TaXmas for Residents

Hi Patrick. More info needed in order to answer your question.

I take it that you are now living here, but please confirm, and advise roughly when you moved here.

To make sure I understand you correctly, is your €8000 the military pension or state retirement pension?

What are your ages, as at 31st December this year?

Hi Jim

Thanks for replying.     Our ages as at 31 Dec 2017 are:   me 68, wife 69.  We moved here 1 Nov 2016 although Residency Certificate says 1 Feb 2017.

Thestate pension figures are not correct.  They are as follows:

Me:    £170.96 per week

Wife:  £147.31 per week

These figures are taken off the official DWP letter.  As you know state pension is paid every 28 days.  I do not know what exchange rate the Spanish tax authorities use.   The other figures I gave on savings are correct.  We do not own property in UK or Spain.   We are just rent here.   Hope this helps.    Happy Christmas

Patricky O'Neill

Hi Jim

Should have said the military pension is taxed at source by HMRC and paid into my UK bank accounot. 

Patrick

Thanks - just come back in from the cold, so I'm doing this whilst having a brew.

So you'll be doing your first tax return next April-June for calendar year 2017. You have to do this for your first year of residence even if no tax is due.

Income:

Patrick income £170.96 x 52 @ 1.2 = €10668

Mrs P income £147.31 x 52 @ 1.2 = €9192

Note 1: I'm just using 1.20 as a notional exchange rate for now.

Note 2: check your bank account for details - it's the date that pensions hit the bank account that matters.

Note 3: again check your account for actual amounts received, as I assume there will have been a slight increase from April onwards.

Note 4: The military pension only comes into the calculation here if you've got tax to pay, as it only affects the rate at which the tax is calculated.

Allowances:

Personal:

Both aged between 65 & 75, so personal allowance €6,700

Special:

Both receive earnings related income, so there is an extra €2,000 allowance - assuming this is still the case for 2017 returns.

Earnings related Personal Allowance:

If earnings related income is less than €11,250, the allowance is €3,700.

If earnings related income is between €11,250 and 14,450, the allowance is:

€3,700 less 1.15625 x (earnings related income - €11,250)

Over €14,450 you don't get anything

On these criteria, you both qualify for the full €3,700

Calculation Patrick:

Earnings related income  €10668

Less €2000 allowance for having earnings = €8668

Less €3700 earnings related allowance = Taxable pre apply personal allowance €4968

Less €6700 personal allowance = Unused allowance of €1732 

Savings related income less than this, so no tax due.

Similarly, no tax due by Mrs P

Hi Jim

Your help is invaluable as always.  I worked in accounts for 16 years so whilst I am a sort of expert on the Purchase Ledger I have never worked on Wages or Tax.     Don't understand Earnings Related Allowance, we are pensioners and don't work.

We are in a bit of a tizzy as my younger sister died yesterday, just 57.   Too young to go. We are heading home tomorrow for the funeral.

Have a very Christmas you and your family.

Patrick

You're welcome, Patrick, and my sincere condolences.

Don't bother about the various allowances - it's just the strange way things work out here. They regard a pension from whatever source as ultimately being derived from working. I'm sure they just want to make things complicated - e.g. you can't just add the various allowances together.

Thanks Jim.    Have a good holiday.    Patrick