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As a British citizen living in France who can look after my financial affairs if I become incapacitated?

By Tony Delvalle - Topics: Estate Planning, France, Trusts, United Kingdom, Wills
This article is published on: 14th December 2018

14.12.18

There has been a huge rise in the number of lasting powers of attorney set up as dementia and Alzheimer’s have become the biggest cause of death.

Power of attorney arrangements allow an individual’s financial and health affairs to be looked after by someone else, the attorney, if they lose mental capacity in the future.

Several million “lasting” agreements have been registered since 2008, when they replaced “enduring” power of attorneys, amid concerns that the rules were too easy to abuse. There are two types of agreement – one covering finances and property, and another for health and welfare. Finance and property is far more popular.

The sharp rise in new agreements – which are set up on average when the donor is 75 – comes as the Office for National Statistics reveals deaths from dementia and Alzheimer’s accounted for almost one in eight deaths in 2015 – a total of 61,686 people – overtaking heart disease as Britain’s biggest killer. It is steadily on the increase.

Many people are still exposed as the majority of people have not appointed a power of attorney. It is possible for someone to take control of your financial or welfare decisions after an individual becomes mentally incapable, this can be a lengthy and complicated process with extra cost, which can cause distress at an already difficult time.

Without power of attorney, friends and family have to retrospectively apply to the Court of Protection and prove why they should assume responsibility. This process incurs court fees and can take up to 16 weeks, leaving money locked into accounts until a decision is made. Add to this an international dimension and it is certainly a complicated problem.

As a British citizen in France you can do either a UK lasting power of attorney or a French mandat de protection future. The choice between which one is best will depend where you intend to live now and the future and where is the main part of your estate.

Let’s look at the UK and French legal systems available in cases of incapacity. The two different types of lasting powers of attorney in case of incapacity in England are Health and Welfare, and Property and Financial, whereas in France there is only one the mandat de protection future.

UK Health and Welfare covers

  • Daily routine
  • Moving into a care home
  • Life sustaining treatment

UK Property and Financial covers

  • Managing bank or building society account
  • Collecting benefits or a pension
  • Selling their home

French Mandat de protection future covers all aspects of a persons financial and health well being.

1) As a British citizen living in France, which law would govern the administration of your estate in case of incapacity?
– French law will be applicable under the provisions of the Hague Convention

2) What does French Law use to protect people from incapacity? The Mandat de protection future is one choice and covers all aspects of a persons financial and health well being.
* Trusteeship
* Guardianship

3) Could you prepare for a physical or mental incapacity by appointing somebody you trust to administer your estate, pay your debts, manage your income in France?
Yes of course.

4) Would that power of attorney be applicable and enforceable abroad?
Yes it would be efficient in most countries and in 100% of the countries who ratified the Hague Convention such as England and Wales. In other words you could prepare a LPA or mandat de protection future and both should be applicable.

5) Does the French power of attorney have a limited scope? Can the attorney sign a deed of sale on your behalf?
a) Notarial mandate (notarial deed extend the power of the guardians up to the possibility of selling the estate)
b) Mandate not supervised by the Notaire (mere administration by an appointed trustee + the Judge)

So both are legal and which one is best for you may depend on a number of factors. What your assets are, where they are held and in what way, jointly, individually, what you want from them, inheritance planning etc.

The most important thing is to do something. Taking good legal and financial advice before you do to see what is best for you and avoid potential future problems when you least need them is imperative.

Possible effects of Brexit in Spain

By Charles Hutchinson - Topics: BREXIT, spain, United Kingdom
This article is published on: 6th December 2018

06.12.18

At 11pm on March 29, 2019, the United Kingdom will officially leave the European Union.

Much has been written about the millions of Europeans living in the UK and the millions of Britons living in Europe, but little about the tax consequences for Britons who are non-resident in Spain but have interests in the country, mainly owning real estate properties.

Britons could lose the following tax benefits in Spain when the United Kingdom leaves the EU:

Non-resident income tax on real estate: the Spanish Government imputes a benefit in kind to owners of holiday houses that is taxable as income. By definition, a house owned by a non-resident cannot be their main home, so every non-resident owner of a house in Spain, even if it is not rented out, has to declare an imputed income and pay taxes on that income annually. The income tax rate is 19% for those living in an EU member state, Iceland and Norway, but it is 24% for the rest.

Therefore, Britons could end up paying 24% tax on the imputed income instead of current 19%.

