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Your Expat Guide to Pension Planning

By Michael Doyle
This article is published on: 4th March 2021

04.03.21

Are you planning on retiring in France or Luxembourg but have a pension in the UK?

Look no further than this article as we guide you through your options. Pensions are a pinnacle part of your retirement plan but can be a complex topic for British expatriates with rules frequently changing, so always consult with your financial adviser when deciding which plan best suits your needs.

First off, you can leave your pension as is in your existing UK pension scheme if you want. However, with the Brexit decision, you should check with your UK financial adviser and make sure they can still support you. If you want to move your funds to an international pension plan, then your best options may be opening a QROPS or SIPP account.

QROPS (Qualified Recognized Overseas Pension Scheme) allows foreign nationals who have worked in Britain to transfer their UK pensions overseas.

  • Expatriates can avoid various restrictions imposed by the UK when taking retirement benefits
  • HMRC allows individuals to access 100% their pension fund after the age of 55. However, it may not be advisable to do so as it can result in higher taxes on withdrawals. It is potentially better to draw the funds periodically in a more tax-efficient manner
  • There’s no compulsory annuity purchase
  • Reduction in currency risk because QROPS allows you to invest and take benefits in a currency of your choice
  • QROPS gives you more freedom to select a portfolio suited to your needs because it offers a more extensive range of investment options

SIPP (International Self-Invested Personal Pension) enables someone access to greater investment choices because it is a personal pension plan based on making your own decisions. However, the pension structure is based in the UK so it’s subject to any legislative changes made by the UK government.

Benefits include, but are not limited to:

  • An international SIPP can provide a regular or variable income
  • No obligation to purchase an annuity
  • They provide greater flexibility regarding investments, tax benefits, and currency choices
  • Ideal way to consolidate various personal pensions, which reduces administrative complications
  • If you plan on moving back to the UK this option may be most suitable for you

You can also try a combination between both UK and international pension plans. The main objective is to arrange your retirement in a manner where you can access your finances when you want, where you want, and in the currency of your choice. Overall, there are many things to consider when choosing your pension plan, so be sure to do your research and understand your different options before making any decisions.

It is in your best interest to act now when planning your pension scheme, so touch base with your financial adviser today to discuss your options.

Beyond Brexit… What comes next ?

By Occitanie
This article is published on: 4th March 2021

Welcome to the ninth edition of our newsletter ‘Spectrum in Occitanie, Finance in Focus’, brought to you by your Occitanie team of advisers Derek Winsland, Philip Oxley and Sue Regan, with Rob Hesketh now consulting from the UK.

In this our first newsletter of the year, it is appropriate we say a fervent goodbye to 2020 and look forward to what we all hope will be a better and much kinder year. Although we are heartily sick of hearing the B-word, we can’t let the passing of the UK’s exit from the European Union pass without addressing the question “where do we stand now?” We also invite our investment partners to give their views on the markets for the coming year.

Post Brexit Situation
As far as financial services are concerned, it is (at this stage) a no-deal Brexit. Financial services in the UK employs 1.1 million people, yet so far more time has been spent negotiating fishing rights than financial markets access between Europe and the UK. This financial services relationship between the two sides will be discussed and negotiated over the coming months. What does this currently mean for us expats? We have already seen:

  • Banks threatening to close down bank accounts, because they struggle to find solutions for the ongoing servicing of non-UK resident account holders.
  • Financial institutions no longer being allowed to ‘passport’ their services into Europe – UK based investment managers, and Independent Financial Advisers (IFAs) being just two examples of this. To continue to offer services, each must now open European offices and apply to be regulated through the relevant EU regulatory system
  • We’ve seen the application of duties to goods imported from the UK from online shopping, a totally new concept for most of us
  • The need to apply for a French Driving Licence

These are but a few of the bureaucratic changes brought about by Britain’s exit from the EU.

We have covered some of these Brexit consequences in previous editions of our newsletter, but there is perhaps a more serious implication for those who hold UK investment bonds.

Why are UK Investment Bonds a problem?
Prior to Brexit, as investment bonds issued in an EU country, UK bonds were treated in the same way as assurance vie policies, with only the gain element of the investment subject to income tax and social charges. How quickly your local tax office recognises that this situation has now changed will vary, but in time it is inevitable that questions will start to be asked regarding those withdrawals that you are taking to support your lifestyle.

Why should that bother me?
As a non-EU qualifying bond, your local tax office could, as a worst-case scenario, treat the whole of any withdrawal as taxable income unless the split between capital and gain can be proved. It is more likely, however, that withdrawals from UK bonds will still only be taxable on the gain element, but the taxpayer will no longer benefit from the favourable tax treatment that the assurance vie enjoys, such as the annual tax-free allowance of €4,600 (€9,200 for a couple) after 8 years and the preferential 7.5% rate of income tax. We urge all our readers to assess their current savings and investments, to ensure that they are all France tax compliant. We can help you with those assessments.

investment manager

What can we expect from investment markets this year?
We have invited one of our investment partners to give us their Investment Outlook for 2021. These are the views of Tilney Smith & Williamson that we would like to share with you.

