UK Rental Income, tax query.

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Paddy Pumpkin
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Location: Madrid

Re: UK Rental Income, tax query.

Postby Paddy Pumpkin » Thu Mar 11, 2021 8:54 am

Just realised a typo.....you still have scope to maintain UK tax residency for 2021 (not 2020) as I stated above

So you still have scope to keep UK tax residency for 2020 and 2021 and won't be liable for Spanish tax until the tax year 2022, which means the tax returns done in 2023

But again get some personalised tax advice. A quick test of your advisor if they don't know that it is possible for you to keep UK tax residency even though you have completed Spanish residency (TIE etc) then walk away as they don't understand the tax laws of both Spain & the UK and how both interact together.


A side subject is retaining Spanish residency. You can be out of Spain for up to 6 months a year and not lose residency, so strictly speaking you need to take a trip to Spain before the end of June. Anyway I digress ....go and see an advisor and tell them everything as there may be other things you should do before you move to Spain that you don't know about.

elusive
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Re: UK Rental Income, tax query.

Postby elusive » Thu Mar 11, 2021 4:07 pm

So you still have scope to keep UK tax residency for 2020 and 2021 and won't be liable for Spanish tax until the tax year 2022, which means the tax returns done in 2023.
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Spain classes you as tax resident 6 months after arrival. Therefore hacienda will want their cut for 2021 as the .O.P has been here since at least october 2020. The only way to get around that is by claiming he hasnt been in Spain for more than 6 months.But by doing that he loses his residency.

Paddy Pumpkin
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Re: UK Rental Income, tax query.

Postby Paddy Pumpkin » Thu Mar 11, 2021 4:23 pm

Nope that is incorrect. I would suggest you read the DT A between Spain and the UK. I have pasted the residency tie breaker test from the DTA below

It is possible to be in Spain zero days per year and be a tax resident of Spain. It is also possible to be in Spain 300 days per year and not be a tax resident...as long as you can prove you are tax resident in another country.

I have highlighted the relevant part in a pevious post but here is again the part that is relevant for the OP

'''' he shall be deemed to be a resident only of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident only of the
State with which his personal and economic relations are closer (centre
of vital interests);''''

So say the OP passes the test to be resident in both countries (183 days is not the only test) As his personal and economic matters are still centred in the UK then he is still only resident of the UK.

As regards residency I have addressed that also

'''''''A side subject is retaining Spanish residency. You can be out of Spain for up to 6 months a year and not lose residency, so strictly speaking you need to take a trip to Spain before the end of June.''''''''

So basically he can take short trips to maintain residency but maintains tax residency in the UK......it all depends how much it saves in tax to retain UK residency


Article 4, Paragraph 2 of the DTA


2. Where by reason of the provisions of paragraph 1 an individual is a resident of
both Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident only of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident only of the
State with which his personal and economic relations are closer (centre
of vital interests);
b) if the State in which he has his centre of vital interests cannot be
determined, or if he does not have a permanent home available to him
in either State, he shall be deemed to be a resident only of the State in
which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident only of the State of which he is a national;
d) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be a
resident only of the State in which its place of effective management is situated.

chrissxuk
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Re: UK Rental Income, tax query.

Postby chrissxuk » Tue Nov 23, 2021 7:33 pm

El Cid wrote: Wed Mar 10, 2021 11:38 am The 60% reduction only applies to long term rentals - typically lets of over 1 year.

Sid
It's 50% not 60%

El Cid
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Location: La Herradura, Costa Tropical, Granada

Re: UK Rental Income, tax query.

Postby El Cid » Tue Nov 23, 2021 11:28 pm

Not according to the latest guidance from Blevins Franks tax guide. Where did you get the 50%figure from?

If you are right, when did it change?

Sid


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