Help with Tax
 

I know this is going to be hard to answer but we've looked at the tax help pages and can't understand head nor tail of it.

First of all let me say we are not rich by any means:
1) I'm on state pension only
2) When OH retires he'll have a reasonable works pension.

We will be selling our house here, which still has a mortgage on it, so we have to pay off what's left before anything else.
With what's left and OH gratuities from work we will buy somewhere over there.
Hopefully there will be some left over. SO....
1) What would we have to pay on say £40,000 savings?
2) Say OH pension is £1200 month from the government which we think will only be taxed in the UK??
3)My state pension £176 a week
This are only ballpark figures as until we sell the house (IF) and pay back what we owe on the mortgage and OH finds out what he's getting pension wise, we are only playing around with guesstimates.

Thank you

Re: Help with Tax
 

You will only be liable for tax on the interest from the savings - which these days isn't a lot. The tax rate is 21% on the first €6000 and you split the income between you.

You both get personal allowances of about €9000 and another €918 if over 65.

As you say, the UK government pension is taxed in the UK, but you still get the Spanish allowances so when you OH gets his state pension he can use the allowances against that. The basic income tax rate is 24.75%

So, frankly, it looks like your tax bill will be very small or even zero.

As I am sure you are aware, you become tax resident in Spain for the whole of the year that your stays exceed 183 days in that calendar year. Just make sure that you sell the house before you become tax resident in Spain or there may be a CGT liability unless you reinvest the proceeds in a new home in Spain within 2 years.

Re: Help with Tax
 

Thank you for that. So to clarify (sorry for being thick) - the tax rate of 21% applies to the first €6000 of interest on the savings only?

If that is correct then our liability would likely be zero because I could only dream of earning that much interest :)

As for income tax, my state pension amounts to less than the €9000 allowance so that would suggest a zero liability too.

Am I getting that right?

Re: Help with Tax
 

Yes, that's right. You will still need to submit tax returns by the end of June in the year after the year you become tax resident.

In other words, if you move to Spain after the beginning of July this year, you won't become tax resident until 2015 and your first declaration will not be due until the end of June 2016.

Re: Help with Tax
 

Thank you. That makes sense and helps our decision making - it's not half as bad as some scaremongering posts would have us believe :)

Re: Help with Tax
 

I heard a rumout that El Corte Inglés fill help fill out the "declaración de la renta". Sounds a bit far fetched. Anybody heard anything similar?

Re: Help with Tax
 

Apparently so...

http://www.labolsa.com/foro/mensajes/1087562341/

Re: Help with Tax
 

That will annoy all the local Gestors who charge up to €200!

If your income details are simple then it takes about 5 minutes to do it yourself on your PC!

Your local tax office will also do it for free.

Re: Help with Tax
 

Excuse my ignorance but is the "declaración de la renta" your annual tax return?

Re: Help with Tax
 

Yep.

Re: Help with Tax
 

Thank you. Learning new things everyday.

Re: Help with Tax
 

I was told that if all income was less than 14K there was no need to do a tax return.
M

Re: Help with Tax
 

I don't know where you got that figure, but it is definitely incorrect.

If your earnings are taxed at source (ie PAYE) and are less than 22k and you have only one source of income, you don't have to make a declaration.

If you are not in that category the rules are very complicated and most people will find that they are obliged to make a declaration, even if it results in zero tax.

In your first year of tax residency you are obliged to make a declaration even if you have no income at all.

Re: Help with Tax
 

Also, the 22 k threshold does not include those who are eligible for the double taxation treaty, in other words most ex pats!

Re: Help with Tax
 

Whilst you might not HAVE to make a declaration, it is still advisable for expats to do so.

Inheritance/succession tax is one obvious reason but there are many more reasons as frequently discussed on this forum.

My advice would be FILL ONE IN, there are no down-sides!