A review of a tumultuous 2020
The investment landscape in 2020 has been dominated by the COVID-19 virus, lockdowns and unprecedented policy easing by Central Banks and governments around the globe. The US election and UK-EU negotiations provided further risks to markets. The pandemic led to a global economic shock that established new multi-generational records. For instance, UK GDP fell by over 11% in 2020, the biggest decline since the Great Frost of 1709 (1).

In financial markets (2), the MSCI All Country World equity index fell 32% in total return terms (including dividends) once COVID-19 new cases spread outside China, while government bonds outperformed as investors became more risk averse. The low point came on the 23 March prompting the Fed to say that it was prepared to buy US corporate bonds as part of a new round of quantitative easing (e.g., asset purchases). Global equities then went on to rally 63% from the trough, supported by – at various points – fiscal and monetary stimulus, economic recovery and hopes of a successful vaccine rollout, to close out the year up 15%.

The main winners of 2020 were ‘growth’ equities and direct COVID beneficiaries such as Big Tech, following widespread adoption of e-commerce and working from home practices. Long-term government bonds benefited from central bank asset purchases. In turn, gold gained from concerns about the debasement of the fiat currency system from money printing: the US created 21% more dollars in 2020 than existed previously. Despite the virus originating in Wuhan, China was one of the quickest economies to re-open and MSCI China equities rose 28%. China’s economy benefitted from lockdowns in the West, since services were restricted, but buying goods was not. China even managed to boost its share of global merchandise exports, driven by stimulus in the West creating demand. The biggest losing sectors were energy (-32%), real estate (-9%) and banks (-11%), with the COVID-exposed UK and Eurozone the laggards in geographical terms.

Be positive

Reasons to be optimistic in 2021

We maintain an optimistic outlook for equities for several reasons. First, the rollout of vaccines and a gradual opening up of economies from lockdowns should encourage households to run down savings rates to sustain consumption.

Second, we expect a synchronised broad-based global economic recovery that supports company earnings. The IMF forecasts that a record 79% of nearly 200 economies will experience growth higher than 3% (3) this year. Not only would this recover much of the lost output last year, but it adds support to consensus global Earnings per Share growth of 28% expected in 2021.

Third, central bank liquidity is still projected to remain highly accommodative. The ECB topped up its pandemic emergency purchase program by €500bn in December to €1,850bn and extended the horizon of net bond purchases to the end of March 2022 (4). In a major policy change in September, the Fed made clear that it intended to “run hot” with regards to maintaining easy monetary policy in order to achieve above 2% inflation (5). Morgan Stanley forecasts that the combined balance sheet of G4 central bank assets will rise by $3.4trn by the end of 2021(6).

The UK and Brexit
Despite the widespread recovery in global risk assets, all UK equity indices were laggards, handicapped by the ongoing Brexit uncertainties and a compositional skew towards value orientated economically sensitive businesses. Should current assumptions over a vaccine inspired economic rebound prove correct, it seems probable that this skew, allied to the removal of Brexit trade uncertainties, could give rise to some relative recovery in UK equity valuations. However, with the longer term balance sheet impact of the Covid lockdowns still to be fully understood, remaining focused on the fundamental quality of the businesses selected, even in an ostensibly cheap market remains paramount.

Investment Risk

Risks to the outlook
In terms of the risks, we continue to monitor: i) a sudden removal of accommodative policy, perhaps if inflation returns at a pace that exceeds central bankers’ expectations, ii) fears of another COVID-19 surge, or a disappointment in the effectiveness in vaccines/a mutation to a more virulent virus, iii) social unrest in the politically polarised United States, and iv) extended valuations in some sectors triggering a broader market rout.

As a reminder to our readers, Spectrum is a registered French company, regulated in France. We are not passported in from the UK, so for us it’s business as usual.

For those of you who still have investments in the UK, whether they be stocks and shares ISAs, investment bonds, pension funds or other investment portfolios, now would be a good time to review these and discuss with your provider as to whether they will be able to continue advising you in a post-Brexit world. Even if your UK provider will be able to continue advising you, they may not be familiar with the French taxation framework and the investments you hold may not be tax efficient in France. We can advise you on investment products that are suitable and tax-efficient for living in France and provide you with ongoing advice to ensure that your financial plan remains on track as your situation and attitude to risk change over time.

Please do not forget that, although we may be restricted on where we can travel at present, we are here and have the technology to undertake your regular reviews and financial health checks remotely. If you would like a review of your situation, please do not hesitate to get in touch with your Spectrum adviser or via the contact link below.

Occitanie@spectrum-ifa.com

We would love to hear from you with any comments and/or questions, as well as suggestions as to future topics for our newsletter. Please feel free to pass this on to any friends or contacts who you think might find it interesting.

UK pensions and investments after BREXIT

By Andrea Glover
This article is published on: 25th February 2021

25.02.21

After several years of uncertainty, the UK has now fully left the EU and whilst many of us understand exactly what that mean in terms of French residency requirements, the impact on the financial services world is only just starting to unfold.

