12 ♦ FRENCH LIFE
www.thebugle.eu ○ THE BUGLE ○ JULY 2018
Home bias vs diversification: Some home truths about investing
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hink about where you hold your savings and investments. Is there one area that stands out in terms of geographical region and asset type? For many expatriates, it is common to have a skew towards UK assets and investments. Britons also tend to favour property as an approach to invest and grow capital. Home may be where the heart is, but is it where the savvy expatriate investor should focus? Here, we explore the tax implications of two types of ‘home bias’ – UK-based investments and a concentration in property – and look at why diversification is so important. Home bias #1: UK investments With familiar rules and benefits, it is understandable that many expatriates keep savings and investments in UK structures. However, once you no longer live in the UK, this approach becomes less beneficial. ISAs, UK life assurance policies and pooled vehicles such as unit trusts and Venture Capital Trusts (VCTs), for example, lose UK tax relief once you are resident elsewhere, and interest or dividends received will become liable to taxes in France. Brexit may complicate things further. When the UK leaves the bloc and investments like UK bonds and life policies become non-EU/EEA assets, they may not qualify for the tax benefits available today in France.
If you are non-UK resident, take time to explore alternative investment options that may be more tax-efficient where you live, and that may provide estate planning or other advantages. For example, many expatriates in France benefit from wrapping investments in a form of life policy that provides income tax benefits and potentially mitigates capital gains and inheritance taxes. Some investment structures also offer flexible income options, including the freedom to take income in Euros instead of Sterling to minimise currency conversion risk. Even if you remain UK resident, being overly weighted in UK investments is ill-advised, especially amidst Brexit uncertainty. To minimise risk, it is important to spread your interests across various geographical areas as well as across different sectors, markets and asset types in line with your risk profile. More on this later. Home bias #2: Property While investing in real estate has advantages, it can carry a heavy tax burden. Wherever you own property, you are likely to face some sort of council tax, stamp duty and capital gains tax charges. In France, owning property valued over €1.3 million also attracts an annual wealth tax. For French residents, this applies to worldwide property, otherwise only French real estate is liable. Taxes on UK properties have surged in recent years. This includes new liability
for expatriates on capital gains since April 2015, a stamp duty surcharge on second and subsequent homes, increased council taxes on vacant properties and the gradual elimination of buy-to-let tax relief. Since 2017, UK residential property owned through certain offshore structures – including trusts – has also become subject to UK inheritance tax. You need to calculate the overall tax burden of investment property alongside other expenses – such as management fees and maintenance costs, plus inflation – to establish the real returns. There is also the issue of liquidity – being able to access your capital when you need it. With property, it can take many months to retrieve your initial investment and you could invite a loss by selling at the wrong time. Why diversification matters Having a home bias – in either sense – does not just present concerns regarding tax efficiency and liquidity. When you concentrate your money in one or just a few areas, it becomes exposed to much more investment risk. By spreading across different regions, market sectors and asset types – including equities, gilts, corporate bonds and cash, as well as property – your capital has the chance to produce positive returns over time without being vulnerable to any single area under-performing. Investment funds offer a way of combin-
ing a suite of different assets across a variety of countries and markets. While most private banks and wealth managers will offer this strategy, often a significant part of their portfolios is placed in their own in-house funds. You can better enhance your diversification with a provider who uses a multimanager approach to blend several different fund managers; reducing your reliance on any one manager making the right decisions in all market conditions. Ultimately, successful investing is about having a strategy specifically based around your personal circumstances, time horizon, needs, aims and risk tolerance. British expatriates in France can benefit from professional guidance from an adviser with in-depth knowledge of the tax regimes and investment opportunities in both countries. With personalised, cross-border advice, you can reduce your exposure to risk at the same time as ensuring you hold all of your assets – home and away – in the most tax-efficient way possible. ■ Tel: 05 53 63 49 19 Email: bergerac@blevinsfranks.com Web: www.blevinsfranks.com Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.
