anagerbera2014

Hello everyone,
I have a question a bit difficult to solve. In case someone has experienced this before, any help would be very much appreciated, thanks very much in advance.
I live in Spain and I am receiving a UK government pension. The annual amount I receive is 4,000 Pounds, and it is taxed in the UK through the PAYE system. Am I correct in thinking that I should not be paying any tax on that pension, as I dón't receive any other UK income and the amount is below the tax allowance of £12,000? What should I do, to avoid having the pension being taxed in the UK? (i.e. should I fill in a UK tax return? should I just write to HMRC to let them know?...). I would like to ask a "gestor" to do the paperwork for me, but I wonder whether a Spanish gestor is legally able to process UK tax paperwork...? - Has anyone experienced this and can give some advice? Thanks a million for your help. Best regards.

Dxf

Hola
Yes, you should tell the Inland Revenue and ask for the correct form to fill in and return; if you get any problems then write "a formal complaint" as this gets results as I had to do several years ago as I ended up paying tax in both countries - the formal complaint brought quick results

Davexf

spainrico

Yes, I would agree that your pension income is below the UK tax allowance levels and therefore it should be paid gross - assume there is a problem with your UK tax code - which if you are resident here you should be making a Declaracion de renta to be come fiscally resident in Spain then you can apply for the UK tax code of NT (No tax) this has been discussed recently in another thread - Spanish tax. (Still appearing on the recent list of threads)

marcbernard

Let me take issue with this.
I am a retired civil servant who still pays tax in the UK (since my pension exceeds the personal allowances). HMRC will only issue a NT code for incomes which are only taxable in Spain. Your CS pension is taxable in UK under PAYE and qualifies for a correct code number against which at £4000, would not suffer tax, unless there are other considerations such as rentals also taxable in UK You need to have provided proof of residence and taxability here in Spain, in order for HMRC to act. You should seek the correct form from HMRC in order to obtain refund of overpaid tax.
Note that the income from CS pension still needs to be declared to Hacienda (under "Exempt income") unless your worldwide income is less that the overall Spanish rules allow.

bobd22

When it came to the time to claim my state pension i contacted them by phone per the letter they sent me to claim the State pension. I am also the holder of Crown Pensions. They simply said we will pay your State Pension gross to your Spanish Bank and you declare it in Spain for tax. That is what I have done no issues so far. I pay UK tax on my Crown Pensions PAYE and as you say inform Spanish tax what I have recieved in Crown Pension and that I pay tax in UK on it,

Fred James

The current Spanish rules for the need to make a declaration is now up to €15000. However if you are taking advantage of the dual taxation treaty, you must make a declaration, even if the tax due is zero.

calman014

The rules differ a lot from country to country within the EU.
Government Pensions, (which cover both CS and Forces pensions amongst others), are under certain conditions, free from taxation in the EU. (According to the UK)
I found myself in a similar position with a small forces pension which also did not reach the regular threshold for actual taxation under PAYE.
As a result I did some research because of the same conflict in the rules.

The OECD has a basic set of rules that were then adopted to setup the various double taxation agreements between member countries.
Each country is free to interpret those rules as they wish.

In general that income will be taxed in your country of residence as I did not find a country that exempts it unless you are above the threshold and actually paying tax on that in the UK.
If you are paying tax on that in the UK it will be shown on your statements as such. Even if you pay no tax it will be marked as subject to PAYE payments on the statements.

Hope that helps.

anagerbera2014

Hello to everyone who offered their experience and knowledge on this matter, it is very much appreciated.
I doubt whether I shall be able to do all this paperwork on my own, as I guess that trying to explain this situation to HMRC will not be exactly "straightforward", and then trying to explain it to the Spanish tax office might be a bit of hard work as well... I wish I could be as brave as you all are...!
One thing I am still in doubt with is this. If HMRC approve it, and they do not tax my "uk government pension" (of £4,000 per year)... does that mean that the Spanish tax authorities are going to ask me to pay tax on that... as they will see that those £4,000 have not been taxed at all?... should I insist to the Spanish tax authorities that that amount should be "exempt of tax" in Spain?.... will they believe me? - it sounds like a really impossible mission!
Thanks very much for any comments. Best regards.

calman014

This was the problem I was confronted with, but in your case it will probably taxed as most EU countries do this. Unfortunate but a fact of life. Like I mentioned earlier, each country is free to interpret the rules. By all means study the dual taxation agreement between UK and Spain, should be available on the HMRC site.

anagerbera2014

Thanks a lot for the your views Calman014. I think I shall probably have to find two "gestors", one in the UK and another one in Spain.... that could be the only way for me to get this puzzle right! Best regards.

calman014

See https://taxsummaries.pwc.com/spain/i...ersonal-income

Lynn R

I have a small Civil Service pension which I have the UK personal allowance set against, so pay no tax on it in the UK as it is well below the allowance. I have been declaring this on my Spanish tax returns for the past 7 years as exempt income and Hacienda have never queried it. I also declared it on the double taxation form I submitted to Hacienda and HMRC although I am aware that form no longer exists.

I also have a larger occupational pension which has an NT code set against it by HMRC, and this has not been affected by my starting to receive my state pension last year. Both of these are declared on my Spanish tax returns and taxed accordingly.

I suggest you ring HMRC on their overseas contact number, I have always found them very helpful and if I ring at 9.00 am Spanish time (they open at 8.00) calls are answered quickly.

It is by no means an impossible mission dealing with Hacienda especially if your tax affairs are not complicated. Each year during the period when tax returns are due they even offer a free service where you can make an appointment (either online or by phone) to visit one of their offices and they will complete the return for you. You would need to speak a bit of Spanish, but surprisingly little, just enough to answer questions like your name, d o b, address, marital status, do you have children or dependant relatives, do you have a disability, do you own a property (you would need to show your IBI bill) and details of your income and bank account to pay by direct debit. For income details you are not asked for any documentary proof such as payslips, letters from pension providers, or bank statements and pensions are not listed separately, all they want is one total figure for the taxable income. When my husband and I used this service before starting to do our own returns we just wrote the figures down on paper with the renta exenta figure shown separately under that heading, and all our personal details written out as well. We were complimented on being "muy preparado"! The whole process in their office took no more than 10 minutes.

spainrico

It is really not a puzzle - it is all straightforward forward and 1000s of people have done it because it is normal and is the system...

Lynn R

I don't know if it is just me, but I am getting increasingly confused as to exactly what your situation is. In the post above you say "I live in Spain" and in other posts you have referred to yourself as a Spanish resident. Yet in another post in January 2023 you said you live in the UK and are hoping to move to Spain in May 2023. Please can you clarify as whether you are or are not yet resident in Spain will have a bearing on the information people are giving and they could be wasting their time if they are basing replies on inaccurate information supplied-

Listen Very Carefully

Yes we certainly need more info if the OP wants us to answer her particular query however as a general rule tax agreements tend to operate in the following way
If you live in country A and get income from Country B then Country B has first dibs in taxing you on their government service pensions.All other pensions from Country B are should be paid tax free and are then subject to tax in Country A including state pensions private etc.Likewise any interest earned in Country B is taxed in Country A.In relation to your civil service pension as you are below the income tax threshold you pay no tax on it in the UK and this should be sorted through PAYE,but this assumes that you have no other income that is taxable in the UK(eg rental) but you must declare your world wide income in Spain.
But unless there is more detail about your sources of income then we are stabbing in the dark as Lynn R has indicated