Tax on state pension?

[Hotrodder]

Related to our recent good fortune with a pension overpayment....
Currently paying no tax on the state pension but scared that situation has come to an end. Does anyone know what the levels are? Or a link where these might be found? We don't want to spend the windfall and find out later the French want such a big lump of it in tax we come up short.

[elsie]

I don't think it will be very much tax. Putting it simply, in France they add up the total household income and divide by the number of "parts" in the household, two for a couple. That figure is used to calculate the tax for that part according to the scale and that tax is then doubled for the household.
The scale is
Up to €10,777 (bracket 1): 0% tax rate;
From €10,778 to €27,478 (bracket 2): tax rate of 11%;
€27 479 to €78 570 (bracket 3): 30% tax rate;
From €78,571 to €168,994 (bracket 4): tax rate of 41%;
More than €168 994 (bracket 5): tax rate of 45%

That calculation means that if your total household income is less than €21,544 you will not pay any tax as each part is only €10,777. Above that you will pay at 11%.

If you have an S1 you will not pay any social charges.

This page gives a worked example https://www.service-public.fr/particuli ... 19?lang=en

[Hotrodder]

Many thanks for that. Depending on how they slice it next year, it could be either not too bad or "Oh no!"

[Quiksilver]

I feel for you, HR. We'll be in the same boat when I finally get the overwhelming bounty of my State pension. Definitely a double-edged sword! By the time I've paid for a mutuelle and some help in the garden, there won't be any left for tax. I wonder if that will wash with les impôts?

[Hotrodder]

Initially we were delighted to get an unexpected boost but three days later it has caused a bit of worry and unrest, afraid to spend any of it because of not knowing how much will remain after it is declared. We were muddling along OK and limiting our outgoings to match the state pension income but now this has upset the equilibrium. It would pay for a conforming fosse and a badly needed new roof but we dare not even think in that direction until we know what the tax man is going to steal.

[Quiksilver]

It was a one-off, though, wasn't it? Or is it an increase that would put you permanently in the tax bracket? Using elsie's info, you can calculate any potential tax liability so you'll know what's left to spend? If in doubt, go for the roof! Half of France is still merrily availing themselves of non-conforming fosses with absolutely no repercussions. In fact, I'd say that the old systems worked a damn' sight better than the ill-thought-out betises imposed in 2006!

[Headers]

Is it an overpayment or a backdated payment? If the latter then you could (I’m sure Elsie will correct me if I’m wrong ) redo your tax declarations for up to the past 3 years to take into account the monies applicable to each year of that would ease the situation.
On the subject of fosse, depending on where you are, there are starting to be more fines applied incrementally for non compliance.

[hughnique]

This is a remarkable account HR, if I am reading it correctly, somewhere along the line HMRC has overpaid you, and when you came clean about it with them they told you to keep the money. It must amount to tens of thousands of pounds if it will cover the cost of a new fosse and roof. My last brush with them was when my FIL died and they sent a tax refund for the part year, due to a mis declaration from the pension company they paid about £200 too much, they certainly tried hard to get that back.

[Hotrodder]

To clarify the situation. My wife and her husband came to France some years ago and he passed away. She was receiving her state pension. It appears that when he died some of his state pension should have been added to hers but it wasn't. Now the DWP has discovered it and is giving her the shortfall for the 14-years now in one lump. This lump will have to be reported in her tax declaration next year (we assume). The money has been paid into her UK account and she has access now but afraid to touch it until we are certain how much of it will be taxed, and how it will affect both of our tax exposure in the future. Since the online tax system lumps both our pensions together the combined total is certainly going to hit us both and since my state pension is only a partial one I have never paid tax before. The link to the rates posted above is only partially helpful because I don't understand some of the terminology. Combining the foyer and dividing and applying, blah blah blah. It looks like deliberately trying to complicate what might (?) be something simple. Wife says surely our pensions are taxed in UK before being paid. I haven't a clue. All I know is that we need to abide by the French rules if we don't want to get kicked out. We would be in deep poo if we had to survive back in UK.

Speaking of poo, [Headers], they can fine us for non-compliance but if there is no money to pay the fine, they'll have a long wait. I spent over a month digging a hole in hard ground to bury a 3000litre holding tank with fork, pick, and shovel. The tank has to be emptied three times a year at €260 a pop. It would cost thousands to add the rest of the system to achieve compliance. Non-starter at the moment.

[L Austin France]

Now the DWP has discovered it and is giving her the shortfall for the 14-years now in one lump.

Nice one ! About time your luck changed.
I'm sure if you asked nicely someone on here in the know could help you, via PMs, so it was private, & give you some good idea of any liability so you can get your roof etc. fixed.