Spanish tax resident with UK income - question about the UK tax return
 

Hi,
I have just been on the phone to HMRC regarding my 2019-20 UK tax return. I moved to Spain in January this year, and I now am tax resident here. HMRC has been notified. I receive income from the UK (salary, pension and rental income), and have been advised that for 2019-20 (and every subsequent year) I need to declare all my UK generated income on the self-assessment tax return. I accept that I am liable for taxation on all UK-generated income from April 2019 until January 2020 as I lived in the UK, but am worried that I will be taxed on my salary for the 3 months of the financial year where I have been living in Spain, even though I am tax resident in another country with a double taxation agreement.

To be honest, the HMRC advisor wasn't that helpful about what will heppen after I submit the return, so I am curious about the experiences of UK cittizens living in Spain with a UK income:

• How does HMRC handle the income tax on the year when someone become non-resident for part of that tax year?
• Moving forward, will HMRC generate an income tax bill for all UK earnings over the personal allowance threshold based on the 06/04/20XX-05/04/20XX income, which I then need to claim back, or will I be liable for income tax only on the rental income if it goes over my personal allowance?

Thanks in advance for any light you can shine on this.

Re: Spanish tax resident with UK income - question about the UK tax return
 

I thought all earned income must be taxed where it's earned. You then complete a Spanish tax for (June 2021) and declare (offset) any tax already paid elsewhere.

I don't know how Brexit affects this situation though

Re: Spanish tax resident with UK income - question about the UK tax return
 

No, some income is exempt from UK tax - typically pension income (but not some UK government pensions).

Brexit should not affect this as income tax is nothing to do with being in the EU or not. It depends on the individual tax treaties between the two countries.

Re: Spanish tax resident with UK income - question about the UK tax return
 

Thanks snikpoh and Fred for your input. I will submit my UK tax return for the full 19-20 UK tax year, then submit here for the 2020 tax year, and let HMRC and the Hacienda resolve who takes their slice of the tax. The double taxation agreement should exlude any possibility of paying the tax twice. I can understnad the pension and rental income being taxed in the UK, but not the salary as I am physically earning that here in Spain. Time will tell ...

Re: Spanish tax resident with UK income - question about the UK tax return
 

Until I had declared my UK pension income in Spain and paid tax on it, then submitted the Spain (Individual) Double Taxation Form together with a Certificado de Residencia Fiscal en España (Convenio), I had to pay the UK tax on it then it was all refunded once those forms had been processed by HMRC.

Re: Spanish tax resident with UK income - question about the UK tax return
 

I can only add what I did. I informed HMRC prior to moving to Spain and they emailed me back what I should do and how it affected me (I have retained the email.). I have crown pensions and at the time was not receiving my state pension. They told me that they would simply continue PAYE with regards to my Crown Pensions. When I received my state pension it would be paid tax free and I should pay Spanish income tax on that along with savings interest etc. When we rent our house out in the UK they said I would have to declare that to HMRC and be taxed accordingly. I now have my state pension I followed their advice I have declared that savings interest and informed Spain I have Crown Pensions amounts etc but they don't tax me on them. I had a fairly small Spanish tax bill to pay with everything recorded. I haven't dealt with HMRC re UK house rental but hopefully that will happen shortly pending a trip back to UK to sort out renting it. To date my dealings with HMRC and tax payments etc have been straight forward and exactly as they advised.

Re: Spanish tax resident with UK income - question about the UK tax return
 

Thanks Lynn R and bobd22 for sharing your experiences. Much appreciated.
As I moved to Spain part way through the financial year, it looks like I will have to submit a split year residency claim this year. I am considering filing the UK tax return through a tax advisor so I can avoid making any mistakes. I think this may prove essential moving forward as between the three incomes I will be over the annual allowance and tax will be deducted by HMRC I guess, which may need to be reclaimed on the Spanish side.

Re: Spanish tax resident with UK income - question about the UK tax return
 

I was just looking at a Blevins Franks article about Spanish income tax, and noticed this paragraph which would seem to be relevant to your question:-

"Note that only the UK state retirement pension is paid gross; other pension income will be taxed in the UK until you confirm to HM Revenue & Customs that you are registered and paying tax in Spain. For this purpose, you will need to obtain a tax residency certificate from your local Spanish tax office to send to HMRC PAYE, PO Box 1970, Liverpool, L75 1WX. The Spanish tax authorities (‘Agencia Tributaria’) generally want the tax due on your UK pension to actually be paid for the first time before they will issue a tax residency certificate. This might not be until almost 18 months after you arrive in Spain, though you will ultimately be refunded the UK tax deducted at source."

Re: Spanish tax resident with UK income - question about the UK tax return
 

I though any income through work done in uk is only declared in Spain ( presumably as autonomo) Rent from uk properties is declared in uk and also put on your modelo 100. You still get your full personal allowance in uk which means often there is little tax to pay in uk and spain takes its slice
Personally I am thinking of returning to uk to live permanently and just visit Spain for 90 days every 180 ( when retired) as things like CGT on primary homes, inheritance tax, personal allowances are much more generous than spain and I fear that living here longer will mean so much of my lifes savings will be tax eventually that it will be hard to enjoy the later years

Re: Spanish tax resident with UK income - question about the UK tax return
 

You say the tax is more expensive, but CGT for over 65’s on their primary residence is exempt. IHT depends very much on where you live, in Andalucia the individual allowance is €1m.

Personal allowances on low incomes are much more than in the UK.

If you have an annuity pension, only about 25% of it chargeable to tax.

Its not all bad news!

Re: Spanish tax resident with UK income - question about the UK tax return
 

Is that still classed as 'earned' income?

Re: Spanish tax resident with UK income - question about the UK tax return
 

Yes.

Re: Spanish tax resident with UK income - question about the UK tax return
 

The over 65 CGT exemption only applies if your property is in an EU country. So no good for those selling in UK. IHT , true Andalucia is an exception .In Valencia ( where many expats live ) it's a very very small amount. Premium Bonds ,ISAs all taxable. No 11,000 pound personal allowance. It's not good for someone who is under retirement age who has been structuring their money under the uk system to allow for a reasonable retirement. Fine if you are retired, sold uk property had an inheritance then moved to spain

Re: Spanish tax resident with UK income - question about the UK tax return
 

If you were living in Spain and sold a property in the UK (or anywhere else) it could not be your de facto primary residence. If you live in Spain, are aged 65 or over and sell your primary residence in Spain then you are exempt from CGT with no need to invest the proceeds in another property.