Disclaimer: This article is for general information only and does not constitute legal, tax, or financial advice. Always consult a qualified French notaire, avocat, or chartered accountant before acting on anything you read here. The English Investor accepts no liability for decisions taken on the basis of this article.
A British landlord we know — let’s call him James — bought a one-bed in the 6th arrondissement in 2019 and has rented it on a furnished basis under the LMNP régime ever since. Last week, his French accountant came back with the 2025 tax-return numbers and James’s social-charges line had nudged up: from 17.2% to 18.6%. He shrugged, signed the engagement letter, and was about to wire the additional couple of thousand euros when his accountant said, almost in passing, “have you ever filed an S1?” James hasn’t. He’s a UK national, lives in London, contributes National Insurance, and has never been registered in any French social-security scheme. With the right form, his social-charges rate on French rental income could be not 18.6% but 7.5%. The form is annoying. The savings, on the small flat, are roughly £2,500 a year. James is now filing the S1.
The 1 January 2026 hike to French social charges — pushed through by the Loi de financement de la sécurité sociale (LFSS) 2026 — is the kind of tax change that quietly shows up on the 2025-income tax return and costs British landlords real money before they notice. But the hike has two important carve-outs, one written into the law itself and one that has existed since 2015, and most British landlords would benefit materially from understanding both. This article is the field guide. For the broader French tax calendar a UK landlord has to navigate, our French tax deadlines guide covers the May–June filing window, our LMNP guide covers the furnished-rental régime in detail, and our French capital gains tax pillar covers the parallel question for property sales. Our complete buying guide covers how to set up the property purchase in the first place.
What the LFSS 2026 actually changed
The Loi de financement de la sécurité sociale 2026 raised the CSG component on capital income by 1.4 percentage points — from 9.2% to 10.6%. The CSG sits on top of two other levies (CRDS at 0.5%, prélèvement de solidarité at 7.5%), so the total social-charges rate on capital income moved from 17.2% to 18.6%. The change applied from 1 January 2026 and, importantly, is effectively backdated to 2025 income for the categories where it bites — which means most British landlords running an LMNP operation are seeing the new rate hit their 2025 return for the first time this May or June. There is no spread of the increase over multiple years, no transitional relief, and no exemption available simply by virtue of being a non-resident.
The exemption written into the law itself: bare rental income and real-estate gains escaped
Here is the part that most readers of the headline news missed. The LFSS 2026 specifically excluded several categories of capital income from the CSG hike. Revenus fonciers (bare rental income from location nue), plus-values immobilières (real-estate capital gains made by individuals), assurance-vie products, épargne logement (PEL/CEL), and PEPs all retained their old CSG rate. The combined social-charges rate on these categories therefore stayed at 17.2% — exactly as before. A British landlord who rents a French flat unfurnished, declares the income as revenus fonciers, and otherwise has no exemption claim, pays the same 17.2% in 2026 as they did in 2025. Nothing changed for them.
What didn’t make it into the exemption is the line that catches most British landlords. LMNP rental income is classified as bénéfices industriels et commerciaux (BIC), not as revenus fonciers. Furnished rental — including most short-term and Airbnb-style operations, see our Airbnb in France guide — is treated by the French tax code as a small commercial activity, not a property-letting activity, even though, economically, it is the same activity. The exemption from the LFSS 2026 hike was drafted around the foncier category and not extended to BIC. So LMNP income jumped from 17.2% to 18.6%, while bare rental income stayed at 17.2%. The 1.4-point gap between the two régimes that already existed has now been opened by another 1.4 points.
The post-Brexit pathway: 7.5% for UK landlords with the right paperwork
The second carve-out is older, larger, and applies to British landlords specifically — but it requires paperwork most British landlords have never been told about. The carve-out comes from the Court of Justice of the European Union’s ruling in de Ruyter (CJEU, 26 February 2015, C-623/13) and the French Conseil d’État’s transposition into domestic law (CE, 27 July 2015, n° 334551). The principle: a person who is affiliated to a foreign social-security scheme — and who therefore already pays into that country’s system — cannot be subjected to the French CSG and CRDS, because doing so would impose double social-security coverage in breach of EU coordination law.
Brexit complicated this for a year, but only briefly. In January 2022, the French tax authority issued a clarification — anchored on Article SSC.3 of the EU–UK Trade and Cooperation Agreement and the Withdrawal Agreement — confirming that UK-resident individuals affiliated to UK National Insurance / NHS remain exempt from French CSG and CRDS on French-source rental income and real-estate capital gains. They pay only the 7.5% prélèvement de solidarité, instead of the full 17.2% (foncier) or 18.6% (LMNP). The exemption is available for both bare rental income AND LMNP rental income, and for capital gains. It is not automatic — it has to be claimed on the tax return and supported by paperwork.
The conditions: the British landlord must (i) be affiliated to a UK social-security regime — typically through ongoing UK National Insurance contributions while working, or through NHS coverage as a UK pensioner, (ii) hold the corresponding certificate — form A1 (issued by HMRC for workers) or form S1 (issued for retirees and certain pensioners), (iii) not be dependent on any French mandatory social-security scheme — meaning they have not registered with French health insurance, are not paying French social charges as a French resident, and have not opted into the French system, and (iv) the affiliation must be effective on 31 December of the year for which the income is being declared. UK national insurance covers most of these conditions for working-age UK residents almost automatically; what’s required is the certificate, plus the right boxes on the French 2042 return (boxes 8SH/8SI for non-residents claiming the exemption).
