UK Banks for Expats in Spain/ Tax Planning

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Dunflittin68
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UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Sun Oct 27, 2024 12:46 pm

Hi there

We are in our mid 70's and we have recently moved to Spain under a Non-Lucrative Visa and after selling our house in the UK have a lot of money sitting in the bank in the UK needing a home to go to to minimise taxes. :D We are buying a house here and the majority of the savings will go on that but we will still be paying taxes on our savings in the UK if we don't find ways to minimise them by moving them either to a Spanish bank or to an overseas finance product. We would have bought ISA's in the UK but obviously that is now out as you can't purchase them once here.

We also need a tax advisor to help with the paying of any taxes here we need to pay.

Has anyone any suggestions on (a) savings accounts in Spain which are tax efficient and (b) a tax advisor ?

By the way we live in Periana so don't want to have to travel miles to see a tax advisor if possible.

TIA :D

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby fyfin » Sun Oct 27, 2024 2:50 pm

Good luck on finding a good tax adviser. We thought we had one, highly recommended locally in forums and by friends. All seemed OK as they got us out of the UK system and correctly installed in the Spanish system but long story short, the main adviser did a quick flit to the UK before the s**t hit the fan. All to do with annuities which were my main source of income. I, along, with many others got fined and had to pay back taxes for 4 years. So, be very cautious with regard to advisors.
The other thing you will find is that you will probably have less allowances and pay more tax in Spain than in UK and if you are resident here then you will likely pay your taxes here (Crown pensions are an exception although they still have to be declared I believe).
There are some differences here as well with regard to investments e.g. Premium Bond prizes and Lottery prizes are not tax free as in UK. Other investments are taxed starting at 19% on a sliding scale up to 26%.
I don't know if you have considered buying a second property, which is what we did ( it was actually our first property, an apartment, and then we sold up completely in UK and bought a villa here), so we rented out the apartment long term to friends. I'm not sure how it works but there are allowances you get for renting out a property and it's a flat tax rate of 19% on net income. We leave it up to our Spanish accountant and I make sure I supply all info on a spreadsheet.
Best of luck whatever you decide.
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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Sun Oct 27, 2024 2:54 pm

Thanks for the info. I am waiting to hear from one company "Expay" who helped us with our Non-Lucrative Visa to get here as they have a financial adviser who may be able to help us but nothing compares to real people's experiences and it appears you had an unlucky experience. We could afford to buy a small apartment as well as a house to live in and never thought about that as a means of income as if my husband dies first I will be really scratching for a living ! Worth considering ! What accountant do you use and what does he charge per annum?

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby fyfin » Sun Oct 27, 2024 3:41 pm

Renting is fine for us as a) it's local so we literally 5 minutes from it and b) it's rented to friends so no issues with letting through agents where you might have problems and have to pay agents fees. We do rent at a reduced rate.
The accountants here for retired people like us don't charge an annual or monthly fee. Having been here 12 years now we have all the usual municipal taxes paid by direct debit so the only reason to use an accountant is for the annual tax return. We are charged €40 each as you have to do individual returns.
We are in Turre in Almeria so quite far from you - we did actually stay at Benamargosa when we first explored the area.
We just use a local accountant/ gestor as our previous experience with a so called expert has left me finding it difficult to trust any of them so as our income etc is always the same now their job is simple and I do my own research.
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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Sun Oct 27, 2024 5:11 pm

A rental might be something for us to think about as we will have some savings not working for us and there are a few rentals in the village that are fairly cheap. I am struggling to find proper builders too. We will need to get one to enlarge our roof terrace for us and I don't want to end up with a cowboy builder :roll: We will probably want built in wardrobes putting in too but don't ever see any carpenters advertising for work !

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby fyfin » Sun Oct 27, 2024 5:24 pm

Ha, builders are another issue. When you're in a village long enough you know who is ok and who isn't. We've been caught out in the past with an aircon engineer allegedly. Turns out he was nothing of the sort but had been recommended.
Chat to locals and see work that was done is my advice. The Romanians here are hard working and do a good job of building. They used to be cheap as well but not so much now bit worth it.
I hate to say it but beware of Brits unless you've seen their work.
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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Sun Oct 27, 2024 5:35 pm

Seems to me like everything service wise is a minefield here! We are friendly with the local estate agents who are Spanish so perhaps they know someone reliable.

