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TAX
TAX
by QUESADALAD » Sun Mar 25, 2018 6:40 pm
Hi I Hope someone like Marcliff can point me in the right direction, as a resident now this has been my first year dealing with the taxes ,I thanks to my solicitor have paid the 2 installments in June and November and have since received a welcome refund plus a fiscal certificate saying i am now resident here,what is my next step now i get a state pension and a private pension from BritishGas my ex employee.
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Re: TAX
by marcliff » Sun Mar 25, 2018 6:59 pm
P85 (you can do it on line or download it and post it off) to HMRC to tell them you have moved abroad. They will then inform the people who pay your pension to pay it free of UK tax.
Of course, you then have to declare your income for this year on your Spanish tax return next year.
Of course, you then have to declare your income for this year on your Spanish tax return next year.
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Re: TAX
by shemarg » Sun Mar 25, 2018 7:56 pm
Be careful. My abogado deducted the tax I’d paid in UK in 2013 (my first year of residency and doing Spanish tax) I claimed a refund as advised for the uk tax paid which I received a year later. I have recently received a demand for the tax deducted from Spain as they say it was refunded by UK so due to them - plus interest for each year since.
Just be warned
Just be warned
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Re: TAX
by QUESADALAD » Mon Mar 26, 2018 10:31 am
Right , Thanks all, P85 I have never heard of that what site will i get it from the HMRC one ?
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Re: TAX
by Paulr » Mon Mar 26, 2018 2:47 pm
shemarg wrote:Be careful. My abogado deducted the tax I’d paid in UK in 2013 (my first year of residency and doing Spanish tax) I claimed a refund as advised for the uk tax paid which I received a year later. I have recently received a demand for the tax deducted from Spain as they say it was refunded by UK so due to them - plus interest for each year since.
Just be warned
Hi,
Just wanted to double-check this with you, as my wife has to do this for the first time this year: when you say your "abogado deducted the tax I'd paid in UK in 2013", do you mean they offset the tax you'd already paid in the UK for that year in your Spanish tax return? So then who advised you to claim a refund in the UK? That would mean you hadn't paid the tax due for that year in either country?
Also, does this suggest that you could have continued to pay tax in the UK and had an allowance for tax paid there offset in your Spanish tax return, so long as you didn't then claim a refund in the UK?
I understand the need to complete the P85 form for people who are drawing UK State Pension and have no other source of income, but my wife was told that as the income she earns from her rental property is generated in the UK, she has to pay any tax due there and have that offset against any tax liability she may have in Spain. If this is correct, does that mean she should NOT complete the P85 form?
She's called HMRC a couple of times; one of the responses was even, "We can't advise on Spanish tax", so it would be helpful to hear from any one is a similar position who has already been through this.
Thanks,
Paul
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Re: TAX
by marcliff » Mon Mar 26, 2018 3:40 pm
The P85 tells HMRC that any pension you have (except government ones like Police, Civil Service etc) should not have any tax deducted. So a private pension from a non-government scheme (an employers one, for example) will be paid with no tax in UK and you have to declare it here in Spain.
Tax on rental income is deducted in the country where you receive the rent but Spain expects you to declare that and offset the tax in UK against it.
It works the same for bank interest as well. You can send the P85 to your bank and they will pay interest with no tax deducted but the interest has to be declared in Spain for tax purposes (bit of a nuisance considering UK now pays up to 1000 pounds a year interest with no tax but the Spanish don't).
The line from HMRC states:
If you live abroad but are classed as a UK resident for tax purposes, you may have to pay UK tax on your pension. The amount you pay depends on your income.
If you’re not a UK resident, you don’t usually pay UK tax on your pension. But you might have to pay tax in the country you live in. There are a few exceptions - for example, UK civil service pensions will always be taxed in the UK.
If you declare the tax you have paid in UK on your Spanish tax return then claim the money back from UK you will be liable for Spanish tax on it as the deduction is no longer valid.
Tax on rental income is deducted in the country where you receive the rent but Spain expects you to declare that and offset the tax in UK against it.
It works the same for bank interest as well. You can send the P85 to your bank and they will pay interest with no tax deducted but the interest has to be declared in Spain for tax purposes (bit of a nuisance considering UK now pays up to 1000 pounds a year interest with no tax but the Spanish don't).
The line from HMRC states:
If you live abroad but are classed as a UK resident for tax purposes, you may have to pay UK tax on your pension. The amount you pay depends on your income.
If you’re not a UK resident, you don’t usually pay UK tax on your pension. But you might have to pay tax in the country you live in. There are a few exceptions - for example, UK civil service pensions will always be taxed in the UK.
If you declare the tax you have paid in UK on your Spanish tax return then claim the money back from UK you will be liable for Spanish tax on it as the deduction is no longer valid.
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Re: TAX
by QUESADALAD » Mon Mar 26, 2018 6:35 pm
Thank you Marcliff. thats very helpul as always
Regards
Regards
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Re: TAX
by Paulr » Mon Mar 26, 2018 6:55 pm
Thanks Marcliff. What my wife is confused about is whether it's mandatory to complete the P85 if you live outside of the UK?
In order to maintain her "Non-Resident Landlord" status, my wife has to complete self-assessment tax returns in the UK. This is her only source of income because, at 57, she's too young to receive UK State pension and her private pensions aren't paid until she's 60. Does the P85 allow you to opt out of some tax liability in the UK, in order to pay it in Spain, whilst paying other income tax, as has been indicated to her in relation to her rental income tax, in the UK?
Trying to get a definitive answer is like walking through treacle
In order to maintain her "Non-Resident Landlord" status, my wife has to complete self-assessment tax returns in the UK. This is her only source of income because, at 57, she's too young to receive UK State pension and her private pensions aren't paid until she's 60. Does the P85 allow you to opt out of some tax liability in the UK, in order to pay it in Spain, whilst paying other income tax, as has been indicated to her in relation to her rental income tax, in the UK?
Trying to get a definitive answer is like walking through treacle
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Re: TAX
by marcliff » Mon Mar 26, 2018 7:09 pm
The P85 is to do with tax taken at source from pensions. If she has no other income except the rental income then she does not need to complete a P85 as you can't get tax exemption on rental income.
Tax is liable in the country where the rental income is received so UK will continue to tax that. Same as if you were living in UK but renting out in Spain. You would pay Spain the rental tax and then declare it, with the amount of tax already paid, to the UK tax people.
She will need to complete the P85 before the private pensions are due to ensure that no tax is taken in UK and you don't get in the same situation as the poster who had to pay back taxes to 2013 once you get a rebate from UK.
The HMRC site says you should inform them and complete the P85 before moving abroad. By waiting, you will still be liable to tax in UK as they won't know.
Tax is liable in the country where the rental income is received so UK will continue to tax that. Same as if you were living in UK but renting out in Spain. You would pay Spain the rental tax and then declare it, with the amount of tax already paid, to the UK tax people.
She will need to complete the P85 before the private pensions are due to ensure that no tax is taken in UK and you don't get in the same situation as the poster who had to pay back taxes to 2013 once you get a rebate from UK.
The HMRC site says you should inform them and complete the P85 before moving abroad. By waiting, you will still be liable to tax in UK as they won't know.
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