We asked Andrea Glover, International Financial Adviser at The Spectrum IFA Group, for her thoughts on the matter and to provide guidance to those of you who are affected.

Andrea explained “Brexit ended automatic ‘passporting’ rights for UK financial services in the EU. So, if you either live in France or are looking to move to France, it is important to check that, if you have a UK financial adviser and/or UK insurer, that they can still support you.”

Andrea commented “For those of you living in France, contact your UK financial adviser if they have not already been in touch and ask if they are still able to provide financial advice to you as a French resident. Also, ask your UK insurer if they have put in place measures to ensure that your policy or pension can continue to be serviced. Your insurer or financial adviser should always act in your best interests. It is also important to note that in the case of a dispute with your insurer or financial adviser that you might not be able to refer the problem to an ombudsman or court in France.”

Andrea continued “My advice would always be to seek advice about the rules, from a French tax perspective, for any pensions and investments held in the UK and check that anyone offering you advice, or financial services, is authorised to do so in France. Further, a suitably qualified financial adviser who is based in France will undoubtedly have first-hand experience of living in France and therefore have greater empathy with their clients.”

Andrea went onto say “Giving advice on UK held investments and pensions is only one component of comprehensive financial planning. A qualified financial adviser will also be able to provide guidance on matters such as Inheritance Tax planning in France and look at alternative tax efficient investment vehicles such as an Assurance Vie.”

tax UK & France

For those of you looking to move to France Andrea explained further “Moving to France as a UK citizen is obviously more onerous than previously in terms of residency. I believe this places even greater importance on seeking suitable financial advice before any firm plans to move are finalised.”

From her own experience, Andrea commented “We are receiving a number of enquiries from people looking to move to France, which is firstly encouraging but secondly it means that we can really help clients structure their financial affairs efficiently before they move. We quite often work in partnership with international tax lawyers to assist clients who, for example, have a business in the UK but want to run it from France. Having a clear and defined plan, after seeking advice from the suitable experts, prior to any move to France, is undoubtedly beneficial and avoids any nasty surprises further down the line.”

*This article first appeared in The Local Buzz

Currency Exchange and the benefits of using a specialist provider

By Spectrum IFA
This article is published on: 2nd February 2021

02.02.21

Relying on a bank to transfer currency is an expensive option. Currency transfer specialists provide competitive terms, secure, swift transactions and a range of other benefits including regular payments, forward contracts and rate tracking alerts.

At The Spectrum IFA Group we work with Smart Currency Exchange to deliver the best possible rates, service and support for our clients.

Whilst nobody can predict exchange rate direction, the relative strength (or weakness) of the euro is relevant for most of us. I attached a weblink to Smart’s 2021 quarterly currencies forecast.

Smart Currency Exchange
Quarterly Forecast 2021

A historic Presidential election, Brexit deal and global pandemic sent currencies in directions that no one could have predicted in 2020.

Does that mean matters will settle down in 2021? We wouldn’t suggest you bet your transfers, your property budget and your future plans on that!

Fresh uncertainties for the year ahead bring new challenges for economies – and currencies – too. So, predicting the pound’s movements accurately can be a near-impossible task – even for the major banks.

I invite you to read this quarter’s currency forecasts, but with a strong suggestion that you do not base any decisions on them. Predictions for GBP/EUR range between 1.06 and 1.28 over the next 12 months!

Download SMART's Quarterly Forecast
Smart Currency Exchange

What’s in your Quarterly Forecast?

Post-Brexit special – what happens now?
Looking to buy a property overseas this year? What do you need to consider in a post-Brexit world? Our resources section can help.

New and improved tables and charts
How are economies coping in the midst of the pandemic? Our new charts and tables offer a deeper insight.

Expert analysis sections
Smart’s Senior Risk Management Analyst offers his insight and opinion – do you agree with him?

Your next move?
In this climate of uncertainty, how should you plan for the future?

GET AN INSTANT CURRENCY QUOTE NOW

For any further information on currency exchange, please contact your local adviser or please send an email to: info@spectrum-ifa.com

Financial Advisers in France
Financial Advisers in spain
Smart Currency Exchange

Top 3 Financial questions after BREXIT

By Andrea Glover
This article is published on: 1st February 2021

01.02.21

We asked Andrea Glover & Tony Delvalle – What are the current top three ‘hot topics’ with clients, particularly affecting retirees?

UK State Pensions
Andrea commented, “The withdrawal of the UK from the EU has obviously been an area of concern regarding UK State pensions. Now the Withdrawal Agreement has come into force, it is reassuring that those covered by the agreement will continue to benefit from aggregation of periods worked in the UK and EU, and those not yet retired will have the same benefits as current claimants.”

Tony went on to say, “UK State Pensions will be uprated every year whilst residing in France. This will happen even if you start claiming your pension after 1 January 2021, as long as you meet qualifying conditions.”

