UK Pensions Taxable in UK or Spain?
Nov 19th 2010, 3:12 pm
#16
Joined: Jun 2006
Location: Granada Costa
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Re: UK Pensions Taxable in UK or Spain?/Tax on Shares
I don't see how the method of acquisition is relevant - it is the capital gain that is taxed.
It all comes down to residency at the time of the gain.
If you are tax resident in Spain you will pay the CGT in Spain. There is no possibility of being assessed for CGT in the UK as well, as the double taxation treaty clearly gives the right to taxation to the country of residence (except for property gains).
Capital gains are declared on your annual tax return under savings and are taxed at the lower rate of 19% on the first €6000 and 21% thereafter.
There are no specific allowances apart from the normal personal tax allowances. The gain is adjusted for inflation on the normal discounted tables.
It all comes down to residency at the time of the gain.
If you are tax resident in Spain you will pay the CGT in Spain. There is no possibility of being assessed for CGT in the UK as well, as the double taxation treaty clearly gives the right to taxation to the country of residence (except for property gains).
Capital gains are declared on your annual tax return under savings and are taxed at the lower rate of 19% on the first €6000 and 21% thereafter.
There are no specific allowances apart from the normal personal tax allowances. The gain is adjusted for inflation on the normal discounted tables.
Nov 19th 2010, 8:40 pm
#17
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Location: Málaga, Spain/Miami Beach, Florida
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Re: UK Pensions Taxable in UK or Spain?
Thanks, everyone.
There's just one last point that I'd like to clarify.
When I say "government pension" or "state pension" I mean the normal retirement pension of just under £100 per week for the current year. I've never worked for the government. Are we all talking about the same thing?
Is it necessary for a resident of Spain to declare this UK retirement pension and is it included in a person's total income when calculating tax payable?
There's just one last point that I'd like to clarify.
When I say "government pension" or "state pension" I mean the normal retirement pension of just under £100 per week for the current year. I've never worked for the government. Are we all talking about the same thing?
Is it necessary for a resident of Spain to declare this UK retirement pension and is it included in a person's total income when calculating tax payable?
Nov 19th 2010, 10:22 pm
#18
Joined: Jun 2006
Location: Granada Costa
Posts: 10,908
Re: UK Pensions Taxable in UK or Spain?
Thanks, everyone.
There's just one last point that I'd like to clarify.
When I say "government pension" or "state pension" I mean the normal retirement pension of just under £100 per week for the current year. I've never worked for the government. Are we all talking about the same thing?
Is it necessary for a resident of Spain to declare this UK retirement pension and is it included in a person's total income when calculating tax payable?
There's just one last point that I'd like to clarify.
When I say "government pension" or "state pension" I mean the normal retirement pension of just under £100 per week for the current year. I've never worked for the government. Are we all talking about the same thing?
Is it necessary for a resident of Spain to declare this UK retirement pension and is it included in a person's total income when calculating tax payable?
The UK state pension is treated as normal income and is taxed in Spain like any other income. Just because it is paid free of tax in the UK does not mean it is not subject to tax, either in the UK or in Spain.
Last edited by Fred James; Nov 20th 2010 at 10:14 am.
Jan 9th 2011, 8:55 pm
#19
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Location: Torrevieja Costa Blanca South
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Re: UK Pensions Taxable in UK or Spain?
Hello all, first post on this forum.
I'm Steve aged 55 and currently in receipt of government (firefighter) pension. My wife Jill aged 61 is also in receipt of a government pension and has taken her state pension.
Am I correct in thinking from the above posts that when we move to Spain next year both my and Jill's occupational pensions will be taxed in the UK with us having a personal tax allowance each, currently £6470pa and that we will both have a Spanish tax allowance, currently €5151pa as well. I didn't realise we could get a tax allowance in both countries.
If so as I am not eligible to receive my state pension for another 11 years can we file a joint self assesment in Spain and use both our Spanish tax allowances against Jill's state pension and the income we will receive from letting our UK property plus our savings income?
I'm Steve aged 55 and currently in receipt of government (firefighter) pension. My wife Jill aged 61 is also in receipt of a government pension and has taken her state pension.
Am I correct in thinking from the above posts that when we move to Spain next year both my and Jill's occupational pensions will be taxed in the UK with us having a personal tax allowance each, currently £6470pa and that we will both have a Spanish tax allowance, currently €5151pa as well. I didn't realise we could get a tax allowance in both countries.
If so as I am not eligible to receive my state pension for another 11 years can we file a joint self assesment in Spain and use both our Spanish tax allowances against Jill's state pension and the income we will receive from letting our UK property plus our savings income?
Jan 9th 2011, 9:59 pm
#20
Lost in BE Cyberspace
Joined: Jun 2005
Location: Puente Esuri
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Re: UK Pensions Taxable in UK or Spain?
Hello all, first post on this forum.
I'm Steve aged 55 and currently in receipt of government (firefighter) pension. My wife Jill aged 61 is also in receipt of a government pension and has taken her state pension.
