2022, to return to the UK with foreign spouses and receive status under the EU Settlement Scheme. After that date, British nationals who return to the UK from the EU with a non-UK partner are also subject to these visa and income requirement rules.

Immigration barriers

The minimum income requirement (MIR) was established in 2012 as part of the toughening of UK immigration policies. British citizens (plus EU/EEA nationals with pre-settled status) need to have a wage with a sufficient annual income in order for them to be able to sponsor their foreign partner’s visa. In other words if they want their partner to come with them, they need to earn a certain amount. This has left Britons living in Europe feeling as though they are “locked abroad” and in “exile”.

The minimum income up until now was set at £18,600 (€21,700), or £22,400 (€26,100) if the couple had one child, plus another £2,400 (€2,800)for each other child.

But these income requirements will rise steeply from April 11th 2024.

This policy has not been equality impact assessed and discriminates against women and poorer British citizens.

— Art (@Art93319672) January 11, 2024

From this date the minimum a British national or long-term resident will need to earn if they want to return home will increase to £29,000 (€33,800) and up to £38,000 (€44,313) by spring 2025, although there will no longer be an additional amount for accompanying children. Alternatively, families have needed to prove they have at least £62,500 (€72,884) in cash, which from 11 April will increase to £88,500 (€103,207).

Anyone who applied before April 11th won’t be affected by the rise.

“This will ensure people only bring dependants to the UK they can support financially,” the UK government has said.

The minimum income is not the only requirement to secure a spouse visa for a non-UK partner and children.

There are visa fees (£1,846 for applications from outside the UK or £1,048 from within) and the immigration health surcharge, which increased on 6 February from £624 to £1,035 for adults and from £470 to £776 for under 18s per year.

In addition, they need to have adequate accommodation and the foreign spouse needs to prove that they have a good knowledge of English.

“The rules are complex and even applicants who fulfil all the requirements struggle to tick all the boxes needed in order to be successful,” Anna Hawkes, Legal Services Manager at UK-based law firm Seraphus, told The Local.

How the MIR works

When it comes to the minimum income requirement, if the sponsoring partner is employed and has been employed for more than six months with the same UK employer, he or she must prove six months of earnings that would make up the equivalent to an annual salary of £18,600, soon £29,000. If the sponsor has not been with the same employer in the UK for six months, he or she will need to show earnings over the threshold in the 12 months before the application.

It the employment is outside the UK, in addition to the earnings, the sponsors have to show they will keep the income they have had abroad after moving to the UK (for example if they are digital nomads) or that they have a job offer in the UK.

Non-employment income, such as property rentals, dividends, royalties, interests, maintenance payments from former partners, pensions or allowances, also counts, but proof is required for 12 months.

If the sponsor is self-employed or the director of a limited company, the income will be that of the last full financial year (which runs from April 6th to April 5th) or the average from the last two financial years. What counts is the gross taxable profit.

If the minimum income requirement is not met, the sponsor or the applicant or both combined need to show they have sufficient cash savings. These amount to the minimum income requirement multiplied by 2.5 and added to £16,000. This currently makes £62,500, but from 11 April it will be £88,500.

Another alternative is for the partner to seek another visa route, for example through their employment.

If requirements cannot be met, it is possible to apply for the right to remain in the UK on the basis of ‘exceptional circumstances’, for instance when it would not be reasonable to expect a child under 18 to leave the UK or if there are “insurmountable obstacles to family life” with a partner staying outside the UK.

It is also possible to request a court to recognise the right to family life under the European Convention on Human Rights. If the family is living abroad, the reasons why they need to return to the UK will be taken into consideration if ‘exceptional circumstances’ is argued, legal specialist Hawkes explains.

This could be for example if a close family member in the UK needs care.

As regards the timing for processing applications, it currently takes around 24 weeks (around 8 weeks if applying from the UK) to obtain a decision when applying from abroad, says Anna Hawkes.

“Applicants should be able to pay for priority service in order to get a decision in 6 weeks. However, it can differ from individual visa centres so it will depend on where the applicant lives,” she added.