Rental income tax: non-resident owners of Spanish properties who get income from renting them out are liable to Spanish non-resident income tax on the gross income. However, those living in an EU member state, Iceland and Norway are entitled to offset some costs from their rental income and therefore are taxed only on the net profit.

Therefore, Britons could end up paying 24% tax on gross income with no deductibles, compared to the current 19% on net profit.

Inheritance and gift tax: regional governments are empowered to regulate this tax, the consequence being that the tax liability will vary depending on the region. The difference can be substantial.

Non-residents are subject to Federal law, which is normally less favourable than Regional law. However, those living in an EU member state, Iceland, Norway and Liechtenstein can choose the application of the most favourable legislation for their situation, Federal law or Regional law (in which the properties of major value are located).

Therefore, Britons could lose the right to apply for Regional law. In Andalucía, for example, there is a threshold of 1 million euro, meeting certain requirements, to which Britons could not be entitled.

This is just a short list of the possible tax consequences of Brexit. The UK may join the EEA (European Economic Area) like Iceland, Norway and Liechtenstein. If the Norway-style agreement is adopted, a major part of EU law could still apply, but that is by no means clear at this point.

*Source: JC&A Abogados (Santiago Lapausa)

The Gift of Giving

By Katriona Murray-Platon - Topics: France, Tax, United Kingdom
This article is published on: 19th October 2018

19.10.18

In my family, there are a lot of birthdays at the end of the year and before you know it Christmas is upon us. With only limited space for physical gifts like clothes or toys, sometimes cash gifts or contributions to the children’s savings plans are more than welcome! But how much can you give your children, grandchildren, nephews and nieces? As we will see, whilst the rules on official gifts and inheritance allowances are very clear, there seems to be much more flexibility on smaller gifts for special occasions.

Gifts from a UK resident to a French resident – UK tax applies
If you receive gifts from a UK resident, such gifts are generally subject to UK tax rules. However, if the recipient has lived in France for at least six of the ten tax years preceding the year in which the gift is received, French tax rules will apply. Inheritances are covered by the Double Tax Treaty between France and the UK but gifts are not. Inheritances are not taxable even if the recipient has been living in France for more than six years. If a double tax situation were to arise then the tax paid in the UK would be deducted from any tax payable in France. French tax is also payable if a UK resident gifts an asset that is situated in France.

A gift is defined as anything that has a value, such as money, property, possessions. If a person were to sell their house to a child, for less than its market value, then the difference in value would count as a gift.
Gifts to exempt beneficiaries are not subject to Inheritance Tax. These include:

  • Between husband, wife or civil partner, provided that they reside permanently in the UK
  • Registered UK charities (a list is available on the gov.uk website)
  • Some national organisations, such as universities, museums and the National Trust

HMRC also allows an annual exemption of £3,000 worth of gifts to people other than exempt beneficiaries each tax year (6 April to 5 April), without them being added to the value of the estate. Any unused annual exemptions may be carried forward to the next year, but only for one year.

Each tax year, a UK tax resident may also give:

  • Cash gifts for weddings or civil ceremonies of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child)
  • Normal gifts out of their income, for example Christmas or birthday presents, provided that they are able to maintain their standard of living after making the gift
  • Payments to help with another person’s living costs, such as an elderly relative or a child under 18
  • Gifts to charities and political parties

These exemptions may be cumulated, so a grandchild/nephew/niece could receive a gift for their wedding and their birthday in the same tax year. However, if the wedding or civil partnership is cancelled, the gift for this event will no longer be exempt from Inheritance Tax.

There is an unlimited amount of small gifts allowance of up to £250 per person during the tax year provided that the person making the gift hasn’t used up another exemption on the same person (such as the £3,000 annual exemption limit).

In the UK, Inheritance Tax is payable (at 40%) on gifts made in the 3 years before the donor’s death. Any gifts given between 3 to 7 years before death are taxed on a sliding scale known as ‘taper relief’. Gifts given more than 7 years before death are not counted towards the value of the estate. Inheritance tax will apply if the gift is more than £325,000 in the 7 years before the donor’s death.

Gifts from a French resident to another French resident or to a UK resident – French gift tax rules apply
In France, the Inheritance Tax allowances are not as generous as in the UK. The tax relief on gifts is the same as for inheritance tax and depends on the relationship between the donor and beneficiary. A parent may only give their child up to €100,000 tax free, a grandparent only €31,865 to a grandchild, brothers and sisters may receive €15,932, nephews and nieces € 7,967 and great-grandchildren €5,310.

