Non Aligned tax year UK v Spain

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Paddy Pumpkin
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Non Aligned tax year UK v Spain

Postby Paddy Pumpkin » Sat Mar 31, 2018 4:28 pm

I am becoming a Spanish tax resident with UK income.

I complete a UK tax return and pay tax due there for the UK tax year (April to April). When I am completing my Spanish tax return how do I align the tax years. Do I just take the simple approach like the following example (presuming no Spainsh income)

UK Tax return completed May 2017 for year end April 6th 2017. Income £20k UK Tax £5k.
In March 2018 I complete Spanish Tax return for year ended 31st Dec 2017. Do I just simply say all the UK income and tax occurred in calendar year 2017?

Or do I have to actually figure out when the UK income was received and re-apportion to the Spanish tax year? If so how do I re-apportion the tax paid?

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gerryh
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Re: Non Aligned tax year UK v Spain

Postby gerryh » Sat Mar 31, 2018 4:44 pm

UK income tax paid for April 2016 to April 2017
Spanish tax, paid in 2018 for whole of 2017.
Contact Tax authority in UK after you have paid the Spanish tax and get a rebate of UK tax for Jan - Apr 2017.
That is how it worked in my case several years ago.
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Gerry
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Re: Non Aligned tax year UK v Spain

Postby El Cid » Sat Mar 31, 2018 4:49 pm

HMRC do allow split tax years, Spain does not.

When you become tax resident in Spain you pay tax for the whole of that year, irrespective of what you paid in the UK.

HMRC will adjust your tax to cover the months that you were tax resident in UK and pay a rebate. The tax you paid in the UK can be offset against the Spanish tax.

It sounds straitforward but you may have difficulty persuading HMRC that you are no longer tax resident until you can prove that you are paying the tax in Spain. It will get sorted out eventually but be prepared for a delay.

I did this some time ago when it was much simpler, you just filled in a form from HMRC Ddtailing your uk pension income and got Hacienda to stamp it. Now you have to get a tax certificate from Hacienda (which they won’t give you until you have paid your first years tax) and send it to HMRC.

This mainly relates to pension income which can be exempted from UK tax. Any other UK income such as rental income gets taxed at both ends and you offset it on your Spanish tax return.

There are some on this forum with more recent experiences than mine who hopefully can clarify exactly what the current procedure is.

Sid

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Re: Non Aligned tax year UK v Spain

Postby elusive » Sat Mar 31, 2018 5:21 pm

We did it a few years ago and it was basically the same as gerry. You cant do anything until you file your first spnish tax return.you then get a certificate from hacienda confirming you are a spanish tax resident which you send to hmrc along with is it the double taxation hmrc form? and they refund the amounts of tax that overlap and have been paid twice..you will then get a NT (no tax) code so any income is paid tax free

If you rent out a property you can get that paid tax free by filling in the non resident landlord form.but you will have to do a self declaration form as it can still be taxed in the uk if you go over your allowance

Paddy Pumpkin
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Re: Non Aligned tax year UK v Spain

Postby Paddy Pumpkin » Sat Mar 31, 2018 5:32 pm

El Cid wrote:HMRC do allow split tax years, Spain does not.

When you become tax resident in Spain you pay tax for the whole of that year, irrespective of what you paid in the UK.

HMRC will adjust your tax to cover the months that you were tax resident in UK and pay a rebate. The tax you paid in the UK can be offset against the Spanish tax.

It sounds straitforward but you may have difficulty persuading HMRC that you are no longer tax resident until you can prove that you are paying the tax in Spain. It will get sorted out eventually but be prepared for a delay.

I did this some time ago when it was much simpler, you just filled in a form from HMRC Ddtailing your uk pension income and got Hacienda to stamp it. Now you have to get a tax certificate from Hacienda (which they won’t give you until you have paid your first years tax) and send it to HMRC.

This mainly relates to pension income which can be exempted from UK tax. Any other UK income such as rental income gets taxed at both ends and you offset it on your Spanish tax return.

There are some on this forum with more recent experiences than mine who hopefully can clarify exactly what the current procedure is.