UK Properties
Many people coming to live in France often decide not to sell their UK home, instead renting the property out to supplement their pension income. Tony explained, “We are frequently asked if this is sensible as a form of investment. Whilst there is often an emotional tie to a former home, or perhaps a client wants to keep the option of returning to their UK home, there can be punitive tax consequences to such a decision, should they then decide to sell the property as a French tax resident.”

Tony continued, “The sale of a UK property has to be declared in both the UK and France. Although under the UK/France double tax treaty you receive a credit in France for any UK tax paid, French residents can also pay social charges on gains arising on the disposal of a UK property. There are also new rules effective from April 2020 in the UK, making such a decision even less attractive.”

Andrea summarised by saying “It really is important to speak to a Financial Adviser, particularly if you haven’t yet made the final move to France. Dependent on personal circumstances, it may be more beneficial to sell their property and invest in a more tax efficient investment vehicle such as an Assurance Vie.”

QROPS for expats

Qualifying Recognised Overseas Pension Schemes (QROPS)
Tony told us that many of their clients have taken advantage of a
QROPS, which enables consolidation of UK pension policies and which has attractive tax and inheritance tax advantages for French tax residents. QROPS can also offer multi-currency flexibility.

Andrea commented, “Many clients currently considering moving their pensions are querying if there are to be any changes in QROPS legislation, in view of Brexit. Our stance on this is that we believe it is highly likely that the UK Government will, after the transition period, impose a 25% tax charge on future transfers to a QROPS, making them less desirable. So, although they may not be suitable for everyone, don’t risk leaving it too late or you may face the 25% charge.”

Looking back at 2020, looking forward to 2021

By Occitanie
This article is published on: 12th December 2020

12.12.20

Welcome to the 8th edition of our newsletter ‘Spectrum in Occitanie, Finance in Focus’, brought to you by Philip Oxley, Sue Regan, Rob Hesketh and Derek Winsland, your Spectrum team of advisers in the Occitanie.

2020 has been a year like no other we can remember. We have had a global health pandemic with tragically unprecedented levels of deaths in peacetime and significant changes for many people in relation to both their work arrangements and social lives, notwithstanding challenges in relation to individuals’ physical and mental health.

In the financial world, economies have suffered deep recessions and economic rebounds within the space of months. All financial markets plunged sharply in March, but many have recovered those losses, and more, with the US Dow Jones index recently breaching 30,000 for the first time ever. In the UK, the recovery of the FTSE 100 has been more muted and even with advances in the last few weeks, the index is still currently down about 15% from its starting point at the beginning of this year, although there are still a few weeks to the end of the year for the market to surprise!

cover 19

Vaccines
Perhaps the single most positive piece of news in 2020 has been the recent succesful trials of a number of Coronavirus vaccines. With approval granted by the MRHA, the UK’s medicines agency, for the Pfizer/BioNTech vaccine, there are 800,000 doses heading to the UK with care home residents and staff thought

to be at the top of the list of recipients, followed by the over 80s and healthcare workers.

There are many other vaccines in the pipeline with Moderna and AstraZenica/Oxford University vaccines thought to be close behind in the approval process. Vaccines from Johnson & Johnson and Novavax are both in the final Phase 3 of trials, China has at least three and Russia one, which are all undergoing trials currently.

Interestingly the storage conditions and price vary greatly, with the Pfizer/BioNTech vaccine requiring about -70°c conditions, dilution before administering and is thought to cost in the region of £25 per dose. The vaccine from AstraZeneca & Oxford University, however, can be stored at fridge temperatures for up to six months, with an estimated cost of about £3 per dose (because the company has committed to distributing the vaccine at cost, during the course of the pandemic). On the day the company announced the results of its trials, the markets somewhat cruelly knocked nearly 4% off the company’s share price! Some confusion over the vaccine dosage and efficacy results didn’t help, but supplying the vaccine at cost is not going to provide the profits boost that investors might have expected.

2020 elections

Politics
Politically, both Biden and Trump registered more votes each than any other US President in history. Whilst Biden undoubtedly won this contest (despite Trump’s protestations), Trump and his views clearly still resonate strongly with many Americans. Politics aside, the economy, employment and equity markets have actually had a particularly good run under Trump’s stewardship. However, the markets have also taken the Biden victory in their stride. Despite what was said during the heat of the election campaign, Biden is a moderate and the response of the markets shows that also to be the view of most investors. The markets’ reaction was also supported by the likelihood of a Republican Senate (still to be determined) which will act as a check on any of the more radical instincts of the new administration. Much of the world will welcome the likely return of US support for the World Health Organisation (WHO) and the Paris Climate Accord.

Closer to home, Boris Johnson’s stock has plummeted from a comfortable election winner only a year ago, to talk of grumbling amongst his own MPs. There has been speculation of possible moves against him by his own MPs, although if this dissention does snowball, it will probably not be until 2021.