There is no inheritance tax between married couples or those in a civil partnership, however, for gifts made during a person’s lifetime the maximum amount allowed is €80,724.
Gifts made to disabled persons, subject to certain conditions, have an additional exemption of €159,325 per person irrespective of the relationship between the donor and the disabled person. This exemption is in addition to the normal exemptions above.

These exemptions for gift tax (or ‘droits de donation’) may be used several times over during one’s lifetime, provided that there is a 15-year gap between each gift.
As in the UK, financial support given to a child/ex-spouse/dependent relative on a monthly/annual basis is not considered as a gift in French law, but rather as a family duty. Such support, or ‘pension alimentaire’ as it is called in French, is tax deductible for the donor but must be declared as income by the recipient.

A gift (called ‘don’ in French) may be a physical object, a house or property or intangible gifts like shares or intellectual property rights. If the gift is a house or property, a notary will be required, and he/she will make sure that the proper gift tax declarations are filed. The transfer of property must take place immediately and once given is irrevocable.

Cash gifts, (‘don manuel’ in French) – made by hand, cheque or bank transfer – are subject to different rules. A cash gift of €31,865, may be given to a child, grandchild, great-grandchild or, if there are none such, to nephews, nieces, or if the nephews and nieces have died to their children or representatives. The donor must, however, be less than 80 years old and the beneficiary must be over 18 years old on the day the gift is made. This exemption is also subject to the 15-year rule and is in addition to the Inheritance Tax allowances mentioned above.

The cash gift allowance and the normal gift allowances may be cumulated as long as they do not exceed the legal maximum amounts. So for example, provided that in all cases the donor is not yet 80 years old and the beneficiary is over 18; a mother or a father can give their child a total amount of €131,865; a grandparent can give an adult grandchild a total amount of €63 730 (€31,865 + €31,865); a great-grandparent can give an adult great-grandchild a total amount of €37,175 (€31,865 + €5,310) and an aunt or an uncle can give a nephew or niece a sum of €39,832 (€31,865 + €7,967).

Such cash gifts must be declared to the tax office the month after they are made. Cash gifts (above these exemptions) are taxable if they are discovered by the tax authorities during a routine enquiry by letter or during an official tax inspection. When the beneficiary declares the gift to the tax office of his/her own accord, they must pay the relevant amount of tax. If the value of the gift is over €15,000 it may be declared and any tax paid in the month after the donor’s death.

The French have another type of gift called ‘Présent d’usage’ which is a gift for normal ordinary life events like weddings, birthdays, graduations, baptisms etc. Such gifts are not considered taxable gifts provided that they are given on or around a special event/occasion and that they are not disproportionate given the level of income and assets of the donor.

There is no law which defines the exact amount of these gifts so each is considered on a case-by-case basis.

The Cour de Cassation ruled that a gift of €20,000 from a husband to his wife was a ‘present d’usage’ as it was given for her birthday and by way of a loan taken out by the husband. The monthly payments on the loan were less than 20% of his net income.

Such gifts are not subject to French gift tax and are not included in the donor’s estate.

So now that you are aware of the rules in both countries you may give or receive gifts knowing exactly what needs to be declared. However, the use of gift tax allowances as a tax planning strategy is something which should only be considered after taking proper advice from a qualified independent financial adviser specialised in cross-border matters.

New QROPS tax charge for 2017 – Will this change after BREXIT?

By Spectrum IFA - Topics: Belgium, BREXIT, France, Italy, Luxembourg, Netherlands, pension transfer, Pensions, Portugal, QROPS, Retirement, spain, Switzerland, United Kingdom
This article is published on: 20th April 2018

20.04.18

In the Spring 2017 Budget, the UK government announced its intention to introduce a new 25% Overseas Transfer Charge (OTC) on QROPS transfers taking place on or after 9th March 2017. The HMRC Guidance indicates that the OTC will not be applied in the following situations:

  • the QROPS is in the European Union (EU) or EEA and the member is also resident in an EU or EEA country (not necessarily the same EU or EEA country);
  • the QROPS and the member is in the same country; or
  • the QROPS is an employer sponsored occupational pension scheme, overseas public service pension scheme or a pension scheme established by an International Organisation (for example, the United Nations, the EU, i.e. not just a multinational company), and the member is an employee of the entity to which the benefits are transferred to its pension scheme.

