ug94bxs

Hello



I am looking for some advice regarding tax status and SIPP/ISA contributions.



My family is moving to Spain this summer and I intend to continue working for my UK based employer remotely. I think I will be in Spain for 9 months and UK for 3



I will have to be a resident in Spain for tax purposes as my family will remain in Spain all year round (apart from trips back to the UK for a few days at a time).



Where does this leave me in terms of UK resident status? I intend to keep my family home in the UK and the vast majority of my family (mom, sisters, brothers) etc., are all UK based and I have a UK Ltd company. Is there a way I keep paying into my ISA and SIPP?



Thanks

missile

As soon as you become resident in Spain you are not entitled to make contributions to ISAs.
You should discuss tax liability and pension contributions with your employer.

Joppa

And you have to declare any accrued annual interest to the Spanish tax office and pay tax on it.

ug94bxs

Hi

I have give my situation some thought and would like to do the following assuming its not in breach of any rules

1) Spend 91+ days in the UK and I will be working for more than 30 days in the UK
2) By doing 1) I will be classified as a UK tax resident - I will also have a home in the UK
3) My family will move to Spain and spend all the time there which also makes me a Spanish Tax resident
4) I will continue to work for my Uk employer while in the UK and remotely from Spain and pay UK income tax / national insurance
5) I will continue to contribute into my SIPP and ISA
6) In Spain every year, I will declare my UK income and due to the double tax agreement I should only pay the difference between the UK and Spanish tax rates,.

My concern lies with Spanish social security and how this is paid?

missile

You cannot be tax resident in both UK & Spain.
You cannot choose. Based on what you have posted to date, you will be required to become tax resident in Spain.
You cannot join the Spanish social security system unless you are resident in Spain.

EsuriJohn

Whilst I agree with what you say on where he should be tax resident definitely Spain. You can and I do pay tax in two Jurisdictions, I do on my Government pension in UK and my UK State pension in Spain. I am tax resident in Spain.

missile

Of course one can and many do pay tax in both.

ug94bxs

I know I can pay tax in both UK and Spain which aligns to my plan

My concern is a UK company paying me in the UK and me not paying Spanish social security when I will be a Spanish tax resident as well. My UK company will not be setting up anything in Spain so are the Spanish tax authority likely to request the UK company pay me in Spain as I spend more time there?

ug94bxs

Hi, does this not conflict with your previous comment ?

missile

Not at all. I said "You cannot be tax resident in both UK & Spain". That is not the same as saying you are not liable for tax in UK and Spain.

EsuriJohn gave one example. If you search the forum you will see this has been discussed previously. There are other examples.

Fred James

People spend time discussing tax residency, but in fact it is irrelevant (mainly) to where you pay tax. For example, any income generated in the UK is taxed in the UK, irrespective of your tax residency. There are exceptions which you can apply for such as pension income.

The important point is that if you are tax resident in a country, you pay the local tax on your world wide income and under most tax agreements one can be offset against the other, but in only one direction. ie. UK tax can be offset against Spanish tax but normally not the reverse.

If there is a question of qualifying for tax residency in two countries (entirely possible, especially with the very complex UK rules) then the ultimate decision has to be agreed by the countries involved. Essentially as has been pointed out, you cannot be tax resident in two countries but you can be liable for tax in both.

Barriej

With regard to your first comment. Once we arrive in Spain (as to when now Ive got no idea) I will be working as a contractor in the Uk installing machines as I do now as an employee (but max4 times a year for about 3 weeks each time)
I will be invoicing the Uk company from Spain (in Euro which will paid direct to my Spanish account) but won't be working enough to become autonomo. My Spanish accountant has said I can just put this income on my Spanish tax return and pay as required. This goes on the return as other income..
I know my situation is different as I will only be working for 12 weeks or so a year. But it is possible to work in the UK (or elsewhere) and only pay tax in Spain.

Patrick2976

Aside from the payment of income tax issue, once you become a fiscal resident of Spain you are no longer entitled to tax relief from a UK ISA or a UK SIPP. You could set up a Spanish pension but keep in mind tax relief is capped at €8,000 per year on contributions - considerably less than the £40,000 allowance in the UK. If your UK SIPP provider will no longer allow contributions at all you may be able to transfer to an international SIPP (still a UK regulated SIPP but set up and administered specifically for members living abroad) - but still no tax relief on future contributions of course.