President Macron has been busy on the world stage in recent months; although interpreting the polls would suggest the French people would rather he focused on domestic matters instead. His popularity has improved from lows seen previously, but the numbers who disapprove still outnumber those who approve of his presidency and polling on people’s voting intentions for the 2022 Presidential Election show him only a whisker ahead of Marine Le Pen. But with nearly 18 months to the end of the President’s term, much can still happen.

Brexit
As this article goes to press, negotiations are still ongoing between the UK and the EU. Many areas remain unresolved including fishing rights (which seems to be one of the key sticking points in the deal, particularly due to Macron who,according to press reports, is the chief instigator behind the EU’s tough negotiating stance) as well as many other aspects of the UK’s future relationship with the EU. One item that has been clarified recently, however, is in relation to French residents in possession of UK driving licences. It has been confirmed that these will need to be exchanged for French licences, but those affected have until 31 December 2021 to secure their new licence. UK nationals who have driving licences from another EU country do not need to make this switch.

QROPS
Remaining on the subject of Brexit, one of the “go to” financial products within the expatriate market for pensions has been the Qualifying Recognised Overseas Pension Scheme (or QROPS). Since its inception 14 years ago, HMRC figures indicate there have been over 130,000 transfers and the average transfer value in 2019/20 was £125,000. This useful financial planning product has an uncertain future after the end of this year. From 9th March 2017 transfers to and from a QROPS became liable to an Overseas Transfer Charge (OTC) of 25%, unless one or more of five conditions was met. One of those conditions was that the pension member was resident in a country within the European Economic Area (EEA) and the QROPS was established in a country within the EEA. This meant that whilst the QROPS remained an attractive proposition to many expatriates within the EU, the number of individuals who went ahead with a transfer to a QROPS and paid the OTC in the tax year 2019/20 was only 13, according to an article published by Canada Life. The UK left the EU on 31 January 2020 and also left the EEA (the EEA comprises all EU member countries plus Iceland, Liechtenstein and Norway). The transition period agreed in the Withdrawal Agreement requiring the UK to be treated as an EU and EEA member, and bound by the rules of both, expires on 31 December 2020. It seems that this may mark the effective end of the QROPS, although we wait to have this confirmed. Fortunately, an International SIPP is still available to those looking for favourable solutions for their UK pension schemes and this product can provide many of the advantages afforded by a QROPS.

2021 finances

2021
One of our favourite quotes about predicting the future in relation to the world of finance is from the late J.K. Galbraith, who was for many years the Professor of Economics at Harvard University. He famously said that “The only function of economic forecasting is to make astrology look respectable”. For that reason, we will focus on possible trends rather than predictions!

The positive vaccine news has already seen a surge in value to those stocks in sectors that have been battered for most of 2020 – leisure, transport, hotels, restaurants, cinemas etc. It is also likely that prices in banking stocks will stabilise or possibly recover further. Furthermore, it is probable that a lot of the old traditional stocks such as oil, industrials, consumables etc. will improve as we move into 2021. What is not so clear is whether those technology stocks, seen also as “stay at home” stocks (Facebook, Alphabet, Apple, Amazon, Microsoft, Netflix etc.) which have had a stellar 2020, benefitting from the impact of Coronavirus, will continue to power ahead or take a breather in 2021. With regard to some of those sectors that were hit badly this year (hospitality, cinemas, airlines etc.) it is also unclear whether the change in consumer behaviour seen this year is here to stay, in which case any recovery in these sectors may be limited in scope.

Gold, seen as a safe haven during this year’s turbulence, fell back sharply with news of vaccine progress, but has recently stabilised, whereas Cryptocurrencies have strongly advanced in value over this period. It is difficult to assess the future direction of either of these assets, but as the vaccines get rolled out and economies improve, the predictions earlier this year that gold could reach $3,000 per ounce seem unlikely, in the short term at least. What can be predicted with more confidence is that there will still be volatility in the markets, because whilst they have been buoyed by the vaccine news, in the “real economy”, the fallout has yet to be properly felt.

Unfortunately, rising unemployment is inevitable, as are tax increases at some point, to start to chip away at the mountain of debt that has accrued through increased government spending and falling tax receipts. There has been much talk about the shape of the recovery, e.g. “V”-shaped, “U”-shaped, “W”-shaped (reflecting a double-dip recession) or even a reverse square root (unfortunately not an available button on this author’s keyboard!). The answer seems increasingly that all of these may happen depending on the country, the market sector or the company.

What we would comfortably recommend however, is to stay invested in the markets. To conclude with another well known quote from Warren Buffett, now 90 years of age and considered one of the world’s most successful investors, “The stock market is a device for transferring money from the impatient to the patient”.

We wish all our readers a very happy and healthy Christmas and we hope 2021 will be a better year for all. We will be back in touch again next year.

If you have any comments or questions, as well as suggestions for future topics for our newsletter, we’d love to hear from you at occitanie@spectrum-ifa.com. Please feel free to pass this on to any friends or contacts who you think might find the content of interest.