It is also intended that the above provisions will apply to transfers from one QROPS (or former QROPS) to another, if this is within five full tax years from the date of the original transfer of benefits from the UK pension scheme to the first QROPS arrangement.

Nevertheless, it is clear that taking professional regulated advice is essential. This includes if you have already transferred benefits to a QROPS and you are planning to move to another country of residence.

It is important to explore your options now while you still have the chance as who knows what changes will come with BREXIT. Contact you’re local adviser for a FREE consultation and to discuss your personal options

How safe is your UK pension?

By Chris Webb - Topics: Madrid, spain, UK Pensions, United Kingdom
This article is published on: 9th February 2018

09.02.18

In days gone by the UK’s private pension schemes were the envy of the world, considered superior to other nations’ schemes. Alas, those days of world class company pension schemes are gone…………..

It is surprising just how many people are still members of their final salary or defined benefit schemes. Considered a “golden pension”, these schemes offer the best retirement promise, a promise to pay you the benefits that are defined in their pension schedule. Not a personal pension wholly dependant on the investments made, but a “fixed in stone” promise.

But how many of these people should be worried about how safe the promises are?

We recently witnessed the collapse of Carillion, a construction and outsourcing company with over 40,000 employees. They were just the latest in a high profile list of companies that have brought the subject of “pension safety” to the fore.

What happens to their workforce who are members of their pension scheme? The chairman of trustees of Carillion’s pension scheme, Robin Ellison, has suggested in a letter to a committee of MPs that there was a funding shortfall of around £990m with Carillion’s defined benefit pension scheme*. YES, £990 MILLION !!!

Many of the UK’s largest companies are running pension deficits that would bring a tear to the eye. The exact amount of pension deficit is hard to ascertain, but sources claim these numbers to be around £103 BILLION* with over 3,700 schemes in deficit compared to 1,800 in surplus.

Many household names find themselves in the same situation with their pension schemes. Names like BAE, Royal Dutch Shell, The Royal Mail and British Telecom to name a few. It is only a matter of time before one of these names, or another “big player” joins the list of collapsing pensions.

So, if you’re in a pension that is in deficit is that a problem? Well, there are close to 11 MILLION people holding defined benefit pensions. Out of that number they estimate that 3 MILLION (3) will encounter problems and potentially have only a 50% chance of receiving their promised pension.

The UK Government runs a special fund aptly called The Pension Protection Fund, the aim being to bail out companies with a pension crisis. The Pension Protection Fund (PPF) was set up on 6 April 2005 to protect members who had defined benefits (i.e. final salary type benefits) in a workplace pension scheme, where the employer became insolvent on or after this date and the pension scheme could not afford to pay those benefits promised to members on wind up.

Many smaller UK defined benefit pension schemes have already fallen into their basket, as well as some larger organisations. BHS and British Steel are two of the largest organisations to be in the pot. You can view all of the companies listed at the PPF website; it makes for horrid reading when you see the true amount of company pensions that have already owned up to and admitted they can’t afford to pay their promises………

The Pension protection fund isn’t exactly a guaranteed scheme anyway, whilst it runs within its parameters it can provide its own level of promises (below what the original pension company was offering), however if too many large company pension schemes start running to it for protection, it will put the protection fund under its own strain……

So what can you do about it?
Well, here at The Spectrum IFA Group we work closely with some of the worlds leading pension providers and can not only offer you completely independent advice but we can also provide you with a technical analysis on your pension. We can advise whether your pension is in deficit or surplus, we can advise on the pro’s and con’s of your existing pension provision and furnish you with sufficient information to actually understand what you may receive. We can also compare that information to the alternative options available to you, whether that be a transfer out of your scheme to a QROPS or an International SIPP option. This service is available for defined benefit and defined contribution (personal) pension plans.

It’s better to be aware of all the options available to you, it’s your retirement and it’s your choice to decide what the best option for your circumstances is.

*Sources: BBC News January 2018.

Brussels Presentation – Should I transfer my pension out of the UK, or not?

By Emeka Ajogbe - Topics: Belgium, BREXIT, EU Pension Transfer, United Kingdom
This article is published on: 16th January 2018

16.01.18

Brexit.
A word that exploded onto the British lexicon almost three years ago and has refused to dissipate. Indeed, instead of disappearing into the shadows and reappearing every time the ruling party wishes to dangle a carrot (or stick) in front of the populace, it has remained in full view without a day or week going by without it being mentioned on the news, by the watercooler, at home amongst family, or debated amongst friends and experts alike.