Am I correct in thinking from the above posts that when we move to Spain next year both my and Jill's occupational pensions will be taxed in the UK with us having a personal tax allowance each, currently £6470pa and that we will both have a Spanish tax allowance, currently €5151pa as well. I didn't realise we could get a tax allowance in both countries.
If so as I am not eligible to receive my state pension for another 11 years can we file a joint self assesment in Spain and use both our Spanish tax allowances against Jill's state pension and the income we will receive from letting our UK property plus our savings income?
I'm Steve aged 55 and currently in receipt of government (firefighter) pension. My wife Jill aged 61 is also in receipt of a government pension and has taken her state pension.
Am I correct in thinking from the above posts that when we move to Spain next year both my and Jill's occupational pensions will be taxed in the UK with us having a personal tax allowance each, currently £6470pa and that we will both have a Spanish tax allowance, currently €5151pa as well. I didn't realise we could get a tax allowance in both countries.
If so as I am not eligible to receive my state pension for another 11 years can we file a joint self assesment in Spain and use both our Spanish tax allowances against Jill's state pension and the income we will receive from letting our UK property plus our savings income?
When you have made the necessary applications to the HMRC to transfer you State pension(s) to Spain they can be paid into your Spanish Bank account tax free in UK but then consttute income in Spain. You can set the Spanish allowance against this income. You declare the income you set the rate of exchange and your wifes State pension pension would for the time being be your only income to be declared in Spain in addition you will have to declare you rental income from UK but this can be taken untaxed in UK if you have filled in the correct form.
The Hacienda can run their programme both as a single person or as a married couple on this income and they should tell you the most advantageous outcome and that is the one to choose.
Last edited by EsuriJohn; Jan 9th 2011 at 10:03 pm.
Jan 9th 2011, 10:16 pm
#21
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Re: UK Pensions Taxable in UK or Spain?
Thanks John & Kath
Is Hacienda the Spanish equivalent of HMRC?
We had planned to have Jill's state pension and both our occupational pensions paid into a UK bank account and then make one monthly transfer into our Spanish bank account after negotiating an exchange rate for 6 or 12 months ahead with a currency exchange house.
If we aren't allowed to do this or it isn't the most cost effective way any advice would be most welcome.
Is Hacienda the Spanish equivalent of HMRC?
We had planned to have Jill's state pension and both our occupational pensions paid into a UK bank account and then make one monthly transfer into our Spanish bank account after negotiating an exchange rate for 6 or 12 months ahead with a currency exchange house.
If we aren't allowed to do this or it isn't the most cost effective way any advice would be most welcome.
Jan 9th 2011, 10:50 pm
#22
Lost in BE Cyberspace
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Re: UK Pensions Taxable in UK or Spain?
Thanks John & Kath
Is Hacienda the Spanish equivalent of HMRC?
We had planned to have Jill's state pension and both our occupational pensions paid into a UK bank account and then make one monthly transfer into our Spanish bank account after negotiating an exchange rate for 6 or 12 months ahead with a currency exchange house.
If we aren't allowed to do this or it isn't the most cost effective way any advice would be most welcome.
Is Hacienda the Spanish equivalent of HMRC?
We had planned to have Jill's state pension and both our occupational pensions paid into a UK bank account and then make one monthly transfer into our Spanish bank account after negotiating an exchange rate for 6 or 12 months ahead with a currency exchange house.
If we aren't allowed to do this or it isn't the most cost effective way any advice would be most welcome.
The best exchange rate bar non is that which the government gives for state pension transfers. These are paid 4 weekly or 13 weekly. You can then arrange the best deal you can for the other with an FX broker.
Jan 19th 2011, 8:18 pm
#23
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Posts: 10
Re: UK Pensions Taxable in UK or Spain?
Although I am normally resident in Spain, at present I am living in the USA, as my wife is working for the Spanish Consulate in Miami.
Because I own a property in Málaga (in my name only) I am filing tax returns in Spain as a non-resident and paying Hacienda a very small amount of tax on the property (less than €250 per year), which I think is 24% of 1% of the valor catastral.
My UK pensions (government and private) are being assessed for tax by the Revenue. However, the total of all my pensions is below the tax-free allowance of £9,490 for someone over 65, and therefore I pay no tax. These pensions are paid into the Isle of Man branch of a UK bank, as I have been unable to open a UK account because I am not resident there.
When I return to Spain, will I be liable for tax on my pensions in the UK or in Spain? I would prefer to be taxed in the UK, as I understand that tax-free allowances are lower in Spain.
Because I own a property in Málaga (in my name only) I am filing tax returns in Spain as a non-resident and paying Hacienda a very small amount of tax on the property (less than €250 per year), which I think is 24% of 1% of the valor catastral.
My UK pensions (government and private) are being assessed for tax by the Revenue. However, the total of all my pensions is below the tax-free allowance of £9,490 for someone over 65, and therefore I pay no tax. These pensions are paid into the Isle of Man branch of a UK bank, as I have been unable to open a UK account because I am not resident there.
When I return to Spain, will I be liable for tax on my pensions in the UK or in Spain? I would prefer to be taxed in the UK, as I understand that tax-free allowances are lower in Spain.
