Declaring UK savings interest
 

I recently came into some money from family in the UK and declared it and paid the tax to hacienda. The money is now in my UK current account.

I'm in the UK right now on a visit and it seems - surprisingly - my British bank (HSBC) will allow me to open a savings account with them despite being tax resident in Spain. I have a meeting to arrange it in a few days and, all being well, I intend to leave a good chunk of the money in the UK to earn interest given the lack of interest accounts in Spain . I know I have to complete form 720 to inform about any asset over 50,000 euros and that I obviously will pay tax on the interest accrued in Spain.

But before I do this, can anyone with experience of this tell me how it works in practice. Interest on savings is paid gross in the UK and I assume I don’t need to declare it there. I think interest under 10,000 pounds is tax free in the UK? But in Spain, is it simply declared as part of my regular annual declaration, supplying the bank slip to show the amount paid? Or are there more complications?

Re: Declaring UK savings interest
 

Interesting that HSBC say you can have a savings account as a non resident. I opened an HSBC current account without issue as non uk resident but they would not let me open a savings account. As for tax free interest in the uk it is £1,000 not £10,000 . As we rent out a UK property we have to submit a uk tax return. I recently contacted HMRC re savings interest as this years declaration the interest will be over £1000. I was informed, I should declare it on uk return but show in comments additional information that it will be declared and taxed in Spain.

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Re: Declaring UK savings interest
 

Yes, interest on savings accounts (wherever they may be located) is just included in your Spanish annual income tax declaration. You may have to provide a statement to a gestor or accountant to show the amount of interest received if you use one to complete your tax return, but if you complete your own (or make an appointment at a Hacienda office to have them complete it for you) no evidence is required, as it is a self declaration system. As you say it is obligatory to submit a Modelo 720 declaration of overseas assets if you have savings accounts or other assets outside of Spain, after the first one you would only need to resubmit if either the value of an asset has increased by €20k or more over the previous year, or if an asset has been sold or a new one acquired, or an account closed or a new one opened.

Re: Declaring UK savings interest
 

I thought it all sounded too good to be true. What you say about having to do a tax return in the UK does throw a spanner in the works. Someone does my tax in Spain; I’ve never filled out a return in my life and not sure I want get into that in the UK now. It all sounds like it might be more trouble than it’s worth. Probably be simpler to bring all the money to Spain and see what I can do with it here.

Re: Declaring UK savings interest
 

Thanks Lynn for the info...

Re: Declaring UK savings interest
 

If you dont need to submit a uk tax return for any other reason I,m not sure you will if its only for savings interest? Savings interest if resident in Spain is always taxed by spain. I think for likes of me its different as i have other uk income taxed in uk so they want my total income and i submit double tax treaty form re income taxed in spain. The double tax treaty form specifically says not to add Savings interest. So if you dont need to submit a uk tax return if the uk ever query the tax on income you will be able to prove with your spanish tax return that you have correctly declared and paid tax on it? Im no expert but that would make sense to me ? I too never wanted to be involved in uk tax returns but renting out a uk property means i have to.

Re: Declaring UK savings interest
 

Yes, that makes sense. As I have a meeting with the bank I will talk it through with them. Maybe they can clarify the UK tax situation before I commit to anything.

Re: Declaring UK savings interest
 

Flexible principles probably due to the amount of money in question!

Re: Declaring UK savings interest
 

Perhaps... but I asked them after reading their website, where the eligibility criteria for this fixed term savings account makes no mention of having to be UK resident, and actually says to contact them if you are non or multi resident. And they had no idea how much i had when I asked in branch if I was eligible as a Spanish resident.
That said, I remain doubtful... but have a meeting in a few days.

Re: Declaring UK savings interest
 

On a general note - all tax everywhere seems to be complicated and tinkered with by every government new and old until it becomes like for most of us a nightmare to try and understand and do the right thing. I do not understand why we have not considered a new and simple tax system for individuals - like having a percentage deducted from each of your daily transactions in the place where you are living - wherever that may be at that time. It then does not matter where or how much you earn from anywhere in the world:(

Re: Declaring UK savings interest
 

They may have changed their policy as it was a out 4 years ago. They never asked amount i wanted to save but it was a significant sum. Anyway i sorted it out by opening a NS&I savings Account. All their accounts are open to non residents soong as you retain a uk current account.
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Re: Declaring UK savings interest
 

Thanks to all for comments and help. I rang HMRC - only took 50 minutes! - and a very nice helpful person told me I don't have to do anything in the UK about the interest on savings and my only obligation is to declare it in Spain.

Re: Declaring UK savings interest
 

I have always found HMRC to be pleasant and helpful. Downside is wait to be connected.Luckily last time i needed to call them we had recently returned from UK and i had purchased a one month Three phone package which had unlimited uk calls including roaming from Spain so the wait to be connected wasnt an issue.

Re: Declaring UK savings interest
 

The HMRC call line is used by all including businesses and tax advisors? If you pick your times carefully, early in the morning, over lunch hours or just before going home time, you can get through almost immediately.

Re: Declaring UK savings interest
 

Thats good to know thanks