What does it mean? To some, it is wrenching back sovereignty from the EU Overlords, to others, it is an unmitigated mistake. To some, it is the taking back control of the British borders and stemming the tide of immigrants, to others, it is an unmitigated mistake. What is sure, is that it means that the UK voted to leave the EU next March and the EU28 will become EU27.

Whilst the politicians discuss the terms on which they will work together in the future and untangle the ties of the past, what does it mean for you?

If you have worked in the UK and have a pension (or more) there, then the lack of clarity and swirling uncertainty surrounding Brexit undoubtedly has you concerned about your money; fortunately, we at The Spectrum IFA Group have a solution for you.

On Wednesday 7th February, we have invited leading industry experts to discuss the potential implications of Brexit on your money and more specifically any pensions that you have in the UK. This is a must attend event for anyone who has worked and has a pension in the UK. Our experts will discuss likely scenarios and provide solutions for your pension concerns and we will also have a local Belgian Tax Expert who will talk about the tax treatment of UK Pensions here. The evening will end with finger food and drinks and an opportunity to meet and greet our experts, advisers, and attendees.

Click below to confirm your attendance, and we look forward to meeting you at the Renaissance Hotel.

Yes, I would like to attend the presentation on Wednesday 7th February/

Is your Pension close to the UK Lifetime Allowance?

By Spectrum IFA - Topics: Lifetime Allowance, pension transfer, Pensions, QROPS, Retirement, United Kingdom
This article is published on: 6th October 2017

06.10.17

With careful planning you can avoid the penal 55pc tax hit on pensions valued at more than £1 million

To find out how to avoid penal taxation on larger pension pots contact your local Spectrum adviser to arrange a free, no obligation consultation.

Lifetime allowance (LTA): what does it mean for your pension?

  • You need to monitor how much you’re putting into your pension funds and how well your investments are performing. Money held in a personal pension, including workplace schemes and SIPPs, Final Salary pensions, all count towards the limit, but the state pension doesn’t
  • If you have a defined contribution scheme or a SIPP the total fund value is assessed against the limit. This will be tested when a Benefit Crystallisation Event (BCE) arises. There are 13 different BCE’s. However the most common would be taking your PCLS, buying an annuity, transferring to a QROPS, reaching age 75, death etc. Each time an event occurs your pension is tested against the LTA limit
  • Generally if your final salary pension is worth more than £50,000 a year you’ll be over the £1m lifetime allowance
  • If you have a mixture of pensions, with benefits taken at different times, then it can get quite complicated to work out, how much LTA was used when and how much you have going forward
  • The LTA excess charge is 55% if the excess is taken as a lump sum and 25% if it is taken as an income. (If taken as income then the net amount is then subject to income tax at the members highest marginal rate, which usually works out to be a total tax of around 55% in total)
  • There are certainly very good ways to reduce the potential LTA liability in the future. This could include applying for protection to increase the LTA limit, however there are restrictions to apply
  • Furthermore if you live abroad there could be other options with International Pensions, such as QROPS, to help reduce or remove future liabilities
  • With our pensions specialists we are able to review your pensions, work out your current situation and then work out clearly your current situation and what the best way forward to help minimise any future tax liability with your pension

New Pension Transfer Rules!

By Derek Winsland - Topics: Final Salary Pension, final salary schemes, France, Pensions, QROPS, United Kingdom
This article is published on: 10th July 2017

10.07.17

Those of you who are familiar with my past articles will know I have a certain affinity with the pensions landscape; indeed, in the I’m considered a bit of an expert on the subject.

If you have read previous articles you will know that I have been quite critical of the Financial Conduct Authority’s seeming inability to keep up to date with developments in the UK pensions arena. Well up until the 21st June 2017, that is.

In a complete reversal of previous ‘guidance’, the FCA has now eventually recognised that an individual’s circumstances differ from the next person’s. Up until now, the FCA’s default position regarding any request to transfer out of a defined benefit (final salary) pension scheme has been to view them as unsuitable. In other words, the emphasis (irrespective of a pension member’s situation), has been to decline such transfer requests, primarily because the FCA says it is not in the member’s interest to do so.

The introduction of Pensions Freedom by then Pensions Minister, Steve Webb, presented the FCA with a challenge. On the one hand, here was the government releasing the constraints that pensions had been progressively bound up by from successive previous governments; whilst on the other, the FCA was continuing to protect the interests of the pensions companies, at the same time becoming increasingly more detached from the consumer, for whom it was supposed to serve.