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Wicksey » Sun Oct 27, 2024 8:17 pm

You pay tax on your worldwide income here, including UK ISAs.

Just my personal opinion, but I believe the interest rates are better in the UK and there are no fees or costs. There are accounts like the NSandI Direct Saver account that is giving good rates of interest with instant access, but I'm fairly risk adverse when it comes to savings.

If you have an occupational pension from the Government (civil service etc) then you do declare it here but it is taxed in the UK. You can also choose to have your UK state pension taxed here and not taxed in the UK. I have completed a form for my gestor to deal with but it's early days as I have only just started to receive my state pension. As yet I'm not sure if or what tax I shall pay here, but I still won't be liable in the UK. I'm hoping that this will work out the best solution for me having a small civil service pension and a partial state pension.

We use Wise to transfer money from our UK bank into Euros for a small fee, and then send it on to the Spanish bank for free. We have a Euro and a sterling account with them.

As Fyfin says, there are complications if you have an annuity. I believe you have to have set it up yourself and paid for it to be accepted for the discount. If it's one set up by your employer then it's not. My OH's annuity is miniscule but he only has to declare 28% of it. There is also a discount for rental income. We'd previously had a UK rental property and only a % is taxable here (can never remember if it's 40 or 60%).

Fyfin is lucky to have a friend renting his house. We've got out of the long term rental business in the UK due to increasing red tape and it's something you'd have to consider carefully if you were thinking about buying a property here for long term rentals.

Our gestoria charges 110€ to complete our yearly tax returns each June (the tax year here runs 1 Jan to 31 Dec). The hacienda programme shows which way is most beneficial to complete the returns, as individuals or as a couple. We usually always do a joint return. I complete our UK tax returns but the system here is different so I leave that to our gestoria. Having said that, our finances are pretty simple and we have a low income, so we haven't needed advice on investments as such.

Good luck!

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Sun Oct 27, 2024 10:01 pm

That's really useful advice. We only have small private pensions (hubby has two small private pension annuities with Prudential) but still pays tax on them in the UK as together with his state pension it pushes him over the Personal Tax Threshold. Mine is negligible which is why I might consider buying a small apartment to rent here to top up my income. I think I will need a Gestoria to do out tax returns here but since retiring and giving up our property rental in the UK we don't receive tax returns anymore in the UK, so will I need to complete a tax return for our UK assets (mainly one savings account) in the UK ? Would we be better then leaving all our savings in the UK N,S & I savings account, as it seems either way we will pay tax on the interest over about £20,000 in the UK (we are allowed to receive £1000 each in interest in the UK at the moment but everything over that is 20% on the interest), so together I think just under £40,000 and we will be taxed on everything over that amount. I notice that the Spanish savings account interest rate is slightly lower here but as I say I don't know how it would impact our tax here, hence why I was asking the question of where to hold our savings. Perhaps a Gestoria can give me a better idea?

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby markwilding » Mon Oct 28, 2024 12:06 am

Wicksey wrote: Sun Oct 27, 2024 8:17 pm You pay tax on your worldwide income here, including UK ISAs.

Just my personal opinion, but I believe the interest rates are better in the UK and there are no fees or costs. There are accounts like the NSandI Direct Saver account that is giving good rates of interest with instant access, but I'm fairly risk adverse when it comes to savings.

If you have an occupational pension from the Government (civil service etc) then you do declare it here but it is taxed in the UK. You can also choose to have your UK state pension taxed here and not taxed in the UK. I have completed a form for my gestor to deal with but it's early days as I have only just started to receive my state pension. As yet I'm not sure if or what tax I shall pay here, but I still won't be liable in the UK. I'm hoping that this will work out the best solution for me having a small civil service pension and a partial state pension.

We use Wise to transfer money from our UK bank into Euros for a small fee, and then send it on to the Spanish bank for free. We have a Euro and a sterling account with them.

As Fyfin says, there are complications if you have an annuity. I believe you have to have set it up yourself and paid for it to be accepted for the discount. If it's one set up by your employer then it's not. My OH's annuity is miniscule but he only has to declare 28% of it. There is also a discount for rental income. We'd previously had a UK rental property and only a % is taxable here (can never remember if it's 40 or 60%).