A petition on the UK parliament website asks the government to reconsider the minimum income policy. If it reaches 100,000 signatures, it will have to be debated in parliament.

This article has been produced by Europe Street news.

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6 pension questions British people should ask before retiring to France

Retiring to France is a dream for many, but before turning that dream into reality there are some serious financial questions that you need to ask yourself to ensure that your retirement is a financially comfortable one.

For most retirees, their main or only income will be a UK pension, so it’s important that you understand how your pension will work once you make the move.

There are some specific rules and restrictions on taking pensions out of the UK, while there is also the question of how UK pensions interact with the French tax system.

Financial adviser, Maeve Hoffman, from Spectrum IFA Group, emphasised that people should not take these decisions lightly, telling The Local: “Figuring out what to do with your pension should be part of your wider financial plans for your life.

“This may be your most important asset, besides your home, and the best answer for what to do with your pension is highly individual. There are no sweeping generalisations when it comes to advice on private pensions. Everyone’s situation is different,” she said.

This article is intended as an overview of how the system works for UK pensioners and is not intended as a substitute for individual financial advice. The article is aimed at people who have worked most or all of their career in the UK and then intend to retire in France – the situation is slightly different for people who work in France and then retire here.

You can find an overview on French tax rules for pensions HERE.

Long-term or short-term

The first thing you need to carefully consider is whether or not your move to France will be for the long-term or short-term.

When it comes to your UK pension, there are some options that may be advantageous for French residents looking to stay here permanently, but they could make your life very complicated if you end up returning to the UK in the future.

Do not be afraid to ask yourself the tough questions – is there any chance you will have grandchildren in the future that you will want to be geographically close to? Have you ever spent a significant time in France, aside from short holidays? Do you have roots in France, such as friends, family or a home? If your health deteriorates, will you want to be cared for in France or the UK?

If are unsure about the answers to these questions, then take some time to really think about them. There are alternatives to permanently moving to France if you are unsure – for example, you could spend a few months a year here on a short-term visitor’s visa.

Understanding the different tax rules

British retirees should be aware that the UK and France have very different tax systems.

Once you become a tax resident in France, you have to file a yearly declaration, including your global income. The country that gets to tax that income is determined based on the tax treaty between the UK and France, which seeks to eliminate double-taxation.

As for your UK-based pension, the treaty states that if you have a UK government or civil service pension (eg a state school teachers’ pension), then this will remain taxable only in the UK. Some old NHS pensions were considered ‘government pensions’, but modern ones might not be. You can check if your pension is classified as ‘government’ here.

You still have to declare this income to the French tax authorities, but you will not be subject to tax in France on it. That being said, it will count towards your total household income, and could end up pushing you into a higher tax bracket which is something you should carefully consider, particularly if you want to take a large sum at once.

The same is not true of private pensions: these are taxed in France, not the UK, as soon as you become a tax resident here. Confusingly, the UK state pension is also considered a private pension, even though it is paid by the government.

You can find a complete guide to how UK pensions are taxed in France HERE.

As a result, you will want to think about whether your previous plans for your private pension were only advantageous to you as a UK resident. Once you become a French tax resident, they could have unforeseen implications.

You can find more information about tax rates in our tax guide.

Get reliable, expert financial advice before doing anything

If you have decided you want to be in France permanently, then you will need some expert tax and pension advice – but you need to be careful who you take advice from, this is a highly specialist area and it’s unlikely that high street financial advisers will have the knowledge that you need.

Brexit has also made getting financial advice more complicated, with fewer experts available.

Maeve told us: “Because of Brexit, you cannot use a UK-based financial adviser anymore – you have to use an EU-registered one. This has made things more complicated. When picking an adviser, seek out someone who has expertise on the local taxation rules in France. They should also be regulated with the financial regulator where you live and where they work.”

It can be especially complicated to parse out who you can and cannot take advice from – for example, some UK-based advisers have continued to give advice to EU-based clients, even though this can be particularly risky if the investments they recommend do not follow EU regulations.