Sid



Thanks Sid

I think I need to explain myself more clearly. I am not and never have been a UK tax resident. So UK residency is not relevant. All the income from the UK is rental income. I previously lived in countries where the UK income was not relevant for a local tax return as these countries did not tax worldwide income so never had to tell them about UK income. I just paid tax due on UK income in the UK.

My question is more along the lines of how do I apportion the UK income...not just my first year in Spain but every year going forwards.

Let me try to give another ficticious example that might explain it better.....


UK
Income April 2017 to Dec 2017 15k
Income Jan 2018 to April 2018 2k
Tax bill for the whole UK tax year 4k

Spanish tax return in March 2019 for Tax year 2018
Do I report Income 17k (15+2) and tax paid of 4k or just 2k income .....if I report 2k...how much tax do I say I paid?

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Wicksey
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Re: Non Aligned tax year UK v Spain

Postby Wicksey » Sat Mar 31, 2018 7:30 pm

I keep accounts on a spread sheet showing monthly income and any expenses. Our rental is paid mid month so I use the April to the following March figures for my UK tax return.

I cut and paste the monthly figs of income and expenditure from the UK accounts to form the accounts for my Spanish tax return. Eg, for Spanish tax year 2017 this means taking Jan, Feb and March figs from my UK 2016/17 accounts, and then the April-Dec info is taken from my UK 2017/18 UK account.

The only thing is that we never have paid tax in the UK. Personally I would declare the total tax paid in the UK tax year 2016/17 on the 2017 Spanish tax return. Not sure if you can apportion the tax paid as it is calculated on the UK tax year's income as a whole. I may well be corrected on that but this makes sense to me as you will have paid any tax due during the Spanish tax year 2017.

Paddy Pumpkin
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Re: Non Aligned tax year UK v Spain

Postby Paddy Pumpkin » Sun Apr 01, 2018 11:53 am

Wicksey wrote:
The only thing is that we never have paid tax in the UK. Personally I would declare the total tax paid in the UK tax year 2016/17 on the 2017 Spanish tax return. Not sure if you can apportion the tax paid as it is calculated on the UK tax year's income as a whole. I may well be corrected on that but this makes sense to me as you will have paid any tax due during the Spanish tax year 2017.


Thanks Wicksey...your approach to apportioning income makes perfect sense to me. However I am still struggling on what part of the tax I apportion to 2017. Strictly speaking in the UK I pay tax in advance....I have to pay tax on account...yes HMRC presumes that since you made X in rent this year you will make X in rent next year and ask you for 50% of that tax bill upfront...and the rest by the following January 31st

Example for tax return 2016/17 completed in say May 2017 you pay 50% of expected bill for 2017/18 in May 2017 and the other 50% by January 2018. I guess it is fairer to PAYE workers as they pay when they get the income. So in short the approach of when it was actually paid won't work as you actually have flexibility and can pay all of it in advance.

I guess it is time for an email to the Agencia Tributaria!...wish me luck

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Re: Non Aligned tax year UK v Spain

Postby Wicksey » Sun Apr 01, 2018 5:03 pm

I would have thought there were others on here that have to declare tax that's been deducted on their UK income on their Spanish returns. I've only been on PAYE when I worked in the UK and haven't really paid anything since I left apart from a very small amount which I think was requested when I got the tax calculation and I just paid it. Sorry I can't help further!

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Re: Non Aligned tax year UK v Spain

Postby elusive » Sun Apr 01, 2018 5:31 pm

Same here. As spanish residents we dont pay any U.K tax. tax code is N.T and rental income doesnt go over the yearly allowance and we get it paid tax free via the non resident landlord form

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Re: Non Aligned tax year UK v Spain

Postby markwilding » Mon Apr 02, 2018 6:27 pm

That’s how we do it too. I’m not sure what the allowance is but with two people, my wife and I, I think its well over 20,000 pounds a year.
I seem to remember the rental agency sent us the form so as not to pay at source. We also keep everything up to date and copy and paste the info needed depending on the individual country whose return we are doing.
For the English return, we fill out the form they send each year and as the Spanish one is done by a Gestor, we just give them the figures.


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