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TAX ON THE NEW STATE PENSION

Posted: Sun May 7, 2023 2:25pm
18 replies482 views4 members subscribed
kazmal57

Posts: 7

Location: Catral

Joined: 7 May 2023

Hi, I bet this question has been asked a million times before, but I have just reached retirement and have heard a lot of conflicting answers as to whether I will have to pay tax on THE NEW STATE PENSION to the Spanish govt.

I am a resident here in Spain.

I even called gov. uk and she didn't know!

Some have said 19% some have said none.

Many thanks

Karen,

Darro

Posted: Sun May 7, 2023 2:35pm

Darro

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Posted: Sun May 7, 2023 2:35pm

Yes you will, how much will depend on your worldwide income.

Being the new, state pension is immaterial.

Herefordjack

Posted: Sun May 7, 2023 7:36pm

Herefordjack

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Posted: Sun May 7, 2023 7:36pm

If you are resident, you are tax resident!

As Darro says, you have to submit an income tax return every year which lists ALL your worldwide income in the appropriate boxes on the form. So everything - all your pensions wherever they come from, savings account interest, any rental income you get from property, share dividends, etc, etc, etc.

There are tax allowances which will be off set against your income, just like in the UK.

If your income is sufficiently modest, you might end up not paying tax at all, but you still need to submit a return to get entered onto the system. This is a legal requirement.

Jack Dees

Posted: Mon May 8, 2023 3:41pm

Posts: 60

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Location: Crevillente

Joined: 8 Aug 2018

Posted: Mon May 8, 2023 3:41pm

Herefordjack wrote on Sun May 7, 2023 7:36pm:

If you are resident, you are tax resident!

As Darro says, you have to submit an income tax return every year which lists ALL your worldwide income in the appropriate boxes on the form. So everything - all your pensions wherever they come from, savings account interest, any rental income you get from property, share dividends, etc, etc, et...

...c.

There are tax allowances which will be off set against your income, just like in the UK.

If your income is sufficiently modest, you might end up not paying tax at all, but you still need to submit a return to get entered onto the system. This is a legal requirement.

Not entirely correct. I am retired and receive a police pension and a techer's pension. 

UK legislation classifies them both as "government pensions" and I pay UK tax on both. The Spanish respect the fact I am a UK taxpayer as we have a dual tax arrangement with them.

Strangely enough the state pension is not considered a "government pension".

Herefordjack

Posted: Wed May 10, 2023 6:46am

Herefordjack

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Posted: Wed May 10, 2023 6:46am

Jack Dees wrote on Mon May 8, 2023 3:41pm:

Not entirely correct. I am retired and receive a police pension and a techer's pension. 

UK legislation classifies them both as "government pensions" and I pay UK tax on both. The Spanish respect the fact I am a UK taxpayer as we have a dual tax arrangement with them.

Strangely enough the state pension is not considered a "government pension".

Yes, if you have crown pensions, you pay tax on them in the UK, but as a Spanish resident, you still have to submit a Spanish tax return which declares all your worldwide income, including your crown pensions in the appropriate section.

A crown pension is one arising from employment in various public sector jobs, it does not refer to the payment source of the pension.

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Sues007

Posted: Thu May 11, 2023 12:07am

Sues007

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Posted: Thu May 11, 2023 12:07am

Jack Dees wrote on Mon May 8, 2023 3:41pm:

Not entirely correct. I am retired and receive a police pension and a techer's pension. 

UK legislation classifies them both as "government pensions" and I pay UK tax on both. The Spanish respect the fact I am a UK taxpayer as we have a dual tax arrangement with them.

Strangely enough the state pension is not considered a "government pension".

Hello Jack

In which bit do I  you declare this.  I've been declaring my fire brigade pension as a normal pension.  I need to place this in the correct section but not sure where it goes on the form.  I know I need to fill in the double tax form too, is this correct?

Please can you tell me and thank you.

Sue 😘

John123456

Posted: Thu May 11, 2023 7:04pm

John123456

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Posted: Thu May 11, 2023 7:04pm

The two pensions you mention are both what are known as Crown Pensions (see 2nd link below) and although they are taxable in the UK this income should still have been reported to the Spanish tax authorities (if you didnt do so) on a yearly basis. These pensions do use up your Spanish personal allowances and lower tax rates. This can cause other income to be taxed at higher rates.

A pension paid by the social security system of any country is exactly what it says on the label,a state pension. State pensions from any country are treated as earned income by the Spanish system (see 1st link below)

You might find these links helpful:

https://www.spenceclarke.com/articles/when-a-pension-is-not-a-pension/

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm343040

oldcathcart

Posted: Sun May 14, 2023 12:13am

oldcathcart

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Posted: Sun May 14, 2023 12:13am

Jack Dees wrote on Mon May 8, 2023 3:41pm:

Not entirely correct. I am retired and receive a police pension and a techer's pension. 

UK legislation classifies them both as "government pensions" and I pay UK tax on both. The Spanish respect the fact I am a UK taxpayer as we have a dual tax arrangement with them.

Strangely enough the state pension is not considered a "government pension".

The dual taxationion agreement between the UK and Spain now works differently.  If your worldwide income (including pensions) is above a certain level you pay tax in Spain as a tax resident. As for the tax you pay in the UK you require to submit a dual income tax residency certificate to HMRC to enable no taxes to be paid in the UK at all.  If you would like a more comprehensive answer (I have just been through the process and got my UK taxes for the last 4 years repaid to me) as I paid under the Soanish tax system as a resident but had failed to fill in and submit the dual taxation exemption application to HMRC. Just request a private message.

Regards 

Alex.

Darro

Posted: Sun May 14, 2023 7:46am

Darro

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Posted: Sun May 14, 2023 7:46am

"The dual taxationion agreement between the UK and Spain now works differently"

Differently how?

DTTs are agreements between individual countries and were affected by Brexit so please specify what has changed and when with an authoritative link. Without that I'm afraid such a claim can only be regarded as speculation or hearsay.

Are you saying that you yourself have crown pensions on which tax is no longer being paid in UK and in fact have had past tax refunded?

oldcathcart

Posted: Sun May 14, 2023 10:01am

oldcathcart

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Joined: 2 Dec 2017

Posted: Sun May 14, 2023 10:01am

Darro wrote on Sun May 14, 2023 7:46am:

"The dual taxationion agreement between the UK and Spain now works differently"

Differently how?

DTTs are agreements between individual countries and were affected by Brexit so please specify what has changed and when with an authoritative link. Without that I'm afraid such a claim can only be regarded as speculation or hearsay.

Are you saying that you yourself have crown pensions on which tax is no longer being paid in UK and in fact have had past tax refunded?

Hello.  Correct.  I am busy today but will post the links and confirmations to this forum.  I was as surprised as you appear to be.

Best wishes 

Alex.

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