Paying Income Tax on my and my wife State Pension

Patrick - you obviously haven't read my posts about residents' income tax. They answer your questions.

I'm progressively posting the full monte about tax, which will culminate next April in how to do your own returns.

Ref your military pension, that will still have to be declared here. You won't directly pay tax on it, but it will affect the rate at which you are taxed, assuming that some tax will be due. It depends on your ages whether or not you will be liable for tax.

Thanks Jim, very helpful.    By the way I am 68 and my wife is 69.      Regards.   Patricj

At those ages, and assuming they don't drop the addition €2K allowance for having income, then there probably won't be any tax to pay.

Irrespective of this, you must still do tax returns for your first full year of residence - 2017 - to be done April to June next year. Make sure you've read my post about registering with Agencia Tributaria.

Watch this forum and I'll tell you how to do it yourself.

Be warned - I've had a lot of experience with tax returns, and not one of those I've seen that has been done by a Spanish 'expert' has been correct. If a return is incorrect, and is found out, it's not the 'expert' who will be penalised; it's you.

Thanks Jim, I will follow your advice, I have paid income tax for 50 years and will of course continue to do so.       Best to not owe either UK or Spanish tax authorities unpaid taxes.   Regards.  Patrick

I'm always willing to help, especially someone who wants to do the job properly, Patrick.

As you may now be aware, you're in the fortunate position where you get tax allowances in both UK & Spain. So the tax you pay should reduce considerably.

Thanks Jim.      Your help has been invaluable.    I will keep in touch through this forum.     Patrick

I get heartily sick of the ex-pats who don't do tax returns here - they're defrauding Spain and they're also defrauding me.

Personally, I think you'd get away with not doing the non-resident return for 2016, but if it's not going to cost you much, then do it for peace of mind.

To be as concise as possible:

If you're resident here, irrespective of whether or not you've got a residencia certificate, you are legally obliged to pay tax here on your worldwide income, with some exceptions.

The principal exception is that a UK pension in relation to employment by the state is taxed in the UK. However, it is still declared here and can affect the rate at which tax on non-exempt income is calculated.

Tax paid in the UK can be offset against tax due here. You won't necessarily get 100% of UK tax offset against Spanish tax - it depends on your level of income.

Once you've submitted a tax return here, you can do the necessary to get out of the UK Inland Revenue system (apart from the military pension). You'll receive a notice of coding, but this will be NT - no tax. I'll be posting a 'how to' on this in due course. At the time, I was quite chuffed at giving the Inland Revenue the elbow.

With reference to your comment about 'complicated', doing the actual tax return isn't complicated (in my opinion). Working out all the taxable amounts you received in a calendar year, then finding and applying the exchange rate for amounts received in sterling, can obviously take you a bit of time. 

For example, this April I'd got all my figures ready. I then spent five minutes getting a number from Hacienda which allowed me to access my tax return. It took about fifteen minutes to do the return itself.- once I'd understood the new online system.

What is complicated is how the calculations are done - horrendously complicated, and it took me a long time to get an understanding of this. However, Hacienda's computer does all the calculations, and instantly gives you a bottom line result.

I've already got several more tax topics to post, once I've finished polishing them. If I remember, I'll add a new one about how the actual calculation is done.

Hi Jim , I've been reading your posts on taxes, we moved to Spain last year and have residency, my wife is on a uk state pension of £7943 per year and I am on a small company pension of £2400 per year do we have to declare this in Spain and pay tax here on these pensions would be grateful for your info

Many thanks

Angela

Hi Angela

You do have to do initial tax returns here, for calendar year 2107, even though the £2400 recipient won't have any tax due. 

Ref the £7943, without knowing more details, principally age, I can't do a calculation, but I doubt if any tax would be due.

If I had enough info to run a calculation and found out that tax would be due, then I'd also run a calculation for a joint tax return, to see if that produced a more favourable result.