Richielisa

That is encouraging. Thanks.

bob_bob

Have you thought about long term rental, certainly for the first year to make sure you really like the area?

Also remember that its a buyers market in Spain, you land and take your pick of thousands of properties the flip side to which is if you are ill/need to move back to the UK or die your property could be sitting on the market for years.

I'd say rent for at least a year that way your mobile and when you find an area you prefer you pack your bags and move...can't do that if you have bought a property.

Richielisa

Thats not such a bad idea. I suppose it depends on the cost somewhat, although it would be no different to paying a mortgage. We could then get our residency visa's and we are not rushing. Thanks mate.

Richielisa

Thanks for all your help everyone. Probably one kast question if thats ok.

Does anyone have a simple explanation on how much income tax is applicable to pension and savings income when using your UK pension and savings plans, when you become a resident in Spain? Im looking for what percentage I deduct from our various income streams.

Thanks again.

spainrico

https://expatsmagazine.org/taxes-in-spain/

Richielisa

Thanks fir this. Looks very complicated and it looks like you have to pay tax on any income you take from savings and pension income. I was looking at personal aloowance which is up to c£12500 in the UK with no tax on accessing your savings but Spain looks far more complicated and a bit harsher....or am I reading this wrong? Cheers.

Joppa

Personal allowance is roughly half of UK in Spain, though there are extra allowances for lower-paid. Also most people can claim 2,000 euro allowance for 'expenses' - but you don't need to show receipts etc.

Richielisa

Thanks. Found a calculator on line that seems to reflect that - i.calculator.info/spain.html

Looks like you also have to liquidate pensions (for the tax free cash) and investments before becoming a resident so you dont incur Capital Gains Tax.

Barriej

Personal allowances here are much smaller than the Uk for those not at retirement age. About half I think (could be wrong and someone will correct me)

Savings and money already in a bank account don't attract any tax (although all interest and any 'winnings' from premium bonds do).
My advice would be to liquidate as much as possible in the tax year before you intend to move over.

That means, sell houses, take the 25% out of your pension, sell cars etc.

Im due to put my first tax return in next year for 2021.
Will have to do a 720 for the private pension pot (which is managed in the Uk) as its over the €50,000
My pension drawn from that pot will be taxed as income and I will show the 'winnings' from the premium bonds, but as me and the better half will file as a couple (she has no pension but has savings worth less than €50,000). With the amount I draw from the pension I hope to pay very little tax.

We didn't need to take the 25% but did anyway as its sat in premium bonds and in the Spanish bank accounts to be used as we see fit (if I had left it in the pension pot, it was estimated that I would get another 8-10 years use out of it) and pay tax on that as well.
But seeing as in 8 years I get my OAP (which will be taxed here) I moved it out as cash. Its highly unlikely that I will ever remove the whole of my pension pot, but Im going to try to, without paying too much in tax over the years.

Although at the end of the day, we have to pay to live here and if I pay more than I would in the Uk, well so be it (the sunshine and lower cost of living more than make up for a few € extra going out)

Richielisa

Thanks. Thats roughly going to be our situation to be honest. Just a couple of questions - when you say tax year do you mean before the Spanish tax year (Jan to Dec)or UK tax year (April to April)? And savings - should they be held in Spain and if you take amounts from savings to supplement income is that taxed or is it just classed as return of capital? Cheers!

Richielisa

Thanks. Thats roughly going to be our situation to be honest. Just a couple of questions - when you say tax year do you mean before the Spanish tax year (Jan to Dec)or UK tax year (April to April)? And savings - should they be held in Spain and if you take amounts from savings to supplement income is that taxed or is it just classed as return of capital? Cheers!

Barriej

Spanish tax year... Jan - Dec.

So all out by 31st Dec and its then tax free........ I did this with my pension 25% otherwise its taxable here..My cert is dated 31st Dec 2019 and we were due to move in may 2020 (didn't till aug but covid etc)

The cash can be anywhere and as long as no one block is over €50,000 you don't even ned to declare it (no tax is due)

Nope to being taxed as its your money, do what you want. I told the accountant what we were doing and I also asked at the tax office (cause I don't always believe what Im told) and no tax to pay on money in your pocket...... If you want you can keep it in a box under the bed (like my gran used to)

Any tax you are due to pay in the UK is (or should be ) of no interest to Spain as you wont be resident at the time you take it. So sell the house and pay Uk tax (if its worth that much) in 2022, move here in 2023 and no extra tax to pay......

You only put the 720 in once as long as you only have a pension (gets complicated with shares, bonds etc) and the value doesn't change by over €20,000 each way (I think) but I don't have shares etc so can't comment on what happens here

Richielisa

Mate, that is excellent info. I will do some planning around this and start to organise ourselves. That should then give us a very nice life. Thanks again my friend!

Chipmonk

It's funny but expats often think of rural Spain as somewhere that exists in the post war years. White houses, sleepy villages, donkeys, hot empty midday squares etc. Real Spain is nothing like that. It is like thinking that the real Scotland is a place where people all wear kilts, drink whisky and have ginger hair. Real Spain is probably more like Benidorm- which is actually very Spanish once you realise that the so- called British zone is tiny and most of the city is like Alicante or Valencia.

Richielisa

I do agree. I suppose what Im saying is finding a place where like minded people have settled and have the capacity to support themselves and enjoy quality of life. The UK seems to encourage the opposite.