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Re: Declaring assets/income
Originally Posted by Kezar
(Post 11109105)
if you rent though tebo53 and spend more than 6 months in Spain aren't you considered to be tax resident and therefore Spanish IHT rates would then apply?
The other option is only spend slightly less than 6 months in Spain and therefore do not become tax resident, Has anyone gone down the 'set up a UK company route for their uk/worldwide assets?' if so please could they forward any advice. certainly not ideal in our case, having worked for 40 years we would like to relax in the sun and not worry about death, IHT liabilities, spouse left having to sort out problems and costs, etc. every day I learn something via this website thanks to everyone We just wanted to live in our favourite area, mind our own business and just enjoy everything but all this sounds like we will end up destitute in a matter of months:eek: |
Re: Declaring assets/income
MeMe, don't confuse domicile with tax residency - totally different concepts.
Many people are UK domiciled but not UK tax resident. If you were tax resident in the UK and then become a tax nomad by living nowhere for the qualifying days then HMRC will probably say you remain UK tax resident until you can prove you are resident somewhere else. If you were, for many years, tax resident in Spain, and you then start moving then the UK will have no claim on you, domicile is irrelevant unless you still have interests in the UK or live there. Domicile is relevant if you are tax resident in the UK but are not domiciled in the UK. If so you only pay tax on your UK income, not your world wide income. It's peculiar to the UK. In Spain, and most countries, if you are tax resident you pay tax on your world wide income - period. It's also important to remember that income arising in the UK such as pensions, is taxable in the UK irrespective of tax residency unless it is covered by a tax treaty with the country that you are tax resident in. So if you manage to become a tax nomad by moving around, your UK income will still be taxed in the UK. |
Re: Declaring assets/income
Originally Posted by Neptuno
(Post 11109295)
Yes but don' t forget even as non resident IHT. Will still be payable in Spain by the surviving spouse on your property
I assume you are already aware of the non resident taxes payable yearly on your house, IBI, imputed income I am aware of the non resident property taxes but they do not concern me as much as the IHT on the 'worldwide income' which is remarkably different between the UK and Murcia. Also the issue whereby the surviving spouse faces a large bill following their partners death whereas in the UK that does not apply. |
Re: Declaring assets/income
Originally Posted by Fred James
(Post 11109339)
It's also important to remember that income arising in the UK such as pensions, is taxable in the UK irrespective of tax residency unless it is covered by a tax treaty with the country that you are tax resident in. So if you manage to become a tax nomad by moving around, your UK income will still be taxed in the UK.
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Re: Declaring assets/income
Originally Posted by Kezar
(Post 11109342)
but the IHT would only be payable on our Spanish property which is a lot less than the value of our UK property
I am aware of the non resident property taxes but they do not concern me as much as the IHT on the 'worldwide income' which is remarkably different between the UK and Murcia. Also the issue whereby the surviving spouse faces a large bill following their partners death whereas in the UK that does not apply. |
Re: Declaring assets/income
You could (currently at least) save a lot of potential Succession Tax by moving up the road from Murcia into the Valencian Community!
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Re: Declaring assets/income
Originally Posted by marcbernard
(Post 11109350)
You could (currently at least) save a lot of potential Succession Tax by moving up the road from Murcia into the Valencian Community!
Even they have recently reduced the allowances. The Canaries are still a good option. |
Re: Declaring assets/income
just a thought would renting in Gibraltar or any other UK colony count towards UK tax residency days
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Re: Declaring assets/income
Originally Posted by Fred James
(Post 11109339)
MeMe, don't confuse domicile with tax residency - totally different concepts.
Many people are UK domiciled but not UK tax resident. If you were tax resident in the UK and then become a tax nomad by living nowhere for the qualifying days then HMRC will probably say you remain UK tax resident until you can prove you are resident somewhere else. If you were, for many years, tax resident in Spain, and you then start moving then the UK will have no claim on you, domicile is irrelevant unless you still have interests in the UK or live there. Domicile is relevant if you are tax resident in the UK but are not domiciled in the UK. If so you only pay tax on your UK income, not your world wide income. It's peculiar to the UK. In Spain, and most countries, if you are tax resident you pay tax on your world wide income - period. It's also important to remember that income arising in the UK such as pensions, is taxable in the UK irrespective of tax residency unless it is covered by a tax treaty with the country that you are tax resident in. So if you manage to become a tax nomad by moving around, your UK income will still be taxed in the UK. For us it will be better to be UK tax residents, and to avoid being liable in Spain for our worldwide income, we will not spend 183 days a year there. What we are after and we are nealy there, is that even though we have declared our UK assets, we want to be off the hook from hacienda. We wish to sell/dispose of certain assets here in the UK in the next couple of years, and we don´t want to part with more tax than we have to. Sorry for confusing the readers and leaving poor Fred to clear up the mess (as usual).;) |
Re: Declaring assets/income
Originally Posted by Kezar
(Post 11109360)
just a thought would renting in Gibraltar or any other UK colony count towards UK tax residency days
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Re: Declaring assets/income
Originally Posted by me me
(Post 11109363)
Yes Fred I have confused things haven´t I?
For us it will be better to be UK tax residents, and to avoid being liable in Spain for our worldwide income, we will not spend 183 days a year there. ) Mitzy has posted that he had no problems transferring back to UK tax residency. Just fill in the right forms in Spain and if they ever dispute your residency, HMRC will be happy to give you a certificate of UK tax residency which will keep Hacienda happy. Luckily we have no assets in the UK so it isn't a problem for us and IHT in Spain will not be a problem until it ends up with our kids, and that's their problem!:(:lol: |
Re: Declaring assets/income
Originally Posted by Fred James
(Post 11109387)
IHT in Spain will not be a problem until it ends up with our kids, and that's their problem!:(:lol:
How do you get around the remaining spouse having to cough up tax following the death of a partner? |
Re: Declaring assets/income
Originally Posted by Kezar
(Post 11109401)
Hi Fred James
How do you get around the remaining spouse having to cough up tax following the death of a partner? Second, in many cases, such as in Andalucia where I live, the regional allowances are much more generous than the state rules. Thirdly, the official value of the house, for IHT purposes, can be much lower than the actual value. The tax office have a strange way of valuing property based on the Catastral value. This can work either way but where we live the official value is less than 20% of the actual value. In some areas it can be higher but where we are it is not. As a result we have no IHT liability if either of us die. Subsequently when the children inherit the same rule applies in that if they don't sell it for ten years no tax is due (subject to some limitations such as €122k per inheritor). There is no requirement for them to be residents or to live in the house. This is the national rule and applies across Spain. In some regions it can be more beneficial. OK so they can't get the money but they can let it for ten years and keep the income (less Spanish tax of course). |
Re: Declaring assets/income
thanks Fred very helpful
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Re: Declaring assets/income
Just to avoid any confusion I should have pointed out that the 95% reduction only applies to a property which was the habitual residence of the deceased. It does not apply to property owned by non residents.
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