There are also expat-oriented financial advice services that are located outside of France, but seek to offer tax advice to people in France.

She added: “Be smart and sensible. If you choose an adviser in Dubai or Spain for example, you will now be adding another regulatory organisation into the mix, plus another language.

“There are free, government-based services in the UK that can help you understand your private pension – Pension Wise and Money Helper. Before doing anything, you should consult the free services. Any financial adviser worth their salt would recommend this too.

“These services have begun to have longer wait times, so be sure to book well in advance of when you plan to draw from your pension.”

Deciding whether to transfer your pension

Another question that is important for Brits to think about is whether or not to transfer their pension into either a UK-based SIPP for non-residents, or a QROPS (Qualifying Recognised Overseas Pension Schemes).

The SIPP will keep your pension in the UK, while the QROPS moves it out of the UK, to Malta specifically.

These options can be helpful for French residents, but you need to familiarise yourself with their benefits and drawbacks.

“The QROPS is not for someone who is unsure of their future in France, as if you return to the UK within five years of the pension transfer HMRC will seek their tax back as if it was a full encashment,” Maeve said.

In France, a QROPS is considered a trust, you may also have additional reporting requirements to fill out along with your annual declaration (more info here).

You should beware of scams on this subject, as the post-Brexit period saw many scammers seeking to persuade Brits that it was now mandatory to transfer their UK pension – always be wary of any cold-calling or unsolicited financial advice.

Determining how you will want to draw from your pension

The next question is how you want to receive your pension – either as regular income or as a lump sum. The option that you chose will have tax implications in France.

If you receive it as a regular income, when doing your yearly French tax declaration, you will add up your pension income for that year and you will be taxed at the normal marginal rates for income (the barème). These rates go up to 45 percent (for the highest earners only) plus social charges if they apply (more on this below).

Pension income can also benefit from a 10 percent tax deduction, as long as it does not exceed €4,123 or fall below €422 per household.

Lump-sums are more complicated. Technically, French tax authorities would allow a return of once off pension capital to be taxed at a flat rate of 7.5 percent.

But in reality, Hoffman explained that anyone seeking to do this would need the express, written confirmation from French tax authorities that this rate will be applied.

She also explained that the type of private pension matters when seeking to get the lump-sum flat rate.

“There are plenty of different types of private pensions in the UK, but the old ‘defined benefit schemes’ have been the gold-plated standard. These are the types of pensions that give you a portion of your salary for the rest of your life.

“In principle, you should be able to take out lump-sum of 25 percent of your ‘defined benefit scheme’ pension and be taxed at the 7.5 percent flat-rate. That being said, some people get refused, so you cannot make any assumptions and you need clarification from the French tax office.

“As for all of the other types of private pensions in the UK, like the money purchase or personal pension schemes, these are considered to be ‘funds’. If you want to benefit from the lump-sum then you would have to take out the entire pension. You would not be able to just take out 25 percent and get the lump-sum rate.

“For anyone considering taking their whole pension and seeking to use the 7.5 percent rate there are conditions to be met, so I advise people to write to their French tax office and explain their own situation in detail. Be sure to clarify the tax rate you are seeking to have applied and ask what documents they would need from your UK pension company to confirm that the contributions to this pension have been tax deductible.”

Healthcare and social charges

Deductions in France come in two types – impôts (income taxes) and prélèvements sociaux (social charges).

People who retire to France (and have never worked in France) and have already reached the state pension age can apply for the S1 – this means that the UK continues to pay for their healthcare costs and they would not be charged prélèvements sociaux. Non-working spouses of an S1 holder can also benefit from this.

People who take early retirement and make the move before they reach state pension age may have to pay social charges in addition to taxes until they reach the state pension age and can apply for their S1. However, there are several exemptions to social charges, so even if you expect a bill, you may not end up being charged. More information in our guide.

Social charges help pay for a lot of services from the French government, including access to healthcare. In France, you can access the state healthcare system (and get a carte vitale) after three months of residency.

READ MORE: Why you might get an unexpected French health bill

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