bobd22

I have been waiting for UK tax year to start I believe I will have to submit a UK tax return by the end of 2021 and of course will have to submit spanish tax return by July. So in next few weeks I will contact HMRC to find out the correct information. I definately know both my wife and myself had to complete an HMRC form to register as overseas landlords re tax on the income it was form NRL1 which they responded to telling us we will have to submit a tax return after April 2021 and by I believe end of 2021.

bobd22

Here's the information re form NRL1 you need to read it fully to understand it as it mentions to have UK rental income without tax but that is referring to exempting overseas landlords from having tax deducted by letting agent or Tennant not total exemption from UK tax.
https://www.gov.uk/government/public...dividuals-nrl1

bobd22

That's exactly what I would do because it differs now you are overseas landlord. I too will be phoning them as I have never had to submit a UK tax declaration. I contacted them when I moved here full time 2 1/2 years ago as I too have crown pensions. I still have the email they sent me saying my crown pensions would not change and would continue to he taxed PAYE they said when I get state pension they would pay that to me tax free and I should declare that in Spain for tax. Further they said when we eventually rent out our UK property we should complete the NRL1 and would need to submit tax returns from that point on.

stevesainty

UK government pesions, such as OP´s teachers pension, are taxed ONLY in UK but the income is declared in Spain as exempt income. This will the determine the rate of Spanish income tax you are liable to if you have any income that is taxable in Spain.
Income from a UK property let is taxable in both countries with the tax paid in UK offset against any tax due in Spain. Usually, if the UK property let satisfies the criteria of being long term and to a private family, income from letting of property is treated very favourably in Spain and is discounted. The result is that, normally, no further taxation is due in Spain for the property let.

bobd22

The one thing I am trying to get my head around is that we let our UK property in November last year initially for a 6 month let. I will declare that to HMRC between now and I believe January? HMRC will then tax me on that income. However in between that time I will have to do a Spanish declaration including the 2 months income from the rental from November to December 31. What's confusing me is I will tell Spain that I have to declare that to HMRC but will not have actually paid that tax when declaring to Spain.

Chipmonk

As said by others. You declare all income on UK property to HMRC. If you have an agency for renting they should provide you with the year's accounts plus an example sheet of the appropriate parts of your UK self assessment forms filled out for you. You will still get your UK personal tax allowance applied. You then submit the same information to the Spanish hacienda ( tax man) who will assess your income and determine if tax is due in Spain. You will not be double taxed but you do need a good bilingual accountant knowledgeable about UK tax affairs to do this for you unless you have very good Spanish.

bobd22

Thanks yes I did exactly that last year with regards to my pensions and savings interest etc. There was no issues I paid a relatively small amount of tax to Spain on state pension and savings. This year I have the rental income to add on.

stevesainty

To HMRC you will declare your rental income up to 5 Aprill 2021 and you need to do your self assessment before 31 January 2022. If you don´t normally pay any tax in UK then you won´t pay any tax if your rental income is less than your personal allowance. If you do normally pay tax to HMRC, then your net rental income (after expenses) will generate tax at 20%. (also if the property is jointly owned you need to make separate returns)
You quite correctly will report 2 months rental to Spain and can quote any tax due to HMRC as having been paid, ie 2 5ths of any UK tax due (Nov - March rental income). If you have no UK tax to pay, then you will pay all the tax due on your 2 month´s rental income to Spain.

bobd22

Thanks Steve yes I do have tax to pay in uk due to government pensions. What you outline is what I thought would happen.

Chipmonk

Biggest pain is making sure you adjust accounts for each countries tax years. It's a bit of a pain I admit

bobd22

Yes that doesn't help

PhilRoy

Thanks everyone for your help. I looked at a downloadable Guide produced by Blevins Franks which is very informative. I contacted them with my issue and a Mr John McCaine phoned me and confirmed that I have to continue submitting my UK rental property income details to HMRC and give the resultant tax liability figures to my Spanish tax advisor.

PhilRoy

For those who participated in this discussion ( and anyone else who has knowledge and advice ! ) Here is the latest development and it is not very good news for me and it is my own fault.
We have engaged a Spanish Tax professional and he is covering my 2019 Spanish return. ( 18/19 and 19/20 in the UK ) We have been in Spain and Resident for Tax purposes since August 2019 so my wife and I are each being fined E1500 for late submission.
I took out £20k from a private pension in the UK in 2018/2019 and was taxed by HMRC £4k. Now I am being taxed again by Spain.
When I say it was my own fault it is because we only learned recently that we should have told HMRC about the change of circumstances when we moved here. If we had, HMRC would not have taken £4k out of that £20k.
OK I made a big error! I understand I could reclaim this from HMRC? Is that right? Would there be penalties?

stevesainty

Given the dates you have provided, it would seem that you have been legitimately taxed by HMRC as it was in the UK tax year. What your Spanish tax professional needs to do is disclose the amount of tax you have paid already for this withdrawal from your private pension. The dual taxation agreement means that you cannot be taxed on the same income twice, however Spain may not take all of the tax paid into account as they apportion your UK allowance as a percentage of all the different income streams. For example if your Income in UK was 40K and your withdrawal from your private pensions was 20K, your UK tax allowance, in the eyes of Spanish tax authorities, would be apportioned 2/3 on your income and 1/3 on your withdrawal. This means that thet Spain will assume you were taxed around 833 pounds less than the 4k you did pay.

PhilRoy

Thanks Steve, I will put that to him.
He says IF we had told HMRC that we were Tax Resident in Spain then they would not have taxed that £20k.