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- Andalucia Guru
- Posts: 15002
- Joined: Sun Oct 24, 2004 10:42 pm
- Location: La Herradura, Costa Tropical, Granada
Yes the whole monthly payment is taxed but depending on the age you were when income started, you get a huge allowance of up to about 75% of the payment.
No problem on where the purchased annuity income is coming from, and annuities are an absolute winner tax wise. If you can hold out on the annuity vesting until after you are 70 then only 8% of the income is taxable. That 8% of income in taxed at investment income rates...so max 23%.onlinelee wrote:Hi friends,
I am a retired new tax resident in Spain considering purchasing an annuity purely for the tax benefits it provides.
My question is... Are UK purchased annuities generally accepted? Thanx
So you would pay 23% of 8%...I.e. 2% tax.
My only concern is Brexit and how non EU pensions are treated...for example if you contribute to a non EU pension now...that contribution is not tax deductible. UK pensions may become the same, and I am just not sure how that will all pan out.
You also have currency risk, which goes against everything an annuity should be....I.e long term secured income, with currency risk you have no certainty about what the income will be.
I would look at getting an annuity denominated in EUR and based within the EU. I would also split the purchase across several annuities to spread risk. I would avoid Spain and look at Malta and Luxembourg instead.
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