Re: After Brexit
 

I thought that had already been done in Greece and Cyprus well daily limits when the banks looked like going under. Makes sense I rember the panic re Northern Rock it was very worrying but luckily the managed to keep them going. I suppose that's prior planning for the worst situation rather than flying by the seat of your pants untill you end up in that smelly creak.

Re: After Brexit
 

NOt really. It's a proposal by the current Presidency of the EU to address potential issues and find a workable solution. It would need to be agreed by a majority of EU member states to be able to come into force.

Re: After Brexit
 

I read when we leave all private pensions will be taxed at 25% on the total ammounts and no allowaces for Ex Pats living abroad. Is this correct.

Re: After Brexit
 

Where did you read this?

No-one knows exactly what will happen yet about anything. Everything is still up for discussion between the UK and EU, whether there's an agreement depends on both sides.

Does HMRC tax pensions outside the UK? I would expect taxation would occur in the country of residence.

Re: After Brexit
 

All pensions, except UK government pensions are taxed in the country of residence.

This is enshrined in the double taxation treaty between the UK and Spain which has nothing to do with membership of the EU and was in existence ten years before Spain joined the EU.

What you read is complete conjecture and totally inaccurate.

Re: After Brexit
 

Please read my post more carefully - I said 'unless' not 'if'

Re: After Brexit
 

I seem to remember that, even now, when you realise a private UK pension while resident in Spain tax is payable on the whole amount. I might be completely wrong about that.

Re: After Brexit
 

No, it is treated like any other income. You get various allowances against the income just as you would in the UK.

If that pension is in the form of an annuity that you chose from the capital value of your pension fund, you will end up only paying tax on about 25% of it and the income is treated as savings income and is taxed at a lower rate.

Re: After Brexit
 

Mine aren't :p

Re: After Brexit
 

You are quite right, if you are resident in Spain a UK private pension is taxed as normal income which is then subject to the usual Spanish allowances before the actual tax rate kicks in

Re: After Brexit
 

Good for you.

Re: After Brexit
 

Sorry Fred - I should have said that the (tax-free in the UK) lump sum is taxable as income.

So if you realise a pension worth £100,000 and take a lump sum of 25% (I believe you can take more now) you would pay income tax on that in Spain.

Re: After Brexit
 

Yes, you do pay tax on a lump sum, but only on the "profit" element. If you had a pension pot worth 100k and your contributions over time were say 60k then you apply that ratio to the lump sum. So, if the lump sum was 25000 then only 40% would be taxable and the rates are slightly lower than the normal income tax rates.

It's a fair way of doing it as you are not taxed on your own money, only the increase in value. The same approach is taken with annuity payments which is why you pay significantly less tax on that income.

It's a bit like CGT.

Re: After Brexit
 

OK got that thanks.

A further question, if you take a lump sum from a government (teaching, police etc.) pension, would that be taxable in Spain as well?

Re: After Brexit
 

Interesting question. The tax treaty exempts salaries, wages and other similar remuneration. Whether a lump sum is considered to be in those categories could be debated and I have not seen that discussed before.

Personally, I would assume that it was exempt and not declare it as such, but if you consider it to be exempt you would have to add it to the pension income when you declare it in the "exempt" income box.

Whether that would have any effect depends whether you have any other income that is not exempt.

Hopefully someone on the forum may have come across this and know the official answer.