Taxes for non-working residents - Page 2

Kimmy11 wrote on Sun Feb 9, 2020 8:09pm:

Hi Mags,

Sorry for slow response, as I've been out most of the day and just catching up with the forum.  

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Sarah Green has answered your questions very well.  We moved to Spain in 2016, but because we were here less than 183 days in that year, we were taxed as Non-resident in 2016 and then as Resident from 2017 onwards.

As Sarah says, you can't choose where you are domiciled for tax purposes.  Whilst HMRC's Statutory Residence Test refers to familial links, it initially states that, "If you’ve been in the UK for 183 or more days you’ll be a UK resident. There is no need to consider any other tests."  Conversely, if you spend 183 days (6 months + 1 day) in Spain in the year, you are tax resident by default in Spain, even if you haven't obtained the green residency certificate.  So, I agree with Sarah, make sure you don't exceed 182 days in Spain this year and aim to get your residency in the second half of the Spanish tax year, i.e. between July and December.

Kind regards, 

Kim

Mags03169 wrote on Mon Feb 24, 2020 5:25pm:

Hi Kimmy , many thanks for answering my questions. Can I also ask (apologies as my understanding of anything mathematical is dreadful) but is there an easy way of working out how much income we can have before being taxed in Spain ? I know there are different kinds of “ allowances “ but I cou...

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...ld do with some help understanding them .

jimtaylor wrote on Tue Feb 25, 2020 5:19am:

For an overview of allowances, look at:

https://www.costablancaforum.com/area/la-marina-spain-72/taxes-suma-nie-tax-advice-in-la-marina-25/residents-income-tax-allowances-20054/

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Under 65 you don't incur tax if income is below €13115.

65 or over it's €14265.

jimtaylor wrote on Tue Feb 25, 2020 9:02am:

That's because on top of the personal allowance, there's an additional €2000 just for having pension or earnings income, then another allowance of up to €5565 which varies depending on your circumstances.

Would you like to nip across and make my day!

jimtaylor wrote on Wed Feb 26, 2020 5:01am:

Thanks for the kind offer, but I was only joking, as you no doubt gathered. In the last couple of weeks, Margaret has made a lemon cake, barm brack, and lemon meringue pie, so I'm well supplied with goodies (that I shouldn't eat because I'm diabetic). She's also made fruit teacakes, wholemeal bre...

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...ad, and spelt bread. I'm a lucky man.

Kimmy11 wrote on Fri Feb 28, 2020 3:12pm:

Hi Mags,

Apologies, one thing I forgot to check in my previous post: do you submit UK self-assessment tax returns in respect of your rental property?  If so, you cannot remove yourself from the UK tax system, as per this quote from an HMRC internal manual on "Residence, Domicile and Remittance Basis"...

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... tax:

"If the individual is within self assessment

The form P85 should be rejected if there is a continuing source of UK income. You should advise the customer that as he has a continuing UK source of income the Self Assessment Return issued at the end of the tax year should be completed in the normal way."

In case you're not aware, once you are resident in Spain, you cannot submit self-assessments online, they need to be printed out and submitted by post.  HMRC's system does allow you to prepare them on the online system, to make notes and produce the tax due calculation, which I then print out and send the paper copy to HMRC.  In fact, the system will still allow you to submit them online, but if you do this once you have received your 'Non-Resident Landlord' status, you'll get a £100 fine for doing so.

Kind regards,

Kim