UK bank accounts after Brexit

By Occitanie
This article is published on: 20th November 2020

20.11.20

Welcome to the seventh edition of our newsletter ‘Spectrum in Occitanie, Finance in Focus’, brought to you by Sue Regan, Rob Hesketh, Derek Winsland and Philip Oxley your Spectrum team of advisers in the Occitanie.

As we are approaching the end of 2020, to say that it has been an unusual year would be a gross understatement. Countries across the globe continue to adjust to life with Covid-19 and with the ongoing and ever-changing restrictions that the predicted second wave has brought with it. As this goes to ‘press’ we now find ourselves once again in a national lockdown in France.

Although it had taken a back seat since the virus outbreak, Brexit is once again at the forefront of the minds of UK expats living in the EU. Will there be a trade deal? Are we heading for a cliff-edge ‘No Deal’? It is almost unbelievable that we are still at this point in the deliberations with only eight weeks of the transition period to go.

UK Banks closed

UK Banks accounts after BREXIT
As the deadline approaches one issue that we are frequently being asked about lately by concerned clients, is that some UK banks have been writing to their customers resident in the EU putting them on notice that their UK bank accounts and credit cards will be closed either at the end of the year or, in some cases even earlier, as a result of Brexit.

Although some banks have already contacted some customers, it is apparent that only some types of account are affected and only in some EU countries. The two main banking institutions that have taken such action so far are Barclays and the Lloyds Banking Group, which includes Lloyds Bank, Halifax and Bank of Scotland. Many other banks have stated that they ‘currently have no plans to close customer accounts, but they are monitoring the situation’. Given that this could potentially affect all of us with ties to the UK banking system, we thought this would be a good topic to focus on this month.
So why are some banks closing UK expats’ accounts?

UK banks and other financial firms are currently allowed to trade as part of the European Economic Area (EEA), as all member countries use the same regulatory framework. This arrangement is known as ‘passporting’, and it is why Brits who have moved abroad have been able to use credit cards and banking services from UK-based banks, even though they’re no longer living in the country. However, once the Brexit transition period ends on 31 December, this passporting arrangement will no longer be in place – that is, unless a specific agreement to carry it on is reached as part of a Brexit deal. With no such deal confirmed, UK banks would have to attempt to negotiate and fulfil the stipulations from every EEA country’s regulator. All of them work differently and a continuation of providing services to UK expats will be more feasible for some banks than others.

The impact on each customer will vary depending on how their bank or financial institution currently operates, the product or service being provided, and the legal and regulatory framework in the country in which they are resident. In effect, this means that the situation is different for each financial service offered by each financial provider in each country; for some banks, offering certain products in certain countries simply won’t work. So, certain services and accounts may be withdrawn in some EU countries but not in others.

We understand that many banks are still trying to figure out a way of working in different EU countries after the Brexit transition period, while also waiting to see if a deal can be agreed between the UK and the EU. The Bank of England and the Financial Conduct Authority (FCA) have written to banks informing them that, if they do decide to close customer accounts, they must have plans in place to service their Europe-based customers properly through the process, taking into account how their actions might impact on customer’s individual circumstances and the alternative products available to them.

What should you do?
DON’T PANIC – there have been some dramatic headlines in the press about the issue, but it is important to stay calm. If you think you will be affected, you should not act in haste and repent at leisure. Give yourself time to work out what your options are.

CHECK THE FACTS CAREFULLY – whether or not you have had a warning letter from your bank, talk to them now and find out what they plan to do on Brexit day. If you still have a UK address, your account may not be closed.

CHECK YOUR SPECIFIC ACCOUNTS – you may find the types of savings products you hold are still permitted in France. Your bank should be able to advise you on this.

ARRANGE FOR PAYMENTS TO BE PAID DIRECTLY TO YOUR FRENCH BANK ACCOUNT – if you are in receipt of the UK State Pension, HMRC will pay this directly to your French account every month and, because of the volume of payments made, the exchange rate is extremely competitive. OK, so the GBP:EUR rate isn’t that great at the moment but at least you will be guaranteed continuity of income if you rely on this to fund your lifestyle in France. Some UK private pension providers will also pay pensions to foreign bank accounts, so it is worth speaking to your provider about this.

OPEN A NEW UK ACCOUNT – find a UK bank that is operating in France (such as HSBC and Santander) and check if you can meet their eligibility criteria for opening a new bank account and that the account will meet your needs. For example, does it require you to have a minimum income or deposit with them?

CONSIDER OPENING A STERLING OFFSHORE BANK ACCOUNT – we have a good connection with a very reputable bank, based in the Isle of Man, that offers accounts in a number of currencies including Sterling and Euros and which will accept regular payments in and direct debits out. If you would like details of the account, please contact your Spectrum adviser.

livret A

If you have savings on deposit in the UK that you use for your short-term liquidity or an ‘emergency fund’ and you have been told, or are concerned, that these accounts will be closed, there are a number of tax-free savings accounts available in France, which you should consider maximising, if you have not already done so, including the following:

THE ‘LIVRET A’ – which is currently paying a rate of interest of 0.5% per annum and is available to non-residents. The maximum permitted investment into this type of account is €22,950 per individual.