The decision tree for British landlords in 2026
Combining the two carve-outs and the LFSS 2026 hike, here is what each fact-pattern of British landlord pays on French rental income from 2025 onwards.
| Income type | Default rate (2026) | With UK A1 / S1 carve-out |
|---|---|---|
| Bare rental income (location nue, revenus fonciers) | 17.2% — escaped the LFSS 2026 hike | 7.5% — solidarity levy only |
| Furnished rental income (LMNP, BIC) | 18.6% — hit by the LFSS 2026 hike | 7.5% — solidarity levy only |
| Real-estate capital gains (plus-values immobilières) | 17.2% — escaped the LFSS 2026 hike | 7.5% — solidarity levy only |
| Other capital income (dividends, interest) | 18.6% — hit by the LFSS 2026 hike | 7.5% — solidarity levy only |
The headline pattern is clear. The biggest winner from the carve-outs is the British LMNP landlord with proper A1 or S1 paperwork — they drop from 18.6% to 7.5% on every euro of net rental income, an 11.1-point saving. The biggest loser is the British LMNP landlord without the paperwork — they pay the full new rate, materially more than what a comparable bare-rental landlord pays on the same flat. For a typical Paris one-bed yielding €18,000 net per year, the gap between 18.6% and 7.5% is around €2,000 per year, every year, indefinitely.
How to claim the 7.5% rate, in practice
The administrative path is awkward but well-trodden. UK working-age residents who are paying National Insurance contributions need to apply to HMRC for an A1 certificate using form CA3837 or CA3822 (online via the gov.uk portal). The certificate is issued for a fixed period and confirms that the holder is covered by UK social security and not by another country’s system. UK pensioners who are receiving a UK State Pension and are eligible for NHS coverage as retirees apply instead for an S1 form, also via HMRC. Both certificates are free; turnaround is typically two to four weeks.
On the French 2042 tax return, the exemption is claimed by ticking the relevant non-resident social-charges boxes — boxes 8SH and 8SI on the 2042-C — and by being prepared to produce the A1 or S1 certificate on demand if the French tax administration requests it. For British landlords filing for the first time, our remote-management guide for non-residents covers the practical mechanics of filing from the UK, and most British landlords with a French accountant should expect their accountant to handle this — though it’s worth confirming explicitly that the boxes are being ticked, because the default treatment, when the exemption is not claimed, is the full 17.2% (foncier) or 18.6% (LMNP). If you have been paying the full rate for past years and only now realise you qualified, a refund claim is possible for the past two filing years through the standard réclamation contentieuse procedure, although the process is slower and less reliable than getting it right at filing time.
Frequently asked questions
I’m a UK resident running LMNP on a French flat. What rate do I pay in 2026?
If you don’t claim the post-Brexit carve-out, you pay the new 18.6% rate on your net LMNP income from 2025 onwards (up from 17.2%). If you hold a UK A1 or S1 certificate and are not affiliated to any French mandatory social-security scheme, you can claim the exemption and pay only the 7.5% prélèvement de solidarité — that’s an 11.1-point saving on every euro of net rental income.
Why didn’t bare rental income get hit by the hike but LMNP did?
Because the LFSS 2026 exemption was drafted around the revenus fonciers category. LMNP rental income is classified as bénéfices industriels et commerciaux (BIC), not foncier, even though both are economically rental income from a French property. The exemption applies to foncier and not to BIC, so bare rental escaped the hike and LMNP didn’t. This widens the existing 1.4-point régime gap between bare and furnished letting by another 1.4 points.
How do I get an A1 or S1 form, and how long does it take?
UK working-age National Insurance contributors apply for an A1 via HMRC’s online service (form CA3837 / CA3822). UK pensioners apply for an S1 via HMRC’s overseas-healthcare team. Both forms are free of charge and typically issued within two to four weeks. The certificate is dated and must cover the relevant tax year — affiliation must be effective on 31 December of the year for which the income is being declared.
Can I claim back overpaid social charges from past years?
Yes, in principle, for the past two filing years, through the standard réclamation contentieuse procedure. You file a written claim with the French tax administration, attach the A1 or S1 certificate covering the relevant year, and request a refund of the CSG/CRDS portion. The process is slower and less reliable than getting the boxes right at filing time, but it does work — and for a British landlord who has been paying the full rate for several years on a profitable LMNP flat, the refund can be substantial.
Does this affect British residents who rent out their French flat through an SCI?
The same logic applies. An SCI that holds French property and rents it out is fiscally transparent for income tax purposes (in its default IR régime), so the British associé pays social charges on their share of the rental income at whatever régime applies — foncier (17.2%) for bare rental, BIC (18.6%) for LMNP-style furnished rental. The de Ruyter carve-out is available to the British associé on the same conditions: A1 or S1, no French mandatory affiliation. For more on SCI mechanics, see our guide to owning shares in an SCI.
