Posted: Mon Jul 20, 2020 10:01pm
You need Spanish tax advice.
If you gain Spanish Residency between now and June 2021, you will be liable for income tax in Spain for Jan-Dec 2021 (more on that later).
As you plan to retire in March 2021 ... 2 things
(1) Your income for Jan-Dec 2021 will include 3 months of salary (not just pension). Assuming that you are NOT a UK Government employee, and are tax-liable in Spain, you will pay substantially more tax in Spain for Jan-Dec 21 than in the UK.
(2) If your retirement comes with a golden goodbye of some sort - e.g. a tax free lump sum from your pension - that lump sum MAY NOT be tax free in Spain.
You will not reconcile your taxes until 2022. You will submit Modelo 720 to declare your worldwide assets in Feb 2022. You will submit a tax return (for all sources of income) for Jan-Dec 2021 in June 2022. You will pay around 2/3 of your taxes at end June, with the 1/3 balance in November.
BUT, you will continue paying UK tax PAYE until after this. You claim back your UK tax AFTER you have paid your tax in Spain.
There is a significant cash flow issue to be managed.
You need to fully understand this to avoid a nasty surprise in June 2022.
If, at some point, you decide to sell your UK house, there may be Capital Gains Tax implications.
All good reasons to get tax advice.