For the last two years, the FCA has struggled with the new pensions landscape, still believing that preserved former pension benefits, even those held within schemes that are only 50% funded, should remain where they are. The Pension Protection Fund, set up to protect members’ pensions where the employer has folded, is coming under increasing strain, because it is funded by all the other occupational pension schemes. As more schemes fold, the more the remaining schemes come under pressure. Clearly, therefore, something had to be done – those self-same members, now fearing their preserved pensions weren’t as guaranteed as they had been led to believe, wanted action.

On 19th June, Steve Webb, now working for Royal London, reminded the FCA of its duties, warning it against ‘over-regulating’ DB Pension Transfers. The result? New ‘guidance’ (read ‘rules’ to us IFA’s) now focusing upon the individual member’s circumstances. Without blowing my own trumpet, I’ve been saying this ever since Pension Freedoms came in in 2015. You could have knocked me down with a feather when I read about this volte-face. At last, it is not now just about critical yields and hurdle rates, it’s about applying financial planning assumptions to individual needs. If a client has sufficient other assets to fund retirement, why leave deferred benefits in a scheme where on your death (and that of your spouse or partner), the pension is lost? Tell that to your kids……

“Johnny, you know you’re struggling to make ends meet, let alone build funds for your eventual retirement? We guess what, I’m going to leave my pension benefits in a scheme that will provide nothing for you on my death. How does that sound?”   Under Pension Freedom, you can pass unused pension funds to your children, if it is outside of a defined benefit scheme. How many parents wouldn’t want that for their children, once their own needs had been catered for?

This is not to say that the floodgates have opened; we as advisers MUST assess the needs of not only the pension member, but also the family unit. We must assume something of a nanny role, helping our clients to plan for the future, to properly identify what capital and income will be available and when. There will be circumstances where the best advice is the comparative guarantee of an occupational pension income; for those people, the advice will be to remain a member of the scheme. But for a lot of people, this new FCA guidance will be seen as empowerment to take control of one’s own financial future. Our role as financial advisers is to provide help and support along the way. Proper financial planning.

UK expats cannot vote after 15 years abroad

By Victoria Lewis - Topics: Elections, France, Habitual Residence, Residency, United Kingdom
This article is published on: 12th June 2017

12.06.17

This article was written in May 2015 by a lawyer friend of mine and is as relevant today.

The result of the UK election was meant to be much closer. If it had been closer, the rule which prevents British expats who have been abroad for more than 15 years from voting in Parliamentary elections may have come under renewed scrutiny.

The size of the British community abroad is estimated at 5.6 million. Most expats leave the UK for work-related reasons, taking their families with them. Mixed-nationality marriages are also a factor in emigration decisions, as well as the wish of many British pensioners to retire abroad. Thanks to exchange programs, the number of students travelling around the world to experience life abroad has increased significantly in recent years. In our ever more globalized world, borders are disappearing.

These “British Expats” are unofficial but precious ambassadors, promoting British values to their host countries. They make an invaluable contribution to the diffusion of their culture, disseminating the “British Way of Life” by projecting an image of their “Britishness” around them. In the view of the Institute for Public Policy Research, “British abroad are not a burden or an embarrassment: they are in many ways the best of the UK and we should be proud and supportive of them”.

However, their political situation is overshadowed by the fact that they lose their right to vote in the United Kingdom after they have been living abroad for more than 15 years, no matter how frequently they return to visit their home country. Exceptions exist for the military, civil servants and British Council employees, but all other British expats cannot vote under the current UK law. While most developed countries such as France, Spain, Switzerland or the USA have recognized their own expat population by giving them an unrestricted right to vote in national elections, the United Kingdom seems to be one of the few countries with this type of restrictive rule.

How the law changed
Before 1985, British citizens living outside the United Kingdom were unable to vote in UK Parliamentary elections. Following intensive pressure, the Representation of the People Act 1985 finally gave them the right to vote. They could register as “overseas voters” in the constituency where they last lived in the UK. But, 1985 also marked the beginning of a ‘time limit’ during which British expats would be able to remain on the electoral register. This period was shortened and extended, but has never been unlimited.

The Representation of the People Act 1985 made provision for British citizens residing outside the United Kingdom to remain on the electoral register in the UK for a period of 5 years. In 1989, this period was extended to 20 years. In 2000, it was decided to reduce it to 15 years, with effect from 1 April 2002, leading to the rule that applies today.