Jan 19th 2011, 9:21 pm
#24
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Re: UK Pensions Taxable in UK or Spain?
You are deemed tax resident in Spain if you spend more than 183 days there in one calendar year, not necessarily consecutively.
If you meet this criteria you will have to declare all your income, except for the UK Government pension, in Spain and potentially pay tax on it in Spain.
As Mitzy has said, the UK Government pension is completely disregarded as far as Spanish tax is concerned.
You get a personal allowance of €5151 plus an additional allowance of between €4080 and €2652 depending on your income.
If you are over 65 you get an additional allowance of €918. Over 75 you can add another €1122
If your wife has only a small income it may be advisable to make a joint declaration as she will also get an allowance.
If your other personal pensions are based on a money purchase annuity then you will also get considerable allowances against them.
As a resident, interest on Spanish bank accounts will be taxed at source but if your income is below the threshold then the deductions may be rebated.
If you meet this criteria you will have to declare all your income, except for the UK Government pension, in Spain and potentially pay tax on it in Spain.
As Mitzy has said, the UK Government pension is completely disregarded as far as Spanish tax is concerned.
You get a personal allowance of €5151 plus an additional allowance of between €4080 and €2652 depending on your income.
If you are over 65 you get an additional allowance of €918. Over 75 you can add another €1122
If your wife has only a small income it may be advisable to make a joint declaration as she will also get an allowance.
If your other personal pensions are based on a money purchase annuity then you will also get considerable allowances against them.
As a resident, interest on Spanish bank accounts will be taxed at source but if your income is below the threshold then the deductions may be rebated.
Jan 20th 2011, 7:17 am
#25
Joined: Jun 2006
Location: Granada Costa
Posts: 10,908
Re: UK Pensions Taxable in UK or Spain?
In this context, earned income includes pension income. It is on a sliding scale. If your income is less than €9180 you get €4080 and if your income is above €13260 you get €2652. Between those to incomes it is calculated on a sliding scale.
On your tax declaration is appears as "Reducción por obtención de rendimientos del trabajo" in box 017
Jan 20th 2011, 7:04 pm
#26
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Re: UK Pensions Taxable in UK or Spain?
Thanks Fred.
Jan 21st 2011, 9:29 am
#27
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Re: UK Pensions Taxable in UK or Spain?
The best way to plan a move to Spain/sort out your tax, legal and financial issues is to work with a UK company in Spain who can give you international, cross-border advice. This works out as a cost-effective way to ensure your affairs have been dealt with PROFESSIONALLY.
In addition, there are also cost effective ways of structuring your affairs before becoming a tax resident in Spain. Using Gibraltar is one such example.
In addition, there are also cost effective ways of structuring your affairs before becoming a tax resident in Spain. Using Gibraltar is one such example.
Jan 21st 2011, 9:47 am
#28
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Re: UK Pensions Taxable in UK or Spain?
It is a deduction which everyone gets from their earned income.
In this context, earned income includes pension income. It is on a sliding scale. If your income is less than €9180 you get €4080 and if your income is above €13260 you get €2652. Between those to incomes it is calculated on a sliding scale.
On your tax declaration is appears as "Reducción por obtención de rendimientos del trabajo" in box 017
In this context, earned income includes pension income. It is on a sliding scale. If your income is less than €9180 you get €4080 and if your income is above €13260 you get €2652. Between those to incomes it is calculated on a sliding scale.
On your tax declaration is appears as "Reducción por obtención de rendimientos del trabajo" in box 017
Can you expand on how this fits in with a married couple both drawing state pensions of about €6000 each transferred to Spain untaxed in UK.
Do you get 2x €4080 or is it just one per couple which in our case would we get the single person enhanced for 65+ then one €4085? This would have to be reduced if added together the joint pensions come to €12,000.
Jan 21st 2011, 10:03 am
#29
Joined: Jun 2006
Location: Granada Costa
Posts: 10,908
Re: UK Pensions Taxable in UK or Spain?
FRED sorry I was looking on the wrong thread for this post!
Can you expand on how this fits in with a married couple both drawing state pensions of about €6000 each transferred to Spain untaxed in UK.
Do you get 2x €4080 or is it just one per couple which in our case would we get the single person enhanced for 65+ then one €4085? This would have to be reduced if added together the joint pensions come to €12,000.
Can you expand on how this fits in with a married couple both drawing state pensions of about €6000 each transferred to Spain untaxed in UK.
Do you get 2x €4080 or is it just one per couple which in our case would we get the single person enhanced for 65+ then one €4085? This would have to be reduced if added together the joint pensions come to €12,000.
Also, if you declare jointly you do not get two personal allowances, just one of 5151 plus a family allowance of 3400. You do get both age allowances of 918. If your only income is two €6000 pensions you would not pay any tax whichever way you declare as the total allowances for a 65+ couple, declaring jointly, are about €13000.
Jan 21st 2011, 11:21 am
#30
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Joined: Oct 2006
Location: West Midlands, ex Granada province
Posts: 2,140
Re: UK Pensions Taxable in UK or Spain?
Thanks Fred, that is very useful infomation.