chalky53

Hello Everyone, I am new to this forum but am hoping I can get some good advice from you experts out there... my partner and I are taking early retirement and planning to live in the Nerja region for a year from next March, we have our accommodation pretty much sorted out but could really do with some advice on tax and banking.
we own a property at home which still has a small mortgage on it, and will be renting it out to a family member at a rent which just covers our mortgage payment. we will both be receiving small occupational pensions and have some savings.
we have been attempting to read up on tax and banking but it's pretty confusing!
is there anybody out there who could give us some general advice on where to start with the tax situation here in the UK, and with opening a Spanish bank account, transferring money etc, we will be forever grateful!

Neptuno

It's vast subject. Too big to generalise on in one answer
Why not use the search forum on this and other ex pat forums, and ask questions following this, if you come across something you don't understand.
The first place you start is by informing HMRC
You could also speak to a financial advisor who is familiar with the Spanish and UK tax system.
You will have to pay income tax in Spain on the rental you receive from the UK, and on your pensions( unless it is a government pension) in which case you will have to declare it in Spain, but it will be taxed in the UK.
You may have to declare your world wide assets, but I won't confuse you with that now!

Rosemary

Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst BEVS moderates Europe. Moderators are there to ensure that the site runs smoothly within the rules of BE. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge about the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary

GrahamPooley

I agree, it's a vast subject. I hate dealing with tax stuff too. My advice...ask an accountant or a solicitor who can deal with international tax advice.

Fred James

Hi Chalky53 - welcome to the forum.

It's fairly straightforward in your case.

You will become tax resident in Spain when you have spent 183 days there in one calendar year (not necessarily consecutive) and you will then be treated as tax resident for the whole of that year - in other words, if you arrive in March you will be tax resident for the whole of 2015. Your first Spanish tax declaration will have to be submitted before the end of June 2016.

The income from your lettings in the UK are taxable in the UK irrespective of where you are resident, but as you have a mortgage covering the rental income it is unlikely that any UK tax will be due. You will also be liable to pay Spanish tax on the rental income, but again, you will be able to offset the mortgage costs so there should be no tax due.

Your occupational pensions will normally be taxed in Spain unless they are UK government pensions, in which case they remain taxed in the UK. If they are not government pensions they will be taxed in Spain, but if you ask HMRC they will pay them gross with no tax deducted. To arrange this you have to download a form FD9 from HMRC onto which you give details of the pensions that you want to be exempt from UK tax.

You can do this here http://www.hmrc.gov.uk/cnr/spain-individual.pdf

This then goes to the Spanish tax office who stamp it and return it to you. You then send it back to HMRC and the pensions should then be paid gross by changes to your tax code.

The personal tax allowances are lower than the UK and the tax rates are generally higher so you may well pay slightly more tax in Spain than you would in the UK. Make sure that, if possible, you take any lump sum payments this year as once you are tax resident in Spain these will be taxable.

If your pensions have been converted to an annuity, the tax rates are very much lower.

Transferring money is probably best done by arranging with your pension provider to have the payments converted to Euros in the UK and paid direct to your Spanish bank account. They may charge a small fee to do this, but the exchange rates are usually better than you could arrange via a foreign exchange company.

Opening a bank account is fairly straightforward and you may well get a better deal if you are making regular pension payments into the account. I bank with Banco Popular and have been quite happy with them, but there are plenty of banks in Nerja so see what they can offer. It comes down to how much they charge for running the account and the fees they charge for credit/debit cards. The UK concept of "free banking" is alien to Spanish banks so shop around.

You will need to obtain an NIE, which you will get when you sign onto the register of foreigners with the National Police in Torre del Mar and you should also then sign onto the Padron at the Nerja town hall. The staff there in the foreigners department is very helpful and speak English.

Hope this helps and feel free to contact me via PM (when you have made a few more posts) or email me. You can do either of these options by clicking on my name at the left of my post. I live 15km to the east of Nerja but I have lived there and know it very well.

chalky53

Thank you all for your advice, especially Fred, things seem a bit clearer now! Flights are booked for mid March, maybe we will bump into you somewhere Fred!