Major UK Tax Shifts Hit British Expats in France
Official 2026 data reveals sweeping changes to the UK tax system that will significantly impact British expats in France. The 2026/27 tax year, which began on 6 April 2026, introduces measures that create urgent planning needs for expatriates managing assets across both jurisdictions.
The most dramatic change arrives in April 2027, when pensions will become subject to inheritance tax for the first time. This represents a fundamental shift in UK pension planning, particularly for British expats who’ve retained UK pension arrangements whilst living in France.
Frozen Allowances Create Stealth Tax Increases
The UK government has extended the freeze on income tax thresholds until April 2031, keeping the personal allowance at £12,570. As incomes rise with inflation and thresholds stay put, more British expats will be dragged into higher tax brackets.
For high earners, the personal allowance continues to be tapered by £1 for every £2 of income above £100,000. British expats in France earning above this threshold through UK sources face increasingly involved cross-border tax calculations, particularly when factoring in French tax obligations under the double taxation treaty.
Capital gains tax changes are equally significant. The annual exemption has been cut to just £3,000 for individuals, whilst Business Asset Disposal Relief rates increased from 14% to 18% from April 2026. For British expats holding UK investments or business interests, these changes add further weight to managing assets across two tax systems.
Inheritance Tax Becomes More Punitive for Expats
The inheritance tax picture has shifted dramatically against wealthy families. Agricultural Property Relief and Business Property Relief now provide 100% relief only on the first £2.5 million of combined assets, with values above that threshold receiving just 50% relief.
Most concerning for British expats in France is that UK assets remain liable for UK inheritance tax regardless of how long someone lives overseas. The main nil-rate band stays frozen at £325,000, a figure unchanged since 2009. Had it risen with inflation, it would stand at approximately £517,000 today.
From April 2027, unused pension funds will form part of estates for inheritance tax purposes, with total tax on inherited pensions potentially reaching 67%. British expats in France who also face French succession law obligations will feel this particularly sharply.
Cross-Border Planning Solutions for France Residents
For British expats establishing French tax residency, managing cross-border investment portfolios has become harder under these new UK rules. French tax residents can’t make new contributions to UK ISAs, so alternative structures matter.
Prudential International assurance vie bonds offer a practical solution for British expats in France. These products provide tax-deferred growth under French law, with favourable withdrawal taxation after eight years of holding. Unlike UK investments, assurance vie policies fit naturally with French tax planning whilst offering multi-currency flexibility and succession planning benefits under French inheritance law.
The timing of these UK changes makes inheritance tax planning for UK expats more pressing than ever. British expats in France must consider how UK pension inheritance tax from 2027 interacts with French succession obligations, particularly the forced heirship rules that apply to French residents.
Pension Transfer Considerations Intensify
Inheritance tax on pensions from April 2027 fundamentally changes the calculation for British expats considering pension transfers from the UK. International SIPP transfers may become more attractive for those looking to consolidate their retirement planning outside the UK tax net.
That said, pension transfers require careful analysis of costs, benefits, and tax implications in both jurisdictions. French tax treatment of international pensions differs significantly from UK rules, so professional guidance is worth getting before making irreversible decisions.
How We Can Help
International Wealth Ventures specialises in helping British expats in France work through these cross-border tax changes. We structure Prudential International assurance vie bonds that provide tax-efficient growth under French law whilst managing UK inheritance tax exposure. Our France specialists also assess whether international SIPP transfers make sense given the new pension inheritance tax rules from 2027. Book a free consultation to review how these UK tax changes affect your specific situation.
