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Fears of a ‘humanitarian crisis’ for vulnerable Brits in France

A citizens' rights group has warned of a 'humanitarian crisis' for vulnerable British people in France - including pensioners on low incomes and sick and disabled people.

Published: 2 March 2020 14:03 CET

Fears of a 'humanitarian crisis' for vulnerable Brits in France

Photo by Huy Phan on Unsplash

The citizens' rights group Remain in France Together (RIFT) has been carrying out surveys among the British population in France, and has found many people living in precarious circumstances who are to afraid to apply for residency during the Brexit transition period.

The Withdrawal Agreement covers anyone who is resident in France before December 31st 2020 and allows them to stay in France – provided that they meet the criteria for legal residence.

But it's this caveat that has got people worried.

Even before Brexit, there were always some conditions attached to freedom of movement – and one of them was that people needed to prove that they can support themselves and are not likely to become a burden on the French state.

However, because France does not require EU citizens to register for residency – in contract to most other European countries – many people were unaware of the condition. The lack of registration also means that no-one knows exactly how many British people live here – estimates are between 150,000 and 300,000.

There is no absolute limit on what people need to earn to be allowed to stay. The French government has published a guideline figure but the Withdrawal Agreement states that each case must be decided on its own merits and other circumstances – such as owning your own home – must be taken into account.

But there are still a significant number of British people on very low incomes who are now fearful that they will not meet the criteria.

These include pensioners on low incomes, self-employed people with a precarious income and those whose ill health has affected their earning ability.

RIFT's acting chairman Andrew Dewar said: “Because of Brexit and the policies of successive Conservative governments in the UK over the last decade, British residents in France find themselves in a desperate situation.

“Our members worry and live in fear of what the future holds for them. They came to France to live their dream of a better life for themselves and their family within the European Union. Brexit and its consequences now threaten that dream. And for many, they have nothing in the UK to go back to, their home is here in France.

“The recent declaration by President Macron that he would protect and defend the British in France is genuinely appreciated. This report is aimed at helping the French government make a success of integrating the British residents in France, it is a warning of the potential pitfalls ahead.

“RIFT will work constructively with all responsible parties to ensure a successful outcome. It is in this spirit that we have published today’s report. We have to succeed, all of us together, failure is not an option.”

RIFT is not the only group to be concerned about vulnerable British people living in France – the UN is currently recruiting for staff to set up an operation in France to help vulnerable people navigate the sometimes complex processes that will be required.

The French government has said that all British people in France will need to register for residency via a new online system.

Those who already have a carte de séjour permenant (permenant residency card) will simply use the online portal to swap their card for a new one, everyone else has to make a fresh application.

The site will not go live until July this year, and British people then have until June 2021 to get their applications in.

Justine Wallington, Co-Author of the report and RIFT Administrator, added: “This report is truly shocking as we could be looking at a potential humanitarian emergency in France.

“Our members’ vividly expressed fears and concerns in this report show just how urgent it is to stop their uncertainty.

“They have suffered for over three years not knowing if their families can stay together; if they can stay in their homes; if they can have medical care and if their incomes are secure.”

Here are some of the people that approached RIFT with their fears.

Full time carer

RT: “In August my husband was diagnosed with a brain tumour that is inoperable – his prognosis is 12-18 months from diagnosis. Devastating and terrifying.

“I am caring for him full time so am not working and have no income of my own. By the time the process goes through he will very probably be gone and I have no income, one child at university and one child in school. I will not meet the criteria for staying and I am very, very scared.”

Too ill to work

MP: “I have been in France for 16 years – all low income but I was a homeowner with a partner. Now the house is sold due to impending divorce and I have no current income due to serious illness. I should be entitled to aid but I'm too scared to chance it.”

Insecure income

JGA: “I meet the criteria for staying at the moment but my job isn't secure, my home is just about habitable, I am the wrong age, with dependents and have no safety net. I try not to think about the future, it scares the hell out of me.”

Husband has cancer

ASJ: “We bought a B&B in 2011 which we own outright. Our income was supposed to be from me running the B&B and my husband getting work in the building trade.

“However in December 2014 he got blood cancer and has been unable to work since so our income is solely from the B&B. Even in a good year we only make €14k gross and have struggled to pay bills and keep our heads above water.

“I don't think we would have enough income to get a carte de séjour and the prospect of being sent back to the UK literally fills me with dread. I don't want to be overly dramatic but I am seriously concerned about my mental health.”

Pensioner

JG: “I've lived in France for six years, get pensions from the army and fire service of €1,000 a month. We own our own house but the money is all mine so I worry that if I drop off me perch my wife is utterly penniless.

“Currently trying to find work as an HGV driver to get some savings for when I go and join the choir invisible. However all the work I've been offered is international and nobody knows if I'll be allowed freedom of movement as a worker in Europe on a UK passport.”

If you are concerned about your position in France, head to our Dealing with Brexit section for the latest information on residency, healthcare, driving and pensions.

RIFT also offers information, support and advice on all matters concerning citizens' rights on its website and Facebook page.

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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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