Fyfin is lucky to have a friend renting his house. We've got out of the long term rental business in the UK due to increasing red tape and it's something you'd have to consider carefully if you were thinking about buying a property here for long term rentals.

Our gestoria charges 110€ to complete our yearly tax returns each June (the tax year here runs 1 Jan to 31 Dec). The hacienda programme shows which way is most beneficial to complete the returns, as individuals or as a couple. We usually always do a joint return. I complete our UK tax returns but the system here is different so I leave that to our gestoria. Having said that, our finances are pretty simple and we have a low income, so we haven't needed advice on investments as such.

Good luck!
A lot of stuff to get my head around. I started getting my UK pension in April with my Spanish one to follow this month. My first return will be next year with the pension instead of earnings that need to be declared. We have a rental income from the UK as well as other bits and pieces of such as interest and dividends. The bank doesn’t tax us at source as non UK residents. Until now filing our UK tax returns have been easy in the UK because between my wife and I, we are under the threshold to pay tax there so no tax to pay there we and only have to pay our taxes in Spain. I have decided not to taking anything from the private pension for the moment so that’s not a problem.
What I will have to deal with is the higher income from the UK , which might take me over the tax threshold and how these affects taxes here so it will be interesting to know how you both get on.
The amount of tax allowance on rental income is not the same throughout Spain because here it is only 22 per cent so I have to pay tax on the rest. I know this is much better in other regions of Spain.

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Wicksey » Mon Oct 28, 2024 11:53 am

https://www.gov.uk/apply-tax-free-interest-on-savings

It seems you may be able to have more savings untaxed if you look at this. It can bring your personal allowance up to 17,570 pounds using the 'starting rate for savings'. Have a look at the link.

I know we've had to do the UK tax return as we were non resident landlords, but now we're not I am hoping that I can avoid that.

May not be relevent, but if you have a UK rental property and sell that you have to pay CGT (NRCGT) there then it is set off against what is due here (for general info, you have 60 days to report it to HMRC after the sale, and the tax free allowance is now only 3000 pounds, although all of that may change of course). The UK will let you rebase the value of the property as at 2015 which lessens the blow a bit, but it's irrelevant really as the amount we shall pay here I think will be more anyway. All the UK CGT stuff can be easily completed and paid online.

My two small pensions will eventually just take me over the UK tax free allowance (presuming they remain frozen in the UK) which is why I am trying to get the state pension taxed here and not the UK. The past year my OH has just crept over the UK allowance but as I had a balance of allowances I was able to elect to give him something like an extra 1600 pounds' worth to him, meaning that he didn't pay tax (it was only due to be around 60 pounds, but we avoided that).

We are trying to simplify everything and now we are going to be getting partial state pensions it has meant that we've been able to give up the UK rental property much to our relief. We had excellent tenants but I don't want that responsibilty anymore, plus some of the new rules mooted about reaching certain EPC levels would have been unachievable for our tiny Victorian terraced house. It worked for us for the years we needed it, but I wouldn't choose to be a landlord again now.

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Mon Oct 28, 2024 1:15 pm

I was looking at that link and it says you can have some N, S and I accounts free of tax on interest but on looking, it is an ISA and you can't hold British ISAS's in Spain :( At least that is what I have been told!

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Wicksey » Mon Oct 28, 2024 1:23 pm

The NSandI Direct Saver is just an ordinary savings account so is OK. https://www.nsandi.com/easy-access-saving We have that one and it's just an instant access savings account with variable interest rates.

I think you're right about ISAs that only UK residents can hold those (NSandI do one called a Direct ISA: "Our Direct ISA is a cash ISA for customers aged 18 or over who are resident in the UK for tax purposes".).

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby markwilding » Mon Oct 28, 2024 1:29 pm

Dunflittin68 wrote: Mon Oct 28, 2024 1:15 pm I was looking at that link and it says you can have some N, S and I accounts free of tax on interest but on looking, it is an ISA and you can't hold British ISAS's in Spain :( At least that is what I have been told!
What banks require is a UK address so in theory it is possible to open one. My advice regarding banks is open one with variable rates which go up as well as down before you come out. Later living here it becomes more difficult and anyway, interest rates are better in the Uk at the moment.
Not having to pay tax on an ISA account has no benefit as a Spanish resident because i’d have to pay the tax here anyway so I transferred all the savings from the ISA I had in it to the variable one because the interest rate was stuck at a low rate.

