TAX ON THE NEW STATE PENSION - Page 2

If true then I think there will be a lot more than me surprised!

Any refund made on that basis will of course need to be declared for tax in Spain potentially creating a larger bill by pushing you into higher tax brackets.

Edit:

Just been looking at the DTT on the Agencia Tributaria web site and the last update noted there was in May 2014.

Similarly UK/HMRC show no changes or amendments from the same TIME.

https://www.gov.uk/government/publications/double-taxation-united-kingdomspain-si-1976-number-1919-form-spain-individual

I called HMRC and they confirmed this.  Will save me money for my particular financial circumstances.

Alex.

For all non government pensions. Government pensions will still be taxed in UK and those which are, and are not, are listed here

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

That's still the same and you must complete a FD9 Spanish personal to claim back tax on the non government pensions. 

The note in completion guidance spells that out: "UK government and local authority Pensions paid by the UK for service to the UK government or local authority are taxable in the UK." 

Problem is, the amount not taxed in UK is much higher than here in Spain. Personal allowance UK is £12.570 but here in Spain, even if you're old like me, is only €6700. They add all income, including the ones that aren't taxed in Spain, and set your tax rate at that. In my case, my government pension eats up all the personal income level and then I'm taxed at 24% and 30% on my other, non government, pensions including the state one. UK my annual tax on the non government pensions was around £1200 (plus the tax on the government pension which, of course, I still pay) a year. Because they then tax my state pension and private pension at the higher levels in Spain, this year it worked out at €2970 for the year which is about 250 less than last year since they cut the rates. 

If they did stop taxing government pensions in UK and only in Spain, my tax bill would be much, much higher.

Thank you. Helpful.  My Spanish tax over the last 4 years has been a minimum of 4000€ per annum

HMRC calcilated I would be saving around 800 - 1000€ per annum.  Suppose it depends on your incime streams - I have several.

Best regards,

Alex.  Coveta Fuma.

So nothing different then, only you not having submitted an FD9 'Spain Individual' form.

Have you been declaring that UK income gross or net of UK tax?

If gross then you will probably get away with pocketing the refund and saying nothing, if net then you will have to declare it on your next return which will inflate your liability and because of that you will pay more than if it had been declared correctly each year.

Thank you so much for your diligence.  I am content in my own (albeit tardy) outcomes.

Best

Alex

I was wondering if anyone knows how the tax on UK company shares work when a Spanish resident? Currently we are UK residents planning to move to Spain under the NLV scheme. I understand you would pay tax on any dividends we receive. However, if the company share price increased, and consequently the value of your holdings, would I be right in assuming you would only pay capital gains tax when you sold the shares?

If that is the case, presumably it would make sense to bed and breakfast any shares we hold (if they have increased in value) as any future sale would also mean we pay tax on the accumulated value of the holdings prior to moving to Spain.

Hope that makes sense.

You don't get taxed on actual holdings. For example, if you own a house in UK you have to declare it as an overseas asset. Regardless of the price increasing you don't pay tax on that increase. You do, however, have to pay capital gains on the difference of what you bought it for and the price you sold it for. Same for shares.

If the price rises by more than 20,000 euro, you have to re-declare the asset.

When the capital gain or loss is generated from the transfer of an asset, it is calculated by deducting the previous acquisition value from its transfer value; otherwise, the capital gain or loss is the market value of the asset.

Capital gains arising from transfers of assets are included in savings income and are taxed at the corresponding progressive tax rates of between 19% and 28%.

Thanks Marcliff.

For clarity. If I purchased 10000 shares at £1 in 2020 and sold 10000 at £1.50, after becoming Spanish tax resident in 2024, I would have a capital gain of £5000 to pay tax on? However, if I had sold them at £1.50 and repurchased them prior to becoming a Spanish tax resident, the capital gains tax would be reduced by £5000 on any disposal?