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View Full Version : Do I have to pay tax on a UK pension in Spain?



Biker
09-10-2013, 13:28
I have a fire brigade pension, would I have to pay tax on this in Tenerife, I pay tax on my pension in the UK even though I currently live in Thaialnd.

cressrt
09-10-2013, 15:50
You can choose to pay in UK or Spain under the double tax scheme, so long as you are non fiscally resident I believe.

garlicbread
09-10-2013, 16:05
If you spend more than 183 days in Tenerife in any one year you are obligated to pay tax in Spain, however you could then get your pension paid in the UK free of tax under the double tax agreement between UK and Spain. I would add that many ex pat Brits living in Tenerife for 183 days per year or more do not pay tax in Spain BUT recent changes in the sharing of fiscal information between UK and Spain means that it is inevitable that they will be caught out by the Spanish tax authorities eventually (sooner rather than later) and then be subject to Spanish tax and fines for late payment.

Tom & Sharon
09-10-2013, 16:40
All of that is based on the premise that you tell them where you are of course........

casabonny
09-10-2013, 20:17
If the Fire brigade pension is considered to be a government pension then it cannot be paid tax free in the UK but any UK tax paid can be credited in your annual Declaracion de la renta here.
I would expect the Fire brigade would not be considered a government pension but you need to check that with HMRC, some very strange cases have been classed as government pensions of late in my experience.
You cannot choose where you are fiscally resident itis a matter of fact and physical presence.

garlicbread
10-10-2013, 16:39
You cannot choose where you are fiscally resident itis a matter of fact and physical presence.


All of that is based on the premise that you tell them where you are of course........

I suspect/know there are loads of Ex Pat Brits (and no doubt other nationalities) living here under the radar but now it is only a matter of time before they are found...not if but when.....

junglejim
10-10-2013, 19:27
This is the new guideline for UK residency for tax purposes (a lot of reading !)
http://www.hmrc.gov.uk/international/rdr3.pdf

you can also try out the tool to work out status

http://tools.hmrc.gov.uk/rift/investigate/SRT+-+Combined/en-GB/Attribute~interview_Complete~global~global/qs%24s40%40Interviews_Screens_xint%24global%24glob al?user=guest

TOPGUN77
10-10-2013, 19:56
Surely it depends on how much your pension is,my wife and I get around £800 and is below the UK tax threshold and we don't pay tax as that is our only income.

casabonny
10-10-2013, 20:10
Surely it depends on how much your pension is,my wife and I get around £800 and is below the UK tax threshold and we don't pay tax as that is our only income.
The amount is irrelevant it is the fact , either you are resident here or in the UK not both.You cannot pick and choose which bits of legislation suit you and abide by them and ignore the facts of physical presense.

garlicbread , yes you are correct and many choose to ignore the situations in which they find themselves, and hope no one finds out!I have dealt with quite a few people of late to assist them in sorting out tax positions , and some indeed end up paying more here than they did in the UK , but at least they are fully legal and can sleep at night .

andy pandy
10-10-2013, 20:15
The amount is irrelevant it is the fact , either you are resident here or in the UK not both.You cannot pick and choose which bits of legislation suit you and abide by them and ignore the facts of physical presense.

garlicbread , yes you are correct and many choose to ignore the situations in which they find themselves, and hope no one finds out!I have dealt with quite a few people of late to assist them in sorting out tax positions , and some indeed end up paying more here than they did in the UK , but at least they are fully legal and can sleep at night .

We were told if we live in Tenerife the first year we would ahve to pay Spanish Tax AND UK tax on our pensions and then we could claim the UK tax back.

casabonny
10-10-2013, 20:25
We were told if we live in Tenerife the first year we would ahve to pay Spanish Tax AND UK tax on our pensions and then we could claim the UK tax back.

That depends on when you first became fiscally resident .For a short period of time you may have to have paid tax here before the UK accept your NON resident status.Some companies here have and do fail to deal with these things in the correct manner, causing the client to suffer unnecessary delays and thus payment of double tax when it should have been dealt with in a proper and timely manner in the first place.
Normally the UK HMRC deal with any such claims as a priority and a six week , although often sooner , turn around is experienced.

cressrt
10-10-2013, 20:57
I can concur this Casabonny helped us and I had a refund from the UK within 2 weeks, the previous "company" we had used had failed to sort this for over 2 years!!!

garlicbread
11-10-2013, 18:28
Tax dodgers in Spain beware........http://newsinthesun.com/fight-against-fiscal-fraud-government-says-its-winning/

balcon
15-10-2013, 11:19
Does the tax just relate to private pensions, or do you have to pay tax on the UK state pension

casabonny
15-10-2013, 12:59
A UK state pension is not taxed at source but is in effect taxed as a restriction is made in you PAYE code that is applied to you works pension thus the tax is paid this way.if your only source is UK state pension , which would normally be under the UK tax threshold then the above would not apply.you should if fiscally resident here still make a Declaracion de la renta even if the result is nil.

Goldenmaniac
15-10-2013, 13:15
We were told if we live in Tenerife the first year we would ahve to pay Spanish Tax AND UK tax on our pensions and then we could claim the UK tax back.
That is normally the way it works in the first year because if you are not employed or self employed here then the first time the Spanish tax office knows about you and will issue the appropriate certificate of fiscal residence in Spain (either manually or digitally) is when you do a declaración de la renta here (annual residents tax return) - which is from end april to end june following the Spanish tax (calendar) year in Question. You can then claim back the overpaid UK tax under the double impositions agreement. But from then on tax should not be deducted at source in the Uk unless it derives from a "functionary's pension" (local authority, teacher, etc.)

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As CB says it is often useful to make a nil declaración de la renta in order to establish fiscal residency here for things like inheritance tax purposes etc.