Uk Pensions and Tax

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pirate
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Uk Pensions and Tax

Postby pirate » Sun Apr 22, 2007 3:57 pm

Hi again

I`ve been reading about NIE numbers, (which my wife and I already have), I am receiving a private pension from the Uk and going to have it transfered into my Spanish bank account, does any one know if its best to,
(A) pay tax on it in the Uk as I do now, or
(B) pay tax in Spain,

or is this not an option to pay it in Spain?
When I`m in Spain it`s my intention to try and make a few bob and obviously pay taxes and probably get an Ni number ( Im only 50 by the way)

What would you pro`s do?
Snot me, stwiscki

katy
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Postby katy » Sun Apr 22, 2007 4:07 pm

If you are living in Spain you should pay your taxes here, unless it is a civil service pension ( I think?)

olive
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Postby olive » Sun Apr 22, 2007 6:14 pm

Good luck to you making a few bob. Many try and find it difficult, mind you watching the Marbella Belles programm or whatever it is called, the streets there are paved with gold. I nearly upped sticks when I saw it last week but remembered the size of the free tapas king prawns I would be giving up.....

Anyway back to your question. My suggestion would be go to a gestor that specialises in tax or a fiscal specialist. Ask them how much tax you would pay on your pension and how much they would charge toi fill the forms in for you . You may be shocked how much it is compared with "Rip off Britain". Then you can play the game. Pay Uk taxes as long as you dare then claim them back and pay Spanish Tax. You might even be clever enough to disappear in the middle and save a bit of tax. Long term you have to pay Spanish tax if you live here on your UK pension, end of story.

If you make ANY money here you also have to pay Autonomos (like Social security/pension in Uk - can't remember the term) It is around 250 euros a month. I believe you get a Spanish pension if you do a minimum of 15 years contributions but others on this forum know far more than me on this.

olive

katy
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Postby katy » Sun Apr 22, 2007 6:21 pm

Taxes are a little higher here than the UK (official), not sure what the marbella stuff is about when someone asks a simple tax question :?: Somebody been rattling your cage Olive :?:

jenna m
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Postby jenna m » Sat May 19, 2007 8:39 am

I seem to remember reading that you are liable to pay U.K. income tax for 3 years after you cease to be a full time resident.
Can anyone confirm this?

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Postby El Cid » Sat May 19, 2007 8:52 am

As soon as you spend more that 183 days in one calendar year in Spain you will pay Spanish income tax.

There is no option.

You pay tax on your worldwide income. UK government pensions are taxed in the UK but you are still tax resident in Spain and all other income is taxed in Spain.

Spanish tax rates are higher than the UK and the allowances are lower so generally you will pay more tax in Spain.

Sid

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Postby anewlife » Sun May 20, 2007 10:13 pm

Mum and dad are both pensioners getting UK state pension. They both also have private pensions, but pay tax in the UK on these. They have lived here for almost 3 years. Mum had a letter about a year ago from her private pension company asking her to go to Madrid to prove she was still alive and still entitled! She phoned them up, told them she was not prepared to go to Madrid, would a letter from their bank suffice - it did. At the end of the day, why should pensioners be taxed on their pensions when they have paid into to the system for 40-50+ years???? Surely they should be allowed some allowance...

Alan-LaCala
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Postby Alan-LaCala » Mon May 21, 2007 9:39 am

As you will be liable for spanish tax, you can apply to have your pension paid in the UK free of tax. You need a form FD9 from the Inland Revenue.

Alan
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malagaman2005
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Postby malagaman2005 » Mon May 21, 2007 7:00 pm

Not so with my civil service pension, it is taxed at source and always will be. I've taken advice from a qualified tax expert and as my pension is my only source of income and my savings are miniscule, which are taxed in the UK, I do not need to register with the Hacienda as they won't be interested in me even though I permanantly live in Spain and have a spanish mortgage. I have to admit I'm somewhat surprised but you have to be guided by 'those who know'
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El Cid
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Postby El Cid » Mon May 21, 2007 8:46 pm

You would be well advised to register with Hacienda or you will not be regarded as tax resident when you might wish to take advantage of the tax breaks only available to tax residents with regard to CGT and IHT.

The simplest way is to submit a zero tax return showing your "miniscule" savings interest in the UK. In fact, if you can show the UK taxman that you are tax resident in Spain you should be able to get any other UK income (such as the state pension if applicable) paid free of UK tax and pay no tax on it in Spain as you will be below the tax threshold.

Sid

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Postby El Cid » Mon May 21, 2007 8:53 pm

anewlife wrote:Mum and dad are both pensioners getting UK state pension. They both also have private pensions, but pay tax in the UK on these. They have lived here for almost 3 years.
They should be paying the tax in Spain.

Under the Dual Taxation Agreement they will get the UK pensions paid gross in the UK if they are paying the tax in Spain.

If they do not regularise the tax situation they could get a large back tax bill and fines at some stage.

Just because the UK taxman is happy to have them continue to pay UK tax does not mean that they have no responsibility to pay in Spain. It is entirely their responsibility to advise the Spanish taxman of the fact that they are living in Spain and receiving income from the UK.

Sid

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Postby geo » Tue May 22, 2007 11:33 am

I live in Nerja, work offshore north sea, pay my tax in uk, I am in Spain more than 183 days per year. today I contacted inland revenue in uk to clarify where I should pay tax. as I work in British waters then I must pay in Britain and Spanish authorities would get a tax credit for what I have paid, then I would get a bill for any amout still due if Spanish tax is higher.
All according to the tax man....hmmmmm
How come there is always to much month left at the end of the money???

El Cid
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Postby El Cid » Tue May 22, 2007 12:40 pm

He is quite right about you having to pay tax in the UK but it doesn't change the fact that you are also a tax resident of Spain.

It is perfectly possible to be tax resident in both the UK and Spain as the UK rules on residency are very complicated and there are also special rules for offshore gas and oil workers.

The normal way you sort out the tax is that you pay it in the main country of residence and offset the tax paid in the other country. Certainly there are special rules for Crown pensions and it is quite possible that you also fall into a special category. However I would not be inclined to take what HMRC say as gospel - I would see what Hacienda think about it, particularly if you might want to take advantage of your Spanish tax residency in the future.

Pensions and annuities paid in the UK are special cases covered by the Dual Taxation Treaty and by submitting the Form FD9, as previously mentioned, it makes it possible to get the UK income paid free of tax so long as the tax can be shown as being paid in Spain.

Sid

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Martin Page
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Postby Martin Page » Tue Jun 05, 2007 3:30 pm

I have laboured long and hard about this problem ....

The rules for spanish tax is 183 days and the rules for the UK are 30 days in the country before your liable for taxation in that country. - Catch 22 -

The dual taxation agreement is a behemoth that even governments argue and disagree about.

You Will NEVER get a difinitive answer to the issue.

You may get a bill from the Spanish Authorities for unpaid Tax - BUT you will not be fined for Tax avoidance IF you are paying Tax in the UK

I have been advised that I pay Income tax in the UK (out of choice) and pay Holiday WealthTax here in Spain.
Then, When and IF, I get a Spanish Tax demand - to submitt it to the Inland revenue and ask them to sort it out with there Spanish counterparts.

Custom and Practice shows that in most cases the Spanish Back down.

What ever the out come at least YOU will have an agreed resolution between Spain and the UK.

It is my bet it wont happen and you will fall down the cracks between them....
They are after bigger fish than pensions and low income groups - the're after the persistant tax dodgers.

YOU pays your money - you makes your choice. (Its when you dont pay, the trouble starts )

I wish you well !


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