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amount of tax to pay
Re: amount of tax to pay
by GLASSMAN » Sat Jun 03, 2017 8:36 am
That's a good informative post Marcliff,bit complicated for me to follow ,but very informative,if read slowly for me.thanks.
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Re: amount of tax to pay
by Espanabums » Sat Jun 03, 2017 10:12 am
I´m sorry Marcliff but the information you posted was incorrect in a couple of places.
Firstly, if you have a Government pension (Civil Service, Local Government, Police, Fire etc.) you are quite correct in saying that it is taxed solely in the UK and your UK personal tax allowance is applied. You are also correct in saying that your UK old age pension is taxed solely in Spain.
However, you do receive both a UK and a Spanish personal tax allowance.
Your UK taxes are fairly straightforward however, your pay tax on the difference between your total income and your personal tax allowance at 20% (if you do not fall into the higher rate tax bracket). Your total income for UK purposes includes, Government Pension, Interest and Dividends, UK rental income and Spanish rental income and any paid employments.
Your Spanish taxes are slightly more complicated. First of all your total Spanish income includes, UK Old age pension, interest and dividends, UK ISA interest, Lottery wins Above a certain amount, both UK and Spanish rental incomes (although you are not taxed on the full amount of these, and any UK tax paid is offset) and finally your UK Government pension is taken into account to see in which tax bracket you fall (you are not taxed on this but it may well push you into a higher tax bracket).
Your Spanish tax allowances are in 3 parts, first of all a general allowance of 2,000€ which reduces your total income. Your Spanish tax burden is then calculated at this stage and is then reduced by the application of your personal allowances.
Your personal allowance, depending on your age, reduces your tax burden by 19% of your allowance, the lowest rate of Spanish taxation.
Your earned income allowance is applied on a sliding scale so that the low earners get a high figure and the high earners get a lower figure or none at all. (Again at 19%)
To put this into perspective, I have a good UK government pension and UK rental income but no old age pension. My Spanish income consists of the UK rental income and a small amount of bank interest. The result is that I get a small tax refund on the tax already paid on my savings income. However when I do receive my UK old age pension I will be taxed, in simple terms, on the whole of it at a rate of 40%. (6,240 GBP @ 40% =2,496, you would need to convert into € equivalent)
Firstly, if you have a Government pension (Civil Service, Local Government, Police, Fire etc.) you are quite correct in saying that it is taxed solely in the UK and your UK personal tax allowance is applied. You are also correct in saying that your UK old age pension is taxed solely in Spain.
However, you do receive both a UK and a Spanish personal tax allowance.
Your UK taxes are fairly straightforward however, your pay tax on the difference between your total income and your personal tax allowance at 20% (if you do not fall into the higher rate tax bracket). Your total income for UK purposes includes, Government Pension, Interest and Dividends, UK rental income and Spanish rental income and any paid employments.
Your Spanish taxes are slightly more complicated. First of all your total Spanish income includes, UK Old age pension, interest and dividends, UK ISA interest, Lottery wins Above a certain amount, both UK and Spanish rental incomes (although you are not taxed on the full amount of these, and any UK tax paid is offset) and finally your UK Government pension is taken into account to see in which tax bracket you fall (you are not taxed on this but it may well push you into a higher tax bracket).
Your Spanish tax allowances are in 3 parts, first of all a general allowance of 2,000€ which reduces your total income. Your Spanish tax burden is then calculated at this stage and is then reduced by the application of your personal allowances.
Your personal allowance, depending on your age, reduces your tax burden by 19% of your allowance, the lowest rate of Spanish taxation.
Your earned income allowance is applied on a sliding scale so that the low earners get a high figure and the high earners get a lower figure or none at all. (Again at 19%)
To put this into perspective, I have a good UK government pension and UK rental income but no old age pension. My Spanish income consists of the UK rental income and a small amount of bank interest. The result is that I get a small tax refund on the tax already paid on my savings income. However when I do receive my UK old age pension I will be taxed, in simple terms, on the whole of it at a rate of 40%. (6,240 GBP @ 40% =2,496, you would need to convert into € equivalent)
Steve & Jill, Torrevieja
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Re: amount of tax to pay
by Paulr » Sat Sep 09, 2017 4:10 pm
Espanabums wrote:I´m sorry Marcliff but the information you posted was incorrect in a couple of places.
Firstly, if you have a Government pension (Civil Service, Local Government, Police, Fire etc.) you are quite correct in saying that it is taxed solely in the UK and your UK personal tax allowance is applied. You are also correct in saying that your UK old age pension is taxed solely in Spain.
However, you do receive both a UK and a Spanish personal tax allowance.
Your UK taxes are fairly straightforward however, your pay tax on the difference between your total income and your personal tax allowance at 20% (if you do not fall into the higher rate tax bracket). Your total income for UK purposes includes, Government Pension, Interest and Dividends, UK rental income and Spanish rental income and any paid employments.
Your Spanish taxes are slightly more complicated. First of all your total Spanish income includes, UK Old age pension, interest and dividends, UK ISA interest, Lottery wins Above a certain amount, both UK and Spanish rental incomes (although you are not taxed on the full amount of these, and any UK tax paid is offset) and finally your UK Government pension is taken into account to see in which tax bracket you fall (you are not taxed on this but it may well push you into a higher tax bracket).
Your Spanish tax allowances are in 3 parts, first of all a general allowance of 2,000€ which reduces your total income. Your Spanish tax burden is then calculated at this stage and is then reduced by the application of your personal allowances.
Your personal allowance, depending on your age, reduces your tax burden by 19% of your allowance, the lowest rate of Spanish taxation.
Your earned income allowance is applied on a sliding scale so that the low earners get a high figure and the high earners get a lower figure or none at all. (Again at 19%)
To put this into perspective, I have a good UK government pension and UK rental income but no old age pension. My Spanish income consists of the UK rental income and a small amount of bank interest. The result is that I get a small tax refund on the tax already paid on my savings income. However when I do receive my UK old age pension I will be taxed, in simple terms, on the whole of it at a rate of 40%. (6,240 GBP @ 40% =2,496, you would need to convert into € equivalent)
Thanks for this explanation, you're the first person I've encountered that appears to be in the same position as me and hubby. We're in our late 50s, so not drawing UK State Pension. We're not working here, so no Spanish income. Hubby has a UK military pension and I have UK income from a UK rental property owned solely in my name. Hubby pays tax at source so doesn't need to do a UK Tax return and I've just submitted my UK 2016/17 Tax Return. Couple of queries please:
- HMRC specifically state that ISAs do not need to be declared on the UK Tax Return, so why is this of interest to the Spanish tax authority?
- We own our property in Spain jointly (no mortgage) and understand we each have to submit a tax return here. For this purpose, I assume we would each declare the Spanish property, but hubby would declare his UK military pension only, and I would declare the UK property rental income only? Is that correct? Or do we each have to declare both his pension and my rental income?
Many thanks.
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