Capital Gains Tax After Brexit

You need to sell your UK main home before you become tax-Resident in Spain.

The Spanish tax year is Jan-Dec.

If you gain your TIE between Jan 1st and end June in any year, you become tax-Resident with effect from 1st Jan that year.

If you gain your TIE between end June and end Dec in any year, you become tax-Resident on 1st Jan the following year.

So think carefully about the dates.

In Spain, tax is paid a year in arrears. So if you become tax-Resident on (say) 1/1/23, you will submit your modelo 720 form in Feb 24. In June 24 you will submit your income tax return for Jan-Dec 23. You will pay your 2023 tax in 2 chunks ... June/early July and November.  

Note ... if you own any other property in the UK (such as a rental property), and you sell it after you gain tax-Residency in Spain, you will pay CGT in the UK and again in Spain. 

Thanks Kelvin,

That confirms that we would sell up and move over to Spain between June and December rather than the early part of the year.

Does Spain and the UK not have the "Dual Taxation Agreement" any more?

Thanks

J

Yes. The non-double-taxation treaty endures.

BUT ... it applies to income tax, not completely to CGT. We recently sold a UK rental property. We declared/paid CGT to HMRC. We also declared to Spain; we had to pay the Spanish CGT (with the value previously paid to the UK deducted). 

Also ... beware ... there is a period of double taxation to be planned for. If (as an example from above) you become tax-Resident on 1/1/23, you will submit your modelo 720 form in Feb 24. In June 24 you will submit your income tax return for Jan-Dec 23. You will pay your 2023 tax in 2 chunks ... June/early July and November 2024. BUT you carry on paying UK tax PAYE.

In Sept 2024 you will be able to submit forms to the Spanish tax authorities (2 identical forms, one in English, one in Spanish). They will check your tax status and then issue you a certificate. You send the certificate and the English version of the form to HMRC, who will zero-rate your tax code and reimburse tax paid in the UK since 1/1/23. This may not complete until 2025, so you will have >2 years of double taxation to deal with.

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

Some forms of income remain taxable in the UK (Crown Pensions - military, Civil Service, Police, Local Authority, some nurses, etc.) but must still be reported in Spain.

Hi Kelvin,

Once again you have answered my question very clearly and concisely.

You have been a massive help and have put my mind at rest which is much appreciated!

Thanks again.

J