For British expats settling in France, understanding how UK pensions are taxed is essential. Many people arrive assuming that pension income will continue to be taxed the same way as in the UK, or that France is automatically the “higher-tax” option. In reality, the French system treats pension income in a very particular way — and in some cases, significantly more favourably than the UK.
Most UK pensions drawn by a French tax resident are taxed progressively each year. But France also offers a special 7.5% fixed tax rate for certain eligible withdrawals. Even if you do not plan to cash in your whole pension, understanding this option helps you compare both systems and plan your long-term retirement income with confidence.
This guide breaks down how pension income is taxed, when the 7.5% rate applies, and how many retirees combine regular pension withdrawals with French-friendly investment structures for long-term efficiency.
How France Taxes UK Pensions
Under the UK–France Double Taxation Treaty, the vast majority of UK private pensions are taxable only in France once you become French tax resident. That means your pension income (whether monthly, ad-hoc, or flexible drawdown) is:
- Added to your household income
- Given a 10% pension allowance (capped)
- Taxed at France’s progressive income tax rates
- Potentially subject to social charges unless you hold an S1
Where the 7.5% Rate Fits In
Alongside the normal progressive system, France offers a 7.5% fixed tax rate for certain pension withdrawals. It isn’t something that applies to routine income taken each year, but it’s still an important part of the French rules because it allows people—when appropriate—to draw from a UK pension at a much lower rate than either country would usually charge.
The 7.5% rate applies only when a pension pot is taken as a single, final payment and the scheme originally benefited from UK tax relief. When those conditions are met, France taxes just 90% of the payment and applies the 7.5% rate to that portion. In practice, this brings the effective tax rate down to around 6.75% of the total amount. Compared with the standard French income tax bands, which rise to 45%, this can be a meaningful saving for anyone who, at some point, needs to restructure or fully close an old pension.
Although most retirees won’t withdraw an entire pension in one go, the regime still has practical value. It helps people understand how France views pension withdrawals, it provides a benchmark for comparing the French and UK systems, and it becomes particularly relevant for long-term estate planning—especially with the UK set to include undrawn pension funds within inheritance tax from 2027. Knowing this option exists means you can evaluate all the routes available to you, even if your main intention is simply to draw income gradually.
Who Can Use the 7.5% Rate?
You may qualify only if a UK pension pot is withdrawn entirely in one payment and:
- No previous withdrawals were made (including the UK 25% lump sum)
- The pension received UK tax-relieved contributions (e.g., SIPP, workplace pensions)
- France has sole taxing rights
- The withdrawal is properly declared as a qualifying lump sum
Even if you are not planning a full withdrawal now, many retirees like to know whether the option exists for future planning.
How Typical Annual Pension Withdrawals Are Taxed
Most retirees continue drawing their UK pensions normally. In this case:
- Each payment is treated as standard pension income
- The method of access (annuity, drawdown, UFPLS-style withdrawals) is irrelevant — it is still ordinary income
- The 10% pension allowance applies
- Social charges may apply unless S1 exempt
This approach keeps taxation predictable and avoids the need for large one-off decisions.
Social Charges: A Key Distinction
Social charges are often misunderstood. They apply differently depending on your healthcare affiliation:
- With an S1: UK pension withdrawals are exempt from social charges
- Without an S1: pension income is generally subject to 9.1% in charges
This exemption is one of the main reasons many UK retirees face a lower tax burden in France than they expect.
Common Mistakes to Avoid
- Taking the UK 25% lump sum before moving to France
This can prevent future access to the 7.5% regime. - Assuming DB pensions can be withdrawn completely
These are usually income-only. - Declaring pension income incorrectly on the French tax return
Leads to higher tax than necessary. - Believing UK private pensions remain taxed in the UK
They do not, once you are French resident.
If you are retiring in France with a UK pension, your options are broader than many people expect. Most retirees simply draw income year by year, but understanding the full landscape — including when the 7.5% regime applies, helps ensure every decision is tax-efficient and aligned with your future plans.
If you’d like to review how your own pension withdrawals would be taxed in France, or how an Assurance Vie could complement your retirement income, feel free to get in touch for a complimentary review.
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Disclaimer: While care has been taken to ensure the information in this article is accurate at the time of publication, laws and regulations may change. This content should not be relied upon as a substitute for personalised professional advice. Always seek guidance based on your specific circumstances.