Pensions /tax

Old Feb 12th 2024, 1:44 pm
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Default Pensions /tax

Hi

Thinking of making the move.

I have a state pension and public sector pensions , approx £30k. Am I right in assuming that these are still taxed in UK with a personal allowance?

What happens then to a private pension pot I have? Lets say I withdraw £10 a year. Do Spain tax it as £10k, or do they add it to my public sector pensions and tax it as it as if it were my earnings say above £30K...and is there a personal allowance?

Thanks
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Old Feb 12th 2024, 2:33 pm
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Default Re: Pensions /tax

Originally Posted by faraway74
Hi

Thinking of making the move.

I have a state pension and public sector pensions , approx £30k. Am I right in assuming that these are still taxed in UK with a personal allowance?

What happens then to a private pension pot I have? Lets say I withdraw £10 a year. Do Spain tax it as £10k, or do they add it to my public sector pensions and tax it as it as if it were my earnings say above £30K...and is there a personal allowance?

Thanks
By public sector pension it depends whether it is deemed to be a Crown Pension such as Military , Police etc. If it is a Crown pension it will be taxed in UK but has to be declared to spain so that they tax other income at correct rate. Your state pension is declared and taxed in Spain . I'm not totally sure but think that private pensions are declared and taxed in Spain same as your State pension.
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Last edited by bobd22; Feb 12th 2024 at 2:39 pm.
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Old Feb 12th 2024, 3:01 pm
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Default Re: Pensions /tax

Personal allowances are €5.550 for someone aged under 65, €6,700 for those aged 65-74 and €8,100 for those aged 75 or over. In all cases you are allowed an additional €2,000 for general expenses. There is also a low income allowance which means that anyone earning €15,876 does not pay income tax, but that tapers off gradually for earnings over that amount, so does not affect anybody with earnings or pensions of just over €20k.

I have a former employer's pension which is not a Crown one, so yes that is taxed in Spain as well as my state pension. I have a small Civil Service pension as well which is only taxable in the UK, but does have to be included on my Spanish tax return as exempt income. I know that this affects the marginal rate of tax but not sure exactly how it works. Income from a personal pension would also be declared and taxed in Spain. Income from an annuity is taxed more favourably than other kinds of pension income in Spain, but only if the annuity was purchased entirely by an individual, so one bought from a pension fund to which an employer had contributed would not qualify.
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Old Feb 12th 2024, 5:05 pm
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Default Re: Pensions /tax

Does anyone have the link to the official exchange rate to convert GBP to EUR for 2023 tax purposes?

Thanks
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Old Feb 12th 2024, 5:08 pm
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Default Re: Pensions /tax

I affects your marginal rate because it's declared gross and added to the rest of your income, then the tax paid in UK is deducted from the resultant tax bill.
That gross calculation can push you into a higher tax bracket meaning that you can end up paying more tax then if the UK taxed income were ignored completely.

Good point about annuities, few UK ones actually qualify for relief in Spain but many declare them as such.
Spanish annuities can also be term contracts meaning that they are redeemable at term end which of course UK annuities are not.
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Old Feb 12th 2024, 5:50 pm
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Default Re: Pensions /tax

The average rate for 2023 was quoted to me as 1.1492
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Old Feb 12th 2024, 5:54 pm
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Default Re: Pensions /tax

Originally Posted by PoloMarco
Does anyone have the link to the official exchange rate to convert GBP to EUR for 2023 tax purposes?
I have never seen an "official" rate quoted for the average rate over the whole of the tax year.

I will be using the rate quoted by the ECB which is 1GBP=1.1495€

If your pensions are paid directly into your Spanish bank account, you can use the actual € amounts paid in.
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Old Feb 12th 2024, 6:36 pm
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Default Re: Pensions /tax

Originally Posted by Lynn R
Personal allowances are €5.550 for someone aged under 65, €6,700 for those aged 65-74 and €8,100 for those aged 75 or over. In all cases you are allowed an additional €2,000 for general expenses. There is also a low income allowance which means that anyone earning €15,876 does not pay income tax, but that tapers off gradually for earnings over that amount, so does not affect anybody with earnings or pensions of just over €20k.

