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-   -   Property income in UK. (https://britishexpats.com/forum/spain-75/property-income-uk-928669/)

Justaskin Oct 19th 2019 4:29 pm

Property income in UK.
 
I am looking slightly into the future, and possibly in the next year or so, I could become a Spanish resident again.
i have a property income derived from UK properties that give me an income of 30k ish after tax.
How would that translate into how much tax would I pay in Spain even if a good chunk of the income stays in my UK bank?
how would the tax I have already paid in the UK be taken into account?

Fred James Oct 19th 2019 5:24 pm

Re: Property income in UK.
 
It matters not if the income stays in the UK, as a resident you still pay Spanish income tax on it and CGT if you sell it.. You can deduct any UK tax paid on the same income.

As for how much the tax would be, that would depend on what other income you have, such as investments or pensions and other personal data such as age etc.

Justaskin Oct 19th 2019 5:48 pm

Re: Property income in UK.
 

Originally Posted by Fred James (Post 12751022)
It matters not if the income stays in the UK, as a resident you still pay Spanish income tax on it and CGT if you sell it.. You can deduct any UK tax paid on the same income.

As for how much the tax would be, that would depend on what other income you have, such as investments or pensions and other personal data such as age etc.

​​​​Thanks Fred,
I won't be selling the UK property, and I have no other income, I intend to defer my UK pension as I come from a family of long livers.......or that live to a ripe old age, hence the enforced tempory separation from hubby.
So if for clarity sake, I have paid 6k tax to arrive at a net income of 30k, have no other income, how would the figures stack up as far as Spanish tax is concerned.

bob_bob Oct 20th 2019 6:40 am

Re: Property income in UK.
 
Get a good UK accountant, £6k tax on your rental income seems high. I'm retired from nursing but inherited a property portfolio years ago plus added properties over the years, we are a business and our accountant does a great job for us; you need to reduce that £6k then worry about tax due in Spain.

bolton wanderer Oct 20th 2019 3:26 pm

Re: Property income in UK.
 

Originally Posted by Justaskin (Post 12751037)
​​​​Thanks Fred,
I won't be selling the UK property, and I have no other income, I intend to defer my UK pension as I come from a family of long livers.......or that live to a ripe old age, hence the enforced tempory separation from hubby.
So if for clarity sake, I have paid 6k tax to arrive at a net income of 30k, have no other income, how would the figures stack up as far as Spanish tax is concerned.

As a single person you would be allowed approx £12,500 personal tax allowance in the UK. So if your sole income is £36,000 gross, your UK tax would be based on an income of £23,500. which would be approx 23,500 X 20 /100 = £4700 (ish)......You would pay a UK tax of £4,700 leaving £32,300. Not sure why your net income is only £30K.

However, as a Spanish resident your personal tax allowance is only approx €5000 (It's not this simple but it will give you an idea). Your income of €41,000 (£36,000) minus personal allowance of €5000 = €36,000 would be subject to Spanish tax of 19% (ish) which would leave you €36,000 - €7,790 = €28,210 net income.

You have already paid UK tax of £4,700 (€5,400), which would be claimed back. So your total net income in Spain would be approx €33,610 (£29,216).

Please note that these figures are very approximate but given to illustrate the dual tax arrangement.


Justaskin Oct 20th 2019 6:28 pm

Re: Property income in UK.
 
Thanks bob-bob and Bolton wanderer for your reply.
I haven't paid 6k tax to come to an income of 30k.

I must have been unclear.
I wrote ' if for clarity sake' ..........
My aim was to find out roughly what would my final net income difference would be in Spain, compared to UK.
Ie. to find out how much tax Spanish tax I would have to pay out of 30k.
I just gave an example in round numbers, to get a general result.
going by your example the added tax in Spain would be about 2400e.
I will look through your numbers, and thanks for taking the time to do all those big sums.

Loafing Along Oct 21st 2019 12:38 pm

Re: Property income in UK.
 
As a Spanish resident you are taxed on your Worldwide income , as has been pointed out by Fred James . There is little purpose to paying UK income tax and then off-setting it. Once resident you should complete Double-taxation documention and submit to the UK Inland Revenue . This should then reduce your UK tax bill to zero, all income being reported and tax being paid in Spain.

snikpoh Oct 21st 2019 12:54 pm

Re: Property income in UK.
 

Originally Posted by Loafing Along (Post 12751867)
As a Spanish resident you are taxed on your Worldwide income , as has been pointed out by Fred James . There is little purpose to paying UK income tax and then off-setting it. Once resident you should complete Double-taxation documention and submit to the UK Inland Revenue . This should then reduce your UK tax bill to zero, all income being reported and tax being paid in Spain.

