Fred James

UK lottery wins and premium bond wins are, and always were, liable to Spanish tax.

The same applies to ISAs.

Porth

Can you hold Premium bonds whilst not resident?

The more and more of this I see I shall be spending very little time in Spain some in France and some in the UK. But of course I have to be resident somewhere. But of course centre of economic interest domicile etc are long established problems.

snikpoh

If you were born in UK, then it is almost impossible to be domiciled any where else.

Porth

sorry not so

snikpoh

Why do you say that - can you post a link to where it says otherwise.

Domicile must NOT be confused with nationality or residence - they are different.

The biggest issue is IHT. From HMRC website;

Deemed domicile for Inheritance Tax
'Deemed domicile' is a concept that applies only to Inheritance Tax. Even if you are not domiciled in the UK under general law, you may still be deemed domiciled in the UK and therefore liable to pay Inheritance Tax.

Porth

Thanks for that I do hope this is not supposed to be a first year law lecture. You seemingly take the domicile of your Father but not totally 100%. Like everything it depends. Once a French guy came to Ascot or was it Epsom for the racing which he loved. He lived in France his Father was French but he spent time watching the summer sports in England. He was in the middle of a bitter divorce he was served a writ at the racecourse. Held to be where? Uk

However I do agree a very complex question.

Porth

the operative words are 'you may still be deemed' that does not mean you are deemed to be.

It has the same background and inherent problem as the use of the word 'reasonable' in English Common Law.

Residence/Domicile has caused problems over many years. I could give you pages of stated cases but as I say 'it with respect depends'

Fred James

Snikpoh, yes that is generally true but if you left the UK to take up permanent residence somewhere else with the intention of dying there and have severed all links with the UK then you may be be deemed to have changed your UK domicile to a domicile of choice in Spain.

The problem is that there is no process for applying to change it. It will be determined by HMRC when the situation arises where it is relevant - such as IHT considerations at the time of your death.

bobd22

I was told by the bank that any cash ISA's that were already held you could retain, but you could not take out any future ones if you were not resident in the UK?

Fred James

True but existing ISAs are taxable in Spain.

normaneddey

According to Fred James premium bonds are subject to spanish tax,suppose you won a million quid how would they treat it? as interest or as an outright win.Technically I would call it interest,the UK government periodically do their sums and the ammount of prizes equates to what otherwise would be interest.Example;when interest rates went into free fall some years back,they re-arranged the "prizes"most noticeable was the reduction from £50 to £25 and generally less of other "prizes".Like I said in an earlier post even my tax people don't seem to be clear,that says a lot for them doesn't it?All the same I'm not doubting Fred.

EsuriJohn

Spain is just about to change its own rules on wins. Up until now a win on el gordo or euromillions has been tax free of course if you then invest that and take dividends or interest that is then taxable in the following year. The change is that they are going to tax the capital win as well as the ongoing interest. My guess is that if you win £1m on the bonds you will be taxed in Spain on the capital first and then the interest. I hope Fred can confirm my reading of the new rules.

Fred James

You will pay 20% flat rate tax on any lottery win over €2500.

Any income you get from the capital will be taxed in the usual way.

Domino

I think the reduction in prize values was hidden as a method of giving more people a win, whilst retaining more within the profit of the lottery company Camelot.

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Porth

Things like centre of economic interest etc come into play. What do you do do you have a house in the UK do you have children how many times you move back and forth. You can be in two places at the same time.

Here a friend of mine is a Canadian and I truly do not understand the rules but he comes from one of the islands off Canada and he benefits from non dom status due to a treaty between Canada and the UK. He was a trader in the City and retired to a wonderful life at the age of 50. I have remembered it is Newfoundland.

Also yesterday in London the Commissioners of HMRC won a case against a holiday home in Suffolk which the owners treated as a business but the Revenue in the High Court and in front of three Judges say it was simply an investment so tax I am afraid. This is being challenged in the Court of Appeal.

You could spend years on all of this. Just simply do your best and play with the rules. But even then you could get it wrong.

Of course the UK Chancellor benefits from a discretionary trust set up to protect their wall paper manufacturing interests of the family business. It just goes on.