Tax on my UK assets and implications on moving to Spain

marcliff wrote on Tue Jan 23, 2024 7:32pm:

Firstly, if you become resident in Spain and then sell your house in UK you will be liable for CGT in Spain if you sell it in the same year you become tax resident in Spain (you become tax resident in the first calendar year you spend more than 6 months in Spain). Becoming tax resident in Spain m...

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...eans you can no longer claim your UK property as your primary residence. Therefore downsize in UK first. 

Secondly, all your world wide income, including pensions and bank interest, dividends from shares and so on, become liable for income tax in Spain once you become resident. You must inform the HMRC on a Form Spain Individual with the accompanying certificate of fiscal residency from the Spanish tax authorities. HMRC will then stop charging tax on your pension etc. The only exception to this is government or crown pensions (such as armed forces, police, civil service etc) which will be taxed in UK only but taken into account in Spain to determine your tax level (eg it takes up your tax free allowance).

The important thing on disposing of property is when you do so. If you take out residency in Spain in the first 6 months of the year, even if it is May, you will become liable for taxes, CGT and income etc) for the entire year. If you take out residency in the second half of the year you will not be liable for taxes in that year at all. 

Sell your primary residence in UK in the year you become tax resident will mean CGT on the profit since you bought it which could be substantial. Selling in UK for a smaller one and then becoming tax resident in Spain after July will only mean CGT on the property you downsized to since the time you bought it which will be considerably lower. IF you become tax resident in the year after you sold it, that is. 

You need to carefully weigh up the best time to sell your UK property and compare it to the time you take up residency in Spain.

eg. Sell your UK house in, say, April 2025 and become resident in Spain in May 2025 then you pay CGT in Spain. But, take up residency in, say, August 2025 and sell your UK home at any time in the same year then no CGT to pay as you will not become tax resident until 2026. Anything before 2026 will not even be noted by the Spanish tax authorities. 

marcliff wrote on Tue Jan 23, 2024 7:32pm:

Firstly, if you become resident in Spain and then sell your house in UK you will be liable for CGT in Spain if you sell it in the same year you become tax resident in Spain (you become tax resident in the first calendar year you spend more than 6 months in Spain). Becoming tax resident in Spain m...

Read more...

...eans you can no longer claim your UK property as your primary residence. Therefore downsize in UK first. 

Secondly, all your world wide income, including pensions and bank interest, dividends from shares and so on, become liable for income tax in Spain once you become resident. You must inform the HMRC on a Form Spain Individual with the accompanying certificate of fiscal residency from the Spanish tax authorities. HMRC will then stop charging tax on your pension etc. The only exception to this is government or crown pensions (such as armed forces, police, civil service etc) which will be taxed in UK only but taken into account in Spain to determine your tax level (eg it takes up your tax free allowance).

The important thing on disposing of property is when you do so. If you take out residency in Spain in the first 6 months of the year, even if it is May, you will become liable for taxes, CGT and income etc) for the entire year. If you take out residency in the second half of the year you will not be liable for taxes in that year at all. 

Sell your primary residence in UK in the year you become tax resident will mean CGT on the profit since you bought it which could be substantial. Selling in UK for a smaller one and then becoming tax resident in Spain after July will only mean CGT on the property you downsized to since the time you bought it which will be considerably lower. IF you become tax resident in the year after you sold it, that is. 

You need to carefully weigh up the best time to sell your UK property and compare it to the time you take up residency in Spain.

eg. Sell your UK house in, say, April 2025 and become resident in Spain in May 2025 then you pay CGT in Spain. But, take up residency in, say, August 2025 and sell your UK home at any time in the same year then no CGT to pay as you will not become tax resident until 2026. Anything before 2026 will not even be noted by the Spanish tax authorities.