I have a former employer's pension which is not a Crown one, so yes that is taxed in Spain as well as my state pension. I have a small Civil Service pension as well which is only taxable in the UK, but does have to be included on my Spanish tax return as exempt income. I know that this affects the marginal rate of tax but not sure exactly how it works. Income from a personal pension would also be declared and taxed in Spain. Income from an annuity is taxed more favourably than other kinds of pension income in Spain, but only if the annuity was purchased entirely by an individual, so one bought from a pension fund to which an employer had contributed would not qualify.
Many thanks!
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Old Feb 12th 2024, 6:43 pm
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Default Re: Pensions /tax

Originally Posted by Fred James
I have never seen an "official" rate quoted for the average rate over the whole of the tax year.

I will be using the rate quoted by the ECB which is 1GBP=1.1495€

If your pensions are paid directly into your Spanish bank account, you can use the actual € amounts paid in.

I think that is the non-official rate I’m looking for!
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Old Feb 12th 2024, 7:40 pm
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Default Re: Pensions /tax

The only "official" rate I have seen is that which relates to the valuation of foreign assets (Form720). This is the daily rate on the 31st December (or sometimes a day or two earlier) which is used by Hacienda for these declarations.

The reality about the Renta rates is that you have to declare your income in Euros. How you arrive at that figure is entirely up to you, but be prepared to justify it if you are ever subject to a tax investigation.
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Old Feb 12th 2024, 10:52 pm
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Default Re: Pensions /tax

Originally Posted by Fred James
The only "official" rate I have seen is that which relates to the valuation of foreign assets (Form720). This is the daily rate on the 31st December (or sometimes a day or two earlier) which is used by Hacienda for these declarations.

The reality about the Renta rates is that you have to declare your income in Euros. How you arrive at that figure is entirely up to you, but be prepared to justify it if you are ever subject to a tax investigation.
Our accountant uses the rate that was available on the day the pension was transfered. They use the official figures for this.
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Old Feb 13th 2024, 7:49 am
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Default Re: Pensions /tax

The link for

DT claims and applications - Types of income: Pensions and Annuities

Government or Non-Government


https://www.gov.uk/hmrc-internal-man...ual/intm343040
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Old Feb 13th 2024, 1:23 pm
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Default Re: Pensions /tax

Originally Posted by Barriej
Our accountant uses the rate that was available on the day the pension was transfered. They use the official figures for this.
That's only correct in terms of immediate tranfers such as say having the UK pension paid directly into a Spanish account.

For other circumstances strictly speaking it should be the rate on the day of receipt of the money so if a pension were paid in UK but transfer deferred, perhaps in anticipation of a better rate, then it's the Euro value on that day of receipt which should be used not the Euros you eventually bought with it later.

If you're the sort of person who does that, and you do in fact get a better rate, then it can work in your favour because even though you may end up getting more Euros it's still the original value in pounds which counts for tax purposes. ​​​​​
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Old Feb 13th 2024, 4:54 pm
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Default Re: Pensions /tax

Originally Posted by Fred James
The only "official" rate I have seen is that which relates to the valuation of foreign assets (Form720). This is the daily rate on the 31st December (or sometimes a day or two earlier) which is used by Hacienda for these declarations.

Originally Posted by marcbernard
The average rate for 2023 was quoted to me as 1.1492
Originally Posted by Fred James
I will be using the rate quoted by the ECB which is 1GBP=1.1495€

Digging around on ECB site found EUR GBP was 0.86905 (GBP EUR 1.15068) 29th December 2023

Calculating the 2023 average using the ECB data EUR GBP 0.86979 (GBP EUR 1.14971)

As a first timer (yes using advisor but want to double check), have you got links to the values you mention please? Thanks
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Old Feb 13th 2024, 5:10 pm
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Default Re: Pensions /tax

exchangerates.org.uk should assist
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