The Grumpy Granny Guide - Old sites and new
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irst of all, a warm welcome to a new arrival, the museum ‘La Rue du Temps qui passe’ (Museum of Past Times) in Allasles-Mines off the St Cyprien-Sarlat road. Not very clearly signed, but easy to find when you reach the village centre (tel: 05 53 28 27 82). This is a family owned and run museum, opened last year and which is now coming into its own. The result of the owner’s lifelong interest in seemingly ordinary objects, this simply amazing collection of everyday articles spanning a century from the mid-nineteenth to mid-twentieth century is presented in the form of a covered cobbled street lined with small shops and workshops. Almost overwhelming in its scope from an apothecary to artist’s studio, toyshop to saddler’s, motor repair shop to dentist’s, there is something to delight all ages. And when you tire of looking at the well-displayed contents, you can sit and have a drink or snack with a wonderful view overlooking the Dordogne river. Constructing, filling and organising this museum is no small feat and apparently there are still several sheds stuffed with potential exhibits so this museum holds still further promise. However, it could do with more information in English and with a tiny staff it risks being overwhelmed by visitors, so go there as soon as you can. Good luck and every success to this very interesting museum, I wish there were more like it. Tourists sites evolve from one year to the next, they pop up or disappear, they expand or become overcrowded, improve or become neglected. So time, I thought, to make some return visits to see what’s changing and what has stayed the same. First stop at the Grotte in Rouffignac. This stays much as it has always been over the years, an exploration of the underground labyrinth of decorated caves which were always open to everyone. Before the study of prehistory in the late 19th century and the realisation that such caves were historic treasures to be preserved, many locals and visitors wan-
dered around freely and added graffiti to priceless cave art. So until it was scientifically possible to distinguish old from new, Rouffignac was taken less seriously than some of the ‘discovered’ caves such as Lascaux or Combarelles. But today behind the scenes there is some very serious research being carried out on chromatic composition and so the dating of the paintings is no longer an issue. Maybe not as vibrant or on so large a scale as some other caves, this is nevertheless an almost perfect visit in a little train, for anyone who can’t, or won’t, walk far or is overwhelmed by the earnest or confusing commentaries of the bigger sites. There is a friendly welcome, a vending machine for snacks and drinks, seating while you wait and multilingual audio guides for those who don’t speak French. What has changed, however, is the commentary, and for the better. In keeping with the recent trend, there are no longer any explanations based on the guide’s imagination but an altogether far more modest approach to the mysteries of prehistory. Today’s guides have no problem admitting that no one has much idea about the whys and wherefores of cave art which is totally refreshing for those of us who were used to squinting at unconvincing animal outlines or found it hard to believe that vague scratchings were shamanic symbols. Then on to the Maisons Troglodytiques in Belvès, a little known visit but really worthwhile. A unique insight into how the very poor lived, literally in the dark, under Belvès marketplace from the 13th to 18th century. Here too the commentary has vastly improved, set now in the context of rural life in the Périgord. The visit explores the dozen or so small natural caverns, each one of which housed a family of up to 12 people and yet was considered a safe, warm alternative to living in a hut outside. Just a couple of small drawbacks, the visit is within a very confined space so not for those of you who are claustrophobic and the floor is very uneven and sometimes slippery.
Tickets are bought from the tourist office next to the market and places are limited. The guides speak some English and there are English tours in the summer season (tel: 05 53 29 10 20). A 45-minute visit with a difference. Next, the Château de Lanquais, one of my least favourite places, notorious for its dire attitude towards the public. Visitors were on sufferance, opening times unreliable and if the comments on TripAdvisor are anything to go by, not a pleasant visitor experience. This was a shame because this privately owned castle has lovely buildings, an exciting history and is well furnished. Well, the good news is that things are changing. The owner is now collaborating with the association ‘Au fil du temps’ which specialises in tourist management and is already helping to run a number of local sites. It is much more visitor friendly and welcoming and although it will take a little while to shed its previous reputation, I’m delighted it is now on the right path. The Château de Lanquais is just a stone’s throw from Bridoire castle, also now privately owned, a castle with lovely buildings but a chequered past where the present owner has taken a entirely different approach to visitors from that of his neighbour, providing real value for money. Welcoming and thoroughly child-friendly, this well-restored castle more than makes up for what it lacks in history by specialising in games from the past - bilboquet, skittles, etc. - appealing to all ages and when I was there a few weeks ago, the gardens were full of smiling visitors and excited children rushing everywhere to complete the quizzes and treasure trails which make this castle such an unfailing attraction. In Lanquais we have a Sleeping Beauty, in Bridoire a Cinderella story. The evolution of these two castles proves a point I make frequently which is that opening the gates to a site which may in itself be attractive and interesting just isn’t enough. Unless there is respect for the visitor in the form of a proper welcome and comfortable infrastructure
which includes explanations in various languages, snacks and drinks, good toilet facilities and adequate signage both on and off site, the visitor will leave dissatisfied. Both Lanquais and Bridoire have plenty of plans to improve the visitor experience further, so watch this space. If you know of a new, or old, site you would like to recommend, or which you feel merits a mention for better or worse, you can contact me via The Bugle at editor@thebugle.eu. ■ This is part of a series of features devoted to the tourist experience in the Dordogne provided by the website grumpygranny-guides.com which highlights those sites which are comfortable and pleasant to visit and which offer a warm welcome.
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