Mitzyboy

Well .... they do need the money dont they!

Chiclanagir

Surely you have to declare your Teachers Pension and pay tax on it to the UK if over the personal allowance?

scampicat

My husband's teachers' Pension is taxed in the UK.

EsuriJohn

Kaths teachers and my civil service pension are taxed at source you don't get until they have taken all they think they are due. Its not a case of declaring it they know all about your affairs sort of banker, paymaster and taxman all rolled into one they will grudgingly let you have whats left. Having paid in all my working life from 18 I am so grateful.

Chiclanagir

Ahh so you are paying tax in two countries then.

Fred James

Yes, that's what happens if you have a UK government pension as well as a UK state pension and possibly other income.

You get the best of both worlds - two sets of allowances - one in each country and the lowest tax band in both.

A very nice perk if it applies to you!

Unfortunately most gestors don't understand this!!!

EsuriJohn

Lots! in UK. Hopefully non in Spain. If they would just sign the bloody form. I would then pay less than lots in UK as well.

stevesainty

You sound to be in a similar position to us.

We both have government pensions, mine is Fire Service, Jill's is civil service (PCSPS administered by Capita). Do we have the option to have those paid directly into a bank account in Spain (we haven't enquired yet) and if so is it better to do that or to make an arrangement with an FX house?

EsuriJohn

Exactly! Both PCSPS AND Teachers pension are administered by Capita at Mowden Hall.

The State Pension is paid direct by DWP and it is this that the Government will pay almost anywhere in the world at great FX rates since the exchequer must buy huge quantities of different currencies. Perhaps most of all euro's and dollars. This is paid direct to Spain at no cost (EU Law) so you get the best of all rates and spot on the 4 week cycle.

Capita charge £1 per transaction to send your money to Spain in euro and subcontract the Exchange to the Bank of New York and it seems to come a day late and a dollar short. We tried that and decided we could do better and have used various FX companies since, currently we use Rational and they are very quick and don't shave too much of the top.

merlino

Hi All

my wife and I are looking to move to Spain (gandia) early next year when we are both over 65.
If both our uk government pensions are not taxed (covered by uk tax allowance of £9940 each april/11 ), does anybody know how much I would have to pay in Spain on a company pension of €19,500 a year.


regards merlino

Mitzyboy

Im sure Fred will be along with the number of allowances etc, but in the meanwhile have a look here (2010 rates)
http://www.spainaccountants.com/rates.html

stevesainty

Thnaks for the very useful advice. You seem very knowledgeable on this.

Can you, or anyone else on the forum, give any advice on making the best use of FX houses for regular transfers please?

Mitzyboy

We're going a bit off topic here, try starting your own thread, and have a search also as we have discussed before

Fred James

You mention your government pensions - do you mean the UK retirement pension or are these government service pensions?

If they are your retirement pensions they will be added to your company pension and taxed in Spain.

EsuriJohn

Lets define pensions : -

State Retirement Pension. Paid to anyone who has paid ss for the correct No of years.

Government Pension. Paid to those who have worked for the government or local authority ie civil servants, teachers, local government officials, police fire and others but not all NHS.

Your State pension is taxed in the sense that in your case it eats up most of your Personal Allowance and then more of your Private (company) pension is subject to tax at 20%.

There is a more pernicious and subtle effect in your case your age allowance of £9940 is reduced by £1 for each two pounds that your pensions total exceed £23,000 until back to the personal allowance level of £6475 is reached.

So lets say your State Pension is £7000 plus company pension of £19000 making £26000 so you age allowance is reduced by £3000/2 = £1500 to £8540 so that more of your pension is taxed at 20% or to put it another way you will pay £1500 x 20% = £300 extra tax.

What you have to try to achieve is to export one of your Pensions tax free from UK then you get two personal allowances. With the ups and downs of the euro both personal allowance are about the same and the first tranche of tax is at about the same level so whichever one you might be able to move it is to your advantage. In my personal case with a GP and a SP it is not only possible but forced by the double taxation agreement where the GP has to stay at home in UK and be taxed there but allows the SP to be exported tax free and taxed in Spain

It is futher enhanced by the reduction in the grand total reducing the £1 for £2 penalty.

Does all this make sense?