Returning to the UK from France? Start planning early - Partner article

For many British expatriates in France, the idea of returning to the UK may seem distant or unlikely. If the time does come, however, early and strategic financial planning will reap rewards. 

UK taxation is going through a period of change, with many reforms having a negative impact on wealth. 

It is not all bad news though, with changes from April 2025 offering surprising new tax advantages to long-term expatriates moving back to Britain. 

New long-term residence rules 

The UK has replaced its long-standing domicile-based tax system with residence-based rules. The new regime provides estate planning clarity and advantages to long-term British expatriates. 

While UK nationals living in France are subject to the French succession tax rules on worldwide assets, UK assets are always liable to UK inheritance tax – including pension funds from 2027. 

These long-term residence rules also offer significant tax mitigation opportunities to returning Britons, particularly in the areas of inheritance tax (IHT) and foreign income and gains (FIG). 

If you have lived in France for 10-plus years, you could benefit from up to a decade of UK inheritance tax relief and four years of tax-free foreign income and gains – but only if you plan well ahead and structure your assets accordingly.

Liability to UK inheritance tax is now determined by the long-term residence criteria, with 10 years being the magic number. 

Long-term residents are liable to UK inheritance tax on worldwide assets, while everyone else is only assessed on UK-situated assets. 

Where you own assets is, therefore, key for estate planning and protecting your legacy. With careful planning, returning expatriates could make the UK an IHT-free zone for up to a decade. 

The new Foreign Income and Gains (FIG) regime benefits returning expatriates. It offers four years of UK tax exemption on foreign income and gains, even if remitted to the UK, and a valuable opportunity to reorganise your wealth and investments before becoming fully liable to UK tax.

Timing is everything

Timing your return strategically makes a significant difference to your tax liabilities. Since the UK and French tax years do not align, you can plan your move and when you sell assets to optimise opportunities in both countries.

If you spend time in the UK before moving back, such as looking for and decorating a new home, follow the UK Statutory Residence Test to ensure you do not trigger UK tax residency too early. 

Capital gains tax

Selling or buying property can have different tax implications depending on your country of residence.

France offers capital gains tax (CGT) relief on the sale of your main home, provided the proceeds are reinvested in another EU/EEA property.

If you sell UK property to release funds to buy a new home for your return, it will not benefit from Private Residence Relief as your main home was in France. 

You will be liable for UK CGT even if you sell it as a non-resident, though only on gains made since April 2015 for residential property and 2019 for commercial property. 

The UK charges 5% stamp duty on second homes and investment properties, which would affect you if you bought a UK home while still owning your French residence.

France’s exit tax 

France applies an ‘exit tax’, essentially 30% capital gains tax on your potential gains even though you are not selling the asset. 

It is levied when an individual who has been resident in France for six of the last 10 years leaves the country, and their total shareholdings are valued at over €800,000 or they own more than 50% share of a company. 

This tax is deferred (until the shares are sold, reimbursed etc.) if you move to an EU/EEA member state, or third country with a tax information agreement if moving for professional reasons. 

Certain investment arrangements are exempt from exit tax, or it may be cancelled in some situations. 

Take advice well before leaving France to ensure you do not get caught out by this unnecessary tax. 

Releasing capital and reviewing investments 

Take advice before releasing capital to buy your UK home. Withdrawing from investments or pensions could impact your long-term retirement income and savings, and you need to plan carefully. 

Establish how your investments will be taxed in the UK and how to restructure them for greater tax efficiency. 

It is also a good opportunity to review how they can be passed to your beneficiaries. 

Decide if and when to convert savings and investments from Euros into Sterling; some arrangements offer currency flexibility to help manage exchange rate risk. 

UK pensions 

Returning to the UK may affect how your pension funds are taxed and managed. 

If you have a Qualifying Recognised Overseas Pension Scheme (QROPS) seek specialist advice on the best path forward. 

UK pension funds become liable to UK inheritance tax from April 2027. 

Pension savings transferred out of the UK while living abroad may remain exempt for up to 10 years, provided you leave the funds overseas.

Estate planning

Returning to the UK means your inheritance planning needs a full review, especially if it was structured around French succession law and tax. 

Review your wills, how you own assets and your overall estate plan to ensure your legacy will be distributed efficiently and according to your wishes. 

Consider how your wealth will be passed down the generations and take steps to make the transfer and probate process as easy as possible for your family.

Rob Kay is a financial adviser and regional director of Blevins Franks