A discriminatory and arbitrary rule, according to most British expats
Due to this, pressure groups have been created to plead for the abolition of the 15-year rule. They claim that the legislation is discriminatory, arbitrary and serves no useful purpose.

They consider it to be discriminatory because not all British expats are concerned by the legislation. As indicated previously, members of the armed forces, Crown servants and employees of the British Council are exempted from the rule. Besides, in accordance with European Union Treaties, all European citizens have the right to live and work in another state of the EU. These fundamental rights should not be subject to any restrictions or penalties. They accuse the UK of acting in a discriminatory fashion by penalising the right of free movement of its citizens, whilst most other developed countries do not.

They also consider it an arbitrary treatment because the cut-off point has been fixed without a concrete objective or justified basis on which to determine who should have the right to vote. The Government used to claim that people who have lived abroad for over 15 years are likely to lose links with the UK. However, in today’s world of increasing global communication, this argument does not seem appropriate any more.

Comparison with other countries
Unlike the UK, most advanced democracies have granted their expat population an unrestricted right to vote in national elections.
In June 2012, French people abroad were able to vote for their MPs for the first time. Around the world, 11 constituencies were created. (See the article on the FBCCI Blog: Voting rights for British Expats: What can the UK learn from France?)

Spanish expats’ rights are guaranteed by article 68 of the Constitution. In Portugal, according to the Constitution, the single-chamber Assembly of the Republic is “the representative assembly of all Portuguese citizens”. Thus, expats have the same right to vote in elections for the Assembly as citizens living in Portugal. Italian expats are represented in both chambers of the parliament and elect 65 representatives to the ‘Consiglio Generale degli Italiani all’Estero’. The United States also guarantee their expat population’s political rights.

Efforts to reform
Faced with this situation, some national and European politicians have asked for the law to be reviewed or, at least, debated.

“The exercise of the freedom of movement should not result in losing an important democratic right” says Viviane Reding, European Commissioner for electoral rights, in her factsheet “Promoting your electoral rights”. “Although EU law grants EU citizens the right to participate in municipal and European elections in the Member State where they reside, it provides no such right with regard to national elections. (…) Given that EU citizens of those Member States are not able to participate in any national elections (neither in the Member State of origin not in the Member State of residence), they are deprived of one of their most important political rights just because they exercise their right to free movement. (…) The Commission will launch a discussion to identify political options to prevent EU citizens from losing their political rights when they exercise their right to free movement.”

A short debate in the House of Lords on voting arrangements for British citizens living overseas and members of the armed forces serving abroad was held on 2nd March 2011. Viscount Astor, arduous defender of the overseas voters’ electoral rights (“This 15-year rule is unfair and excludes perhaps half the expatriates living overseas. There is no credible reason for that.”), asked whether the Government would consider changing the voting arrangements that were currently in place. He called on the Government to look again at the 15-year rule. Lord Lester of Herne Hill agreed with him and has previously asked the Government to legislate to change the rules.

More recently, calls have been made for the Government to reconsider this rule. The issue was raised during the passage of the Electoral Registration and Administration Bill 2012-2013 in the House of Commons. Conservative Geoffrey Clifton-Brown proposed that a new clause should be added to the Bill to remove the 15-year limit rule: “the new clause would remove this qualifying period altogether, so that all British citizens could qualify as overseas voters, regardless of when they were last resident in the UK”.

The Parliamentary Secretary, David Health, replied that the Government would give the issue “serious consideration” but that it would not rush into a decision, “not because of any wish to obstruct, but simply because the question of extending the franchise is a fundamental one and both the Government and the House would have to feel comfortable with doing that”. The amendment was subsequently withdrawn.

The Bill received its second reading in the Lords on the 24th July 2012 and Lord Norton of Louth raised the issue of overseas voters during the debate. Lord Lexen also called for the 15-year rule to be abolished: (…) I urge strongly that the scope of the Bill be extended, as my noble friend Lord Norton of Louth argued, by adding to it provision to enable all our fellow subjects of Her Majesty who live abroad to vote in our parliamentary elections. This would end the 15-year limit rule, for which no clear rationale has ever been offered (…)”.

Lord Wallace of Saltaire responded for the Government and said there were no plans to extend the 15-year limit rule: “The Government does not have any plans at the present moment to lengthen the period from leaving the country beyond 15 years, nor do we have any really ambitious plans to do what is done in some other countries, which is to allow voting in embassies and consulates. However, the electoral period will help”.

