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Income from property in UK taxed in UK and Spain

Re: Income from property in UK taxed in UK and Spain

Postby Espanabums » Wed Nov 09, 2022 11:45 pm

To be truly factual here, UK rental income is taxable both in UK and Spain. Usually you get better relief in Spain as it is deemed a public service so the excess of income over expenditure is not all taxed. However, if you have no other income that is taxable in UK, your UK tax allowance will be offset against your rental income and you will have to pay extra tax in Spain. UK gets first dibs on the income and this will be netted off against the calculated Spanish tax on your UK rental income. If your UK tax allowance is all used up by your government pension in UK, then you will pay a full 20% on your excess of income over expenditure on your UK rental income, and will almost certainly pay no more tax on it in Spain. Two caveats however, you must be able to prove that your UK property is let on a long term basis, and it is let to a family and not to a business. This can prove difficult as most UK rental agreements are on a rolling six months agreement. You need to get a signed statement from your tenants,and your letting agent,if you have one, to this affect.

If you have a UK government pension,then it is only taxable in UK and cannot be taxed in Spain. However,you need to declare it in Spain as Exempt income. This has the effect of increasing your total income in Spain and therefore will push your Spanish tax burden into a higher tax bracket. (If you have no Spanish income then it will make zero difference)

I have a UK government pension and a UK old age pension, and also have had some UK rental income so am quite well versed in both UK and Spanish tax systems if you have any further queries.
Steve & Jill, Torrevieja
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Re: Income from property in UK taxed in UK and Spain

Postby EdOD » Fri Nov 11, 2022 9:12 am

marcliff wrote:Are you saying you are paying tax in full in UK and Spain on the same rental income?
In which case you need to get a new accountant. Several have been recommended on here and I believe SGM in Benijofar are fully aware of these types of procedure.

However, it's quite an easy thing. On the income tax return is a box which asks for rental payments overseas and the next box is the tax paid on that income. They should then assess the amount you paid in UK (I think it's 20%) compared with that in Spain (which is 24%) and you should only pay the difference if any. The person doing the return should be aware of the allowances you can claim. These type of payments are governed by the dual tax agreement between UK and Spain.

You should also get an annual statement from HMRC on the tax you have paid as you should get with your government pension (I get an annual P60 from the pension providers).

Advice: find a different accountant or solicitor.



Good morning marcliff.

You refer to two boxes on the 'income tax return' which ask for rental payments overseas and the 'tax paid on that income'. Are you referring to boxes on the spanish MODELO 100 TAX return, and if so which box numbers - the sample I have in front of me has every box numbered in a little circle? Or are you referring to a different form?
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