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Tax advice.

Posted: Mon Oct 30, 2023 3:44pm
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PedroB

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Tax question 1.

My scenario is: I stop working in the UK in July 2024 and move to Spain on a NLV in say September 2024. In June 2025 when I turn 55 I cash in a small pension say to the value of £50,000. In the UK 25% of this would be tax free then I would pay tax on the remainder at the standard tax rate.

My question is will I be taxed on the whole amount in Spain?

I know that since I am moving in the second half of the year, 2024 will not be looked at by the Spanish tax and I will need to declare 2025 income early 2026 but this will still bring my pension in the equation if I cash it in 2025. Hope this make sense.

Tax question 2.

My partner and I own a house which is in joint names in the UK which we intend to rent out when we move to Spain on the NLV. My question is can the rental income go against my partners tax allowance in Spain only or does it need to go against us both?


Posted: Mon Oct 30, 2023 4:41pm

marcliff

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Posted: Mon Oct 30, 2023 4:41pm

For the first part, see this link

https://spectrum-ifa.com/taking-a-lump-sum-from-your-pension-when-resident-in-spain/

But would need the advice from a solicitor here who is up on tax details.

For the second part, the property in UK will be taxed in UK. You declare it in Spain but any tax on the rent will be offset with the tax you have paid in UK as you don't get taxed on the same income twice. 

Again, see a solicitor or tax specialist. 

Posted: Tue Oct 31, 2023 8:09am

PedroB

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Posted: Tue Oct 31, 2023 8:09am

marcliff wrote on Mon Oct 30, 2023 4:41pm:

For the first part, see this link

https://spectrum-ifa.com/taking-a-lump-sum-from-your-pension-when-resident-in-spain/

 

Read more...

But would need the advice from a solicitor here who is up on tax details.

For the second part, the property in UK will be taxed in UK. You declare it in Spain but any tax on the rent will be offset with the tax you have paid in UK as you don't get taxed on the same income twice. 

Again, see a solicitor or tax specialist. 

Thanks Marcliff, so as well as paying tax in Spain do we remain UK tax payers(rental income only) for as long as we rent out our UK property even after the 5 year of the NLV process and become permanent residents?

Posted: Tue Oct 31, 2023 9:28am

marcliff

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Posted: Tue Oct 31, 2023 9:28am

You pay tax in the country where the property is situated. It's the same for people who rent property in Spain but live in UK, they pay tax in Spain. You declare it on your Spanish income tax return but, as said, due to the dual tax agreement the amount of tax you pay in UK is taken into account. 

Also be aware that, if you sell your property in UK, as a Spanish resident you will be liable to Capital Gains Tax in Spain which could be a lot depending on the increase in value since you bought it.

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