The entrenched position of the Courts

The feeling of not being understood and being prejudiced in the execution of one of their fundamental rights has encouraged some expats to challenge the rules before the courts.

Two cases were brought recently.
The first case concerned James Preston, a British citizen living with his family in Spain and working for UK companies since 1995. In 2009 he was denied the right to vote in Parliamentary elections, having lived outside the UK for 15 years. He went to the High Court in 2011, asking for judicial review of the legislation but his case was dismissed. His application to take his case to the Court of Appeal was denied in 2012. Lord Justice Elias said he appreciated Mr. Preston and other expats were “genuinely upset about the rule”, but that there was no real evidence that “it does create a barrier of any kind to freedom of movement”. “It is inherently unlikely that the loss of the right to vote would be sufficient to cause expats to up sticks and return to the UK”, he added.

The second case was brought by Harry Shindler, a World War II veteran who retired to Italy in the early 1980’s. He took his case to the European Court of Human Rights in Strasbourg, alleging a violation of Article 3 of Protocol No. 1, which provides that: “The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature”.

He claimed that no time-limit should be imposed on expats’ voting rights. He considered he should have the right to choose his place of residence without being disenfranchised. “Universal suffrage is set out in the Universal Declaration of Human Rights. Universal to my mind, and in every dictionary I’ve seen, means ‘everybody’”. “Expats abroad pay their taxes at home. There are those who have property and haven’t sold it because they believe they’ll be coming back. They pay taxes on that property. They pay council tax. The pensions we get, government and private, come from the UK and those pensions, when they reach a certain limit, are taxed in the UK. So here we have expats who pay their taxes and are not allowed to vote. It’s unacceptable.”

However, the court in Strasbourg rejected his case, ruling that the 15-year limit was “not an insubstantial period of time” and it was up to the British Government whether to choose a cut-off point. Therefore, in the court’s view, the 15-year rule does not violate the right to free elections.
In view of the positions of both the courts and the Government, it seems British expats are stuck in a situation where, after 15 years abroad, they may still pay taxes in the UK, still feel British and strongly linked to their home country, but cannot vote in British elections; nor in their host country’s national elections either.

In November 2011, the Government said Mr. Shindler is not a ‘victim’, since “it was open to him to take Italian citizenship and acquire a right to vote in elections to the Italian national parliament”.

David Burrage, an ex-soldier and policeman who co-founded the British Expats Association of Spain, commented: “When I consider that Harry had jumped ashore and onto the beaches at Anzio and offered up his life, like so many of our brave servicemen, during World War II, when viewed alongside the conduct of our Government, by way of that most recent response on their behalf, it not only makes me feel ashamed, I also feel utterly disgusted”.

Although this statement dates from 2011, it still expresses the feelings of many British expats.
Neil Robertson
Solicitor, England & Wales
Avocat au Barreau de Paris
May 2015

What can I do to minimise any potential impacts of a tough Brexit process?

By Amanda Johnson - Topics: Article 50, Assurance Vie, BREXIT, Company Pension Schemes, Defined benefit pension scheme, Final Salary Pension, final salary schemes, France, QROPS, Retirement, United Kingdom
This article is published on: 11th May 2017

11.05.17

This is a question many expatriates are mulling over, now positioning for the upcoming negotiations has started. First and foremost, I remind my customers that the process to leave the EU is widely anticipated to take the full two years set out in article 50, so the only immediate areas people should focus on are changes in the U.K. and French budgets.

As the negotiations progress however, there are steps you can take which will ensure that any effects to you are minimised:

  1. Does your adviser work for a French registered company, regulated in France?

Working with adviser who operates and is regulated already under French finance laws means that any change in the UK’s ability for financial passporting will not affect you.

  1. Is your Assurance Vie held in an EU country, not part of the U.K.?

Again, any issues the U.K. may have to solve regarding passporting are negated by ensuring your Assurance Vie is already domiciled in another EU country.

  1. Have you reviewed any U.K. Company pension schemes you hold, which are due to mature in the future?

The recent U.K. Budget saw the government levy a new tax on people moving their pensions to countries outside the EU. There is no certainly that this tax will not be extended to EU countries once the U.K. has left the union.

The process of leaving the EU is very much unchartered waters and whilst I certainly do not recommend anyone acts hastily, a review of your financial position in the next few months may avoid future headaches.

Whether you want to register for our newsletter, attend one of our road shows or speak to me directly, please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations we provide.