THE ‘LIVRET DÉVELOPPEMENT DURABLE (LDD)’ – this account is available to residents of France and the maximum investment permitted is €12,000 per individual. It is currently paying an interest rate of 0.5% per annum.

THE ‘LIVRET D’EPARGNE POPULAIRE (LEP)’ – this account is available to residents of France who are on low incomes. The maximum investment amount permitted is €7,700 per individual. The interest rate is currently 1% per annum. For example, in order to open a LEP account in 2020, your ‘revenu fiscal de référence’ in 2018 (as shown on your ‘avis d’imposition’ of 2019) must not have exceed €19,977 for a single person or €30,645 for a two-part household.

But it’s not just bank accounts that might be affected when passporting goes………….

Some UK financial services providers are informing their non-UK resident customers that they will not be able to provide them with advice on their existing UK based investments after 31 December and that ‘you should find a new adviser or cash in your investments’.

As a reminder to our readers, Spectrum in France is a registered French company, regulated in France, and we are not passported in from the UK, so as far as we are concerned, it’s business as usual.

For those of you who still have investments in the UK, whether they be stocks and shares ISAs, investment bonds, pension funds or other investment portfolios, now would be a good time to review these and discuss with your provider as to whether they will be able to continue advising you in a post-Brexit world. Even if your UK provider will be able to continue advising you, they may not be familiar with the French taxation framework and the investments you hold may not be tax efficient in France. We can advise you on investment products that are suitable and tax-efficient for living in France and provide you with ongoing advice to ensure that your financial plan remains on track as your situation and attitude to risk changes over time.

Please don’t forget that, although we may be restricted on where we can travel at the moment, we are here and have the technology to undertake your regular reviews and financial health checks remotely. If you would like a review of your situation, please do not hesitate to get in touch with your Spectrum adviser or via the contact link below.

We’d love to hear from you with any comments and/or questions, as well as suggestions as to future topics for discussion. Please feel free to pass this on to any friends or contacts who you think might find it interesting.

Occitanie@spectrum-ifa.com

Are you a UK IFA with Clients Living in Europe ?

By Spectrum IFA
This article is published on: 17th November 2020

17.11.20

ARE YOU UNABLE TO SERVICE THESE CLIENTS POST BREXIT?

UK IFA

At The Spectrum IFA Group we can look after your clients long term as licensed and regulated financial advisers operating in France, Spain, Italy, Portugal, Malta, Luxembourg and Switzerland.

The things you should know before you contact us for our help:

  • We specialise in financial planning for English speaking expatriates across western Europe
  • We are locally authorised in all jurisdictions in which we operate and across the entire EU (and Switzerland). Our regulatory status is unaffected by Brexit
  • We hold financial services licenses for both insurance mediation (Insurance Distribution Directive compliant) and investment advice (MiFiD compliant)
  • Established in 2003, we have 50 advisers and 12 regional offices
  • We work only with large, well known asset managers including Blackrock, Jupiter, Fidelity and Prudential. For clients with higher value portfolios we also use discretionary investment managers such as Rathbones, Smith and Williamson and Quilter Cheviot
  • As part of our terms of business, clients of The Spectrum IFA Group receive ongoing, long term service and support. All advisers live within easy travel distance of their clients
  • We are not an offshore broker. We do not use products from UK dependant territories (such as the Isle of Man or Channel Islands) as they can produce adverse tax consequences for clients living in Europe. We advise that you don’t use any of these structures for your clients if they are EU resident
  • We use only locally compliant products which are designed specifically for the jurisdictions in which our clients are based
  • We work on a transparent charging structure with all clients. Charges are deducted directly from the products and solutions we recommend. We do not invoice separately

As the end of the transition period is rapidly approaching we ask that you contact us as soon possible to allow time for us to complete any necessary restructuring of client assets.

If your clients are resident in the EU or Switzerland, or intending becoming resident, please feel free to contact us for a no obligation discussion to determine if we can look after your clients post Brexit.

You can contact us at info@spectrum-ifa.com

Or speak to the specific country managers in France, Spain or Italy

Click the relevant flag below

Spectrum IFA France
Spectrum IFA Spain
Financial Advisers in Italy

We don’t have a crystal ball but we know how to prepare for the unknown

By Alan Watson
This article is published on: 10th November 2020

10.11.20

For most of 2020, nobody in France has been able to escape the misery of the daily Virus update; even as I write this article, it gets worse by the day. From a financial planner’s viewpoint, and thinking of my family, long term Rhone-Alps based, it can spin one’s head wondering, “how much, and for how long, will our children be paying extra taxes and social charges to balance this black hole.”

President Macron has certainly not been slow in pressing his Eurozone political colleagues to secure a massive support package for France (so all those excessive Urssaf charges have clearly not been enough!) Did anybody analyse, offer some statistics as to how this will be paid back? If so, sorry I missed it, but we all know the harsh reality is payback time will be long and heavy.

