- If you're staying in the UK long-term, a SIPP still wins on income tax relief and investment flexibility
- If you're retiring in France or planning cross-border succession, Assurance Vie generally wins — on withdrawal tax, inheritance allowances, and exclusion from French wealth tax (IFI)
- UK pension reforms mean unused pension funds will be brought into the UK inheritance tax net from April 2027 — a real change to the "SIPPs are IHT-free" assumption
- Many cross-border families end up holding both, using each vehicle for what it does best
If you're weighing up a SIPP against an Assurance Vie as your main wealth vehicle heading into 2026, the honest answer is: it depends where you'll actually be living when you draw on it. For someone staying in the UK, a SIPP remains a strong core holding. For someone retiring in France, or planning to pass wealth to family scattered across both countries, Assurance Vie tends to come out ahead on withdrawal tax, succession planning, and French wealth tax exposure.
What Each Vehicle Actually Is
A SIPP (Self-Invested Personal Pension) is one of the most flexible UK retirement wrappers available. You choose the underlying investments, get income tax relief on contributions, and growth inside the wrapper is largely shielded from capital gains tax.
Assurance Vie is a French life insurance and investment wrapper, though "just insurance" undersells it — it functions more like a flexible investment account with a succession-planning mechanism built in. Money grows inside the contract largely free of annual tax, withdrawals are only taxed on the gain portion, and you can name multiple beneficiaries who each receive their own allowance on death. For a full explanation of what Assurance Vie is and how it differs from both life insurance and UK wrappers like ISAs, see our guide to Assurance Vie vs Life Insurance.
Which Wins on Inheritance Tax?
This is where the comparison has shifted the most recently.
From 6 April 2027, most unused UK pension funds will be brought into your estate for Inheritance Tax purposes — now confirmed law. Non-spousal beneficiaries can face a combined income tax and IHT hit as high as 67% in some cases. Spousal transfers remain exempt. More details, including how this interacts with French succession tax if your heirs are French residents, is in our UK Pension Inheritance Tax Reform article.
Assurance Vie takes a different approach entirely. Each named beneficiary can receive up to €152,500 completely tax-free (Article 990 I of the French tax code), provided the contributions were made before the policyholder's 70th birthday. Above that allowance, a 20% rate applies on the next €700,000 of taxable value per beneficiary, rising to 31.25% beyond that — still meaningfully lower than the worst-case UK pension scenario, and the allowance multiplies with each additional named beneficiary.
How Does Withdrawal Tax Compare?
This is the section where residency changes the answer completely.
If you're still UK resident when you draw your SIPP, the standard maximum tax-free Lump Sum Allowance for 2025-26 sits at £268,275, and it's genuinely tax-free under UK rules. Beyond that, withdrawals are taxed as UK income, which can push you into higher tax bands depending on how much you draw each year.
If you're a French tax resident when you draw it, none of that "tax-free" framing applies. France taxes the lump sum in full — there's no equivalent exemption, regardless of what the UK calls it. You have three options for how it's calculated: a 7.5% flat rate (an irrevocable election — once you enter it, you can't switch to another method for that same payment), the standard progressive income tax scale, or the quotient system, which spreads the lump sum's effect over four years for RFR purposes so it doesn't push your other income, benefits eligibility, or CSG tier into a higher bracket for that year alone. The quotient system is never worse than the progressive scale — in the worst case the result is identical — so it's worth calculating before defaulting to the flat rate. Our dedicated Pension Lump Sum guide walks through how to choose between them.
Assurance Vie works differently again: once a contract has been held for more than eight years, gains withdrawn benefit from a reduced income tax rate of 7.5% on premiums up to €150,000, plus social charges. A couple withdrawing from an Assurance Vie held at least eight years also gets an annual tax-free allowance of €9,200 on gains, resetting every year. For anyone drawing a steady retirement income in France, that combination can meaningfully outperform how a SIPP lump sum or drawdown is actually taxed once you're a French resident.
Does French Wealth Tax (IFI) Change the Picture?