I don't think you can do that with rental income - it MUST be taxed first in UK

Loafing Along Oct 21st 2019 1:10 pm

Re: Property income in UK.
 

Originally Posted by snikpoh (Post 12751873)
I don't think you can do that with rental income - it MUST be taxed first in UK

Yes, of course you are probably right...

Fred James Oct 21st 2019 1:20 pm

Re: Property income in UK.
 
,It is possible to get UK rental income paid without deduction of tax (by the tenant or agent) using the Non Residents Rental Income scheme. This means you get all the rental income, but UK tax has to be paid on it via Self Assessment at the end of the year. You do get the usual UK personal allowances even though you are non resident.

The income will be taxed in Spain, but any UK tax can be deducted. The Spanish tax on rental income is very low if it is a long term let. Only 40% of the income is taxable

m2m2012 Oct 31st 2019 7:04 am

Re: Property income in UK.
 

Originally Posted by Justaskin (Post 12750999)
I am looking slightly into the future, and possibly in the next year or so, I could become a Spanish resident again.
i have a property income derived from UK properties that give me an income of 30k ish after tax.
How would that translate into how much tax would I pay in Spain even if a good chunk of the income stays in my UK bank?
how would the tax I have already paid in the UK be taken into account?

Caution! As a tax resident of Spain you CANNOT claim deductions (insurance, local taxes, repairs) on foreign rental property income. You will be taxed on your gross income not your net income like I presume you are in the UK.

snikpoh Oct 31st 2019 7:56 am

Re: Property income in UK.
 

Originally Posted by m2m2012 (Post 12756855)
Caution! As a tax resident of Spain you CANNOT claim deductions (insurance, local taxes, repairs) on foreign rental property income. You will be taxed on your gross income not your net income like I presume you are in the UK.


Are you sure about that - do you have a link?

m2m2012 Oct 31st 2019 9:05 am

Re: Property income in UK.
 

Originally Posted by snikpoh (Post 12756862)
Are you sure about that - do you have a link?

Am I sure? No, not 100% but I too am in the exact same situation that I want to move to Spain but my only income would be rental income from outside of Spain so I've been looking into this. If you think about it, it doesn't make sense for a country to offer a tax break (deductions) for money spent on repairs or insurance in different country, as it doesn't create any jobs, VAT or economic activity. We need a Spanish tax expert to confirm this but until then I think it would be a mistake to assume Spain treats foreign rental income the same as Spanish rental income. There could be ways around this such as creating a company to own the rental properties...again something for a Spanish tax expert.

Fred James Oct 31st 2019 9:41 am

Re: Property income in UK.
 
According to the Blevins Franks "bible" the 60% deduction for long term lets also applies to properties outside Spain. As for the other deductions, they do not say that they only apply in Spain, but nor do they say that they do not.

This site specifically says that all deductions apply to non Spanish property

http://www.advoco.es/advice/8-person...-in-spain.html

It is also confirmed here

https://www.citizensadvice.org.es/wp...O-CONSIDER.pdf

Mustard Oct 31st 2019 11:32 am

Re: Property income in UK.
 
Yes, you can definitely receive UK rental income Gross providing it's with the agreement of HMRC and I believe you need to be letting through a letting agent.

Yes you can definitely deduct management expenses, insurance and repairs plus another 60% on your Spanish tax Return.

snikpoh Oct 31st 2019 12:29 pm

Re: Property income in UK.
 

Originally Posted by Mustard (Post 12756988)
Yes, you can definitely receive UK rental income Gross providing it's with the agreement of HMRC and I believe you need to be letting through a letting agent.

Yes you can definitely deduct management expenses, insurance and repairs plus another 60% on your Spanish tax Return.

But if you receive the income gross, you MUST then do a self-assessment tax return to declare that income (in UK).

Any tax paid can then be offset when you declare the income in Spain.

m2m2012 Oct 31st 2019 1:16 pm

Re: Property income in UK.
 
Thanks very much for this info; I cannot believe I didn't come across it in all my searching on Google. I'm glad I was wrong; moving to Spain in 2021 is now back on the table!

I don't quite follow what the 60% deduction is for and how it is applied? How would it work in the following scenario:

Gross rent for year was 50000
expenses for year totalled 15000 (insurance, local taxes, and repairs)

Fred James Oct 31st 2019 2:44 pm

Re: Property income in UK.
 
As far as I know, you work out the gross income after deductions and just declare 40% of it. The Spanish tax system is very simple and you do not have to give any explanations to how you arrive at (any) income figures. You just put a number in a box on the online declaration and pay the tax. No backup paperwork required.

If, however, you are ever the subject of a tax investigation, then you will have to show how you arrived at the figures you declared.


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