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Mon Oct 28, 2024 1:47 pm

markwilding wrote: Mon Oct 28, 2024 1:29 pm
Dunflittin68 wrote: Mon Oct 28, 2024 1:15 pm I was looking at that link and it says you can have some N, S and I accounts free of tax on interest but on looking, it is an ISA and you can't hold British ISAS's in Spain :( At least that is what I have been told!
What banks require is a UK address so in theory it is possible to open one. My advice regarding banks is open one with variable rates which go up as well as down before you come out. Later living here it becomes more difficult and anyway, interest rates are better in the Uk at the moment.
Not having to pay tax on an ISA account has no benefit as a Spanish resident because i’d have to pay the tax here anyway so I transferred all the savings from the ISA I had in it to the variable one because the interest rate was stuck at a low rate.
We don't have a UK address any longer, we sold our property just recently so opening ISA's in the UK is out of the question. I thought you could keep your UK savings accounts when here so long as they are declared in the UK for tax and as hubby as two private pensions (small!), they just get taxed more as our income goes up above our Personal Allowances and I presume that includes the interest on savings accounts as I presume the interest is declared to the HMRC the same as with your pension increases, bank accounts etc. We only have an N, S and I Direct Saver account anyway.

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby markwilding » Mon Oct 28, 2024 3:15 pm

I am not sure what the critrea is but there was a thread a couple of years ago regarding bank acoounts being closed down for non UK residences. My understanding has always been that it's down to individual banks. I have accounts with Halifax, nationwide and Nat West, none of which have closed my accounts. It's many years since it organised anything but I think I had to fill out a form so any interest I get paid is net. I just have to declare it on my Spanish return.
The main problem is on accounts that become outdated and do not increase interest rates, even though the incial rate is higher, are no good because they always go that way whereas older variable rate accounts, which for UK residents are not the best value, are better for us.

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Mon Oct 28, 2024 3:40 pm

I actually checked with Santander (my account in the UK) if I could keep my current account and they converted to a "Basic" current account which means I get no access to an overdraft or any of the other perks offered with a current account. They said we could keep that account in Spain. As I said other than that we have our N, S and I account and presumably they will take the tax automatically as they do with our pensions every time they increase and go over the Personal Allowances limit which is being frozen again in the budget and which at the rate of this Government we will soon have kids with savings accounts paying taxes! :roll:

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby El Cid » Mon Oct 28, 2024 7:23 pm

Wicksey wrote: Mon Oct 28, 2024 11:53 am which is why I am trying to get the state pension taxed here and not the UK.
It's not a choice. Your UK State pension and any other income (apart from UK government pensions) will be taxed in Spain, and you must declare it even if it is currently being taxed in the UK. It is up to you to ask HMRC not to tax your pensions. If you do not do this, you will be taxed twice and have to sort it out with HMRC.

Sid

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby Dunflittin68 » Mon Oct 28, 2024 7:26 pm

El Cid wrote: Mon Oct 28, 2024 7:23 pm
Wicksey wrote: Mon Oct 28, 2024 11:53 am which is why I am trying to get the state pension taxed here and not the UK.
It's not a choice. Your UK State pension and any other income (apart from UK government pensions) will be taxed in Spain, and you must declare it even if it is currently being taxed in the UK. It is up to you to ask HMRC not to tax your pensions. If you do not do this, you will be taxed twice and have to sort it out with HMRC.

Sid
I thought you could choose which country you pay taxes in? Is that not the case then?

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Re: UK Banks for Expats in Spain/ Tax Planning

Postby El Cid » Mon Oct 28, 2024 7:53 pm

Most definitely not! If you are tax resident in Spain you pay tax on your total worldwide income. If you don’t apply to HMRC to give you a non resident tax code you will get taxed twice and have to reclaim the tax paid in the UK. It’s up to you to ask HMRC to stop taxing you. They won’t do it automatically. You need to declare your income in Spain and pay the tax, then when you can prove that to HMRC they will zero rate you. Don’t worry it will all sort itself out but you will need to manage it.

Also remember that any property you have in Spain will be liable to Spanish IHT.

Also make sure you make a Spanish will or you will not necessarily be able to leave your assets in Spain to who you wish.

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