France's Impôt sur la Fortune Immobilière only taxes real estate — it doesn't touch financial assets. Assurance Vie contracts sit outside the IFI calculation entirely, since IFI targets property rather than investments. For anyone with substantial French property holdings who also wants to grow liquid wealth without adding to their IFI exposure, this is a genuine structural advantage.
What About the PFU Flat Tax?
France's Prélèvement Forfaitaire Unique (flat tax) applies at 31.4% on interest, dividends, and standard capital gains, following the 2026 rise in the social charges component. Crucially, this increase doesn't touch Assurance Vie gains, which continue to run under their own dedicated tax regime described above — widening the gap further for French residents comparing standard brokerage income against an Assurance Vie. See our guide to PFU vs Progressive Tax for more on how the flat tax works.
Can You Hold Both?
In practice, holding both long-term rarely makes sense once you're a French tax resident — the SIPP loses its "tax-free" advantages the moment you draw it in France, so there's little benefit to carrying it forward untouched. What matters more is timing: some people cash in a SIPP while still UK resident, while the lump sum genuinely is tax-free, and move the proceeds into an Assurance Vie before relocating, rather than drawing it later as a French resident under the flat rate, quotient system, or progressive scale. Whether that's the right move depends on your specific numbers and your residency plans, so it's worth running the calculation properly — ideally with a cross-border adviser — before deciding whether to keep contributing to a SIPP, cash it in early, or leave it be.
Common Mistakes
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Assuming a SIPP still sits entirely outside your estate for UK inheritance tax. From April 2027, most unused pension funds are brought into scope — this is now confirmed law, not a proposal.
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Assuming Assurance Vie's €152,500 allowance is the only tax that applies. Beyond that threshold, 20% applies up to €700,000 of taxable value per beneficiary, then 31.25% above that.
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Forgetting that Assurance Vie contributions after age 70 are taxed under different, less generous rules than contributions made before 70 — timing genuinely matters here.
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Not accounting for IFI when comparing property-heavy UK pension pots against Assurance Vie. Only the latter sits outside French wealth tax.
Frequently Asked Questions
Is a SIPP still worth having in 2026 given the UK inheritance tax changes?
It depends where you'll be resident when you draw it. If you are still a UK resident, yes — the income tax relief on contributions and the tax-free lump sum up to £268,275 remain genuine benefits, though you should no longer assume the fund sits entirely outside your estate for inheritance tax purposes from April 2027. If you are French tax resident by then, the "tax-free lump sum" framing doesn't carry over at all — France taxes the full lump sum, just with a choice of favourable calculation methods (flat rate, quotient system, or progressive scale) rather than an exemption.
Is Assurance Vie better than a SIPP for retiring in France?
For most people retiring in France, Assurance Vie tends to come out ahead on withdrawal tax, beneficiary allowances, and exclusion from French wealth tax — the decision needs to be carefully considered before leaving the UK so speak to an independent financial adviser.
Do I lose UK pension benefits if I open an Assurance Vie?
No. Opening an Assurance Vie doesn't affect your existing SIPP or UK pension entitlements — many cross-border families hold both simultaneously as part of a wider plan.
How much can I pass on tax-free through an Assurance Vie?
Each named beneficiary can receive up to €152,500 tax-free, provided the contributions were made before the policyholder turned 70. Above that, 20% applies up to €700,000 of taxable value per beneficiary, then 31.25% beyond that.
Will the UK pension inheritance tax changes affect my SIPP if I live in France?
Yes. The reforms taking effect from April 2027 apply based on where the pension is held, not where the holder lives — French-resident UK expats with a SIPP are affected the same way UK residents are, which is one of the main reasons people weigh Assurance Vie as an alternative for wealth they intend to pass on.
What is the French wealth tax (IFI) threshold in 2026?
€1.3 million in net taxable real estate. Assurance Vie contracts are excluded from this calculation entirely, since IFI only targets property. See the full IFI guide for thresholds, rates, and the 5-year new-arrival rule.