Many of my clients in the Alps are either retired, considering it, or working hard in their business to secure a tidy financial future, not only for themselves, but for their families also. It’s a part of life’s pattern that many of us become beneficiaries of a family estate, and being a French fiscal resident, this brings up potential questions and complications, “what are the limits I can receive before the tax man becomes an unwelcome beneficiary?”, “my children deserve a portion of this, but the bank offers a derisory return, not even Eurozone inflation proof,”, “our young daughter dreams of studying in the US, how much will that cost?”

gifts

So how do we approach such matters ? You may be surprised and relieved to hear that the French fiscal system can be both generous and highly tax efficient when it comes to financial planning for ourselves and our families. For example, a gift of €100,000 can be made every 15 years from parents to children, free of tax and social charges, which could be used for that far off house purchase, a highly regarded study program, or even setting up a business. A lower, but still highly valuable, allowance of just over €30,000 applies for gifts between grandparents and grandchildren.

Currency is also an important consideration. French banks are always happy to offer short and long term saving vehicles. The wording of the contracts, terms, and fund choices, even for somebody who has spent over 30 years in European financial services, can be rather bewildering, plus they always insist on converting your Sterling to Euros, and currently this is not a sensible proposition. In the last year alone we have seen swings between the two currencies of 10%; the Pound is still a global currency and will return to its former glory, so a far better facility is to be able to choose your exchange date, then take advantage whenthe currency is stronger to move to your new Euro based need. This flexibility coupled to tax efficiency, could make a gift for your loved ones a very sensible and well planned move.

As a financial adviser, I meet many people in sometimes complex and misunderstood situations, “I have actually lived in France for the last two years, is it now time to declare fiscal residency?”, “My children have UK ISAs set up by their grandparents, so living here as a family, is this tax efficient?”

A no obligation meeting may help to unravel the complex French reporting system, and allow you to enjoy all the things that brought us here in the first place.

How much tax do you pay in France?

By Katriona Murray-Platon
This article is published on: 3rd November 2020

It’s strange to think that this time last year I was in Quebec with my husband and children. Whilst autumn colours in Canada were absolutely splendid, I have really been enjoying seeing the colours of the trees and vineyards in my local area.

France is now in lockdown for at least the month of November. However unlike the previous lockdown schools will remain open and people can still go to work. Although I have become a lot more comfortable working from home online I enjoy my drives to see my clients. If you would like to speak to me about any matter, even if your annual review is not due at this time, please feel free to let me know and I would be happy to arrange a face to face meeting or an online video call. I can come and see my clients because that is my work but it may also be a way of preventing clients feeling isolated when they cannot see other people.

Being flexible is very important at this time. We don’t know what will happen in the future or how Christmas may be celebrated but what we do know is that

1) We have survived lockdown before so we know what works and what needs changing
2) We know that lockdown was effective in bringing the number of cases down
3) We have made enormous progress on understanding the virus and how to treat it, we are also getting ever closer to a vaccine. We just have to keep calm and carry on!

As you know in November, the Taxe d’Habitation is due (by 16th November or 21st November if paid online). This is a tax for all residents of buildings on 1st January. In 2020, 80% of French households will be considered exempt from paying this tax. In July 2019 Macron said in 2021 the higher income households would see a 30% reduction in their taxe d’habitation increasing to 65% in 2022 and 100% in 2023. So basically this tax will cease to exist after 2023.

As regards income tax, the tax levels have increased by 0.2% for the tax on income earned in 2020 to take into account the inflation forecast for 2019-2020. The new tax barriers are:

Between 0 and €10,084 0%
From €10,084 to €25,710 11%
From €25,710 to €73,516 30%
From €73,516 to €158,122 41%
From €158,122 45%

Just how is my tax calculated in France?

If you have looked at your tax statement and wondered how the tax is calculated, you may find the following rough guide to be useful.

If a couple has a total of €30,000 of income, their taxes would be as follows. €30,000 divided by 2 = €15,000

No tax for the first €10,084 but 11% on the difference between €10,084 and €15,000 (€4916 x 11% = €541). This amount is then multiplied by the number of people (or tax parts) so the total tax for this couple would be €1082.

For a couple with €60,000, the income is again divided between them (€60,000/2 = €30,000).

There is again no tax for the first €10,084, the next amount would be €25,710-€10,084=€15 626 at 11% which is €1719.

The difference between €30,000 and €25,710, i.e. €4290 would be taxed at 30% resulting in €1287.

The final tax would be (€1719 + €1287) x 2 = €6,012 total tax.

Once the tax is calculated then the tax reductions for home help expenses or charitable donations are deducted. For more information please request our free tax guide on our website.

If you have French investments or interest earning accounts and your taxable income (as shown on your 2020 tax return for your income earned in 2019) is less than €25,000 (or €50,000 for a couple) for interest, or for dividends €50,000 (or €75,000 for a couple) you must inform your bank or financial institution before 30th November 2020 so that they don’t withhold the 12.8% income tax on your income in 2021.

Wishing you all a wonderful November. Stay home, stay safe, stay in touch!