Client Case Study: How moving to France can dramatically reduce pension and Inheritance taxes

Client Scenario

John, 67, is a UK resident planning to retire with his wife Margaret, to France permanently in 2026. They have:

  • A UK defined contribution pension worth £1.3M

  • UK State Pension entitlement and an S1 certificate (for healthcare)

  • A French home valued at €1M (his future main residence)

Their key objectives are:

  • Accessing his pension tax-efficiently in France

  • Protecting their beneficiaries from punitive UK inheritance tax (IHT)

  • Ensuring their estate is structured correctly under French rules

The Challenges

  1. UK Pensions & the 2027 Rule Change
    From April 2027, UK pensions will form part of an individual’s estate for IHT purposes, meaning beneficiaries could face up to 40% IHT, plus income tax on death after age 75.

  2. QROPS No Longer as Attractive
    Transferring pensions to a QROPS (Qualifying Recognised Overseas Pension Scheme) was historically a popular IHT solution. However:

    • 25% Overseas Transfer Charge (OTC) now applies in most cases (removed exemptions from October 2024).

    • John would have faced an immediate £325,000 tax hit on transfer.

  3. UK Rules and Key Changes from 6 April 2025:

    John and Margaret’s Uk -Situs Assets (e.g, UK property, UK shares UK bank accounts will remain fully subject to UK IHT regardless of his residency in France.

    His assets in France will fall out of the scope for UK inheritance after 10 years.

Our Recommended Strategy

1. Establish French Tax Residency Before Pension Withdrawal

Once French tax resident, John’s UK pension income falls under the UK-France Double Tax Treaty, meaning:

  • UK cannot tax his withdrawals (except government pensions).

  • French tax rules apply instead.

2. Full Pension Encashment Using the French Lump Sum Tax Option

Instead of taking a tax free lump sum and phased withdrawals, John chose to take 100% of his pension as a one-off lump sum in his first French tax year.

7.5% Prélèvement Forfaitaire Libératoire (PFL)

  • French rules allow a flat 7.5% tax rate on qualifying one-off pension lump sums (no social charges due to his S1).

Contribution Exceptionnelle sur les Hauts Revenus (CEHR)

  • For a married couple CEHR is based on your total Revenu Fiscal de Référence (RFR). If this exceeds: €250,000 (single) or €500,000 (joint) there’s an additional tax.

Tax Saved:

  • John’s marginal tax rate of income tax in the UK is 40% : ~40%+ (£520,000).

  • French PFL: ~£87,750 on £1.3M

  • CEHR: ~ £30,632 on £1.3M– saving £401,618.

  • Plus the beneficiaries are no longer liable to income tax should they inherit the monies post 75

3. Investing Proceeds Into an Assurance Vie

John reinvested the net proceeds into an Assurance Vie contract, which offer:

✔ Tax deferral on investment growth, be careful of your choice of assurance vie (only gains taxed on withdrawals)


✔ Preferential inheritance tax treatment:

  • €152,500 per beneficiary tax-free (on premiums paid before age 70)

  • 20% flat rate thereafter up to €700,000 per beneficiary

  • Flexibility to segment investments for specific heirs

We set up an offshore policy for them both, with several beneficiaries, maximising the amount of money that could be left free of French succession tax.

4. Long-Term Estate & IHT Planning

  • John and Margaret plan to remain in France.

  • Once they have lived in France 10 years:
    Their non UK situs assets including his Assurance Vies will be outside UK IHT completely.
    Their French home remains below the French Wealth Tax (IFI) threshold (€1.3M net real estate, read more here).

  • They have full access to their capital and income during their life.

  • Should they decide to return to the UK they can do so tax efficiently.

The Outcome

John reduced his lifetime tax bill by over £400,000 compared to leaving his pension in the UK, while ensuring his heirs benefit from preferential French succession rules. He also reduced the mountain of red tape his heirs would have to go through should they have inherited his pensions.

Key Takeaways for British Expats Moving to France

✔ Timing matters – establishing French residency before taking any pension benefits can save hundreds of thousands in tax.
✔ Choosing the right Assurance Vie is essential for French estate planning and tax deferral.
✔ Changing the tax residency to France to escape future UK IHT on worldwide assets.
✔ QROPS is rarely cost-effective now given the 25% OTC and loss of previous exemptions.

Thinking of Moving to France?

At MiraClair Wealth, we specialise in helping British expatriates structure pensions, investments, and estate planning when relocating to France.

Important Information


The information on this page is for general guidance only and does not constitute personal financial, tax, or investment advice. Tax treatment depends on individual circumstances and may change in the future. Cross-border planning should always be reviewed with a qualified professional who understands both UK and French regulations.

If you are considering making any changes to your pension or investments, we strongly recommend seeking personalised advice.