Join Talk Quesada
Welcome to Talk Quesada! My name's Alex and this is my website all about Ciudad Quesada in Spain. Talk Quesada is free to sign up and use so register below!
Taxation of pension lump sum
- jpeg
- Posts: 9418
- Joined: Tue Jun 27, 2017 11:24 am
- Which part of Spain are you from?: Dolores
- Gender: Male
Re: Taxation of pension lump sum
by Katie34 » Sun Jan 20, 2019 11:46 am
This was really helpful information from marcliff as I have been trying to fine out about tax on my UK local government lump sum. Can you please point me in the right direction to find information to pass to my accountant - is there something on HMRC website? Thank you
- Katie34
- Posts: 2
- Joined: Sun Jan 20, 2019 11:37 am
- Which part of Spain are you from?: Andalucia
- Gender: Female
Re: Taxation of pension lump sum
by Anniep » Sun Jan 20, 2019 8:08 pm
Any recommendations for an accountant for completing our resident tax returns? I’m not enitirely confident is the girl we are using so thinking g of changing.
-
Anniep - Posts: 1444
- Images: 0
- Joined: Wed May 04, 2016 5:10 pm
- Location: Lo Marabu
- Which part of Spain are you from?: Lo Marabu
- Gender: Female
Re: Taxation of pension lump sum
by Katie34 » Wed Jan 23, 2019 1:47 pm
Sorry we are too far away to know accountants in your area. Back onto the question of local government lump sums I am being told that these are taxable in Spain, if anyone has evidence that they are not it would be really useful. Thank you.
- Katie34
- Posts: 2
- Joined: Sun Jan 20, 2019 11:37 am
- Which part of Spain are you from?: Andalucia
- Gender: Female
Re: Taxation of pension lump sum
by Thatch1 » Wed Jan 23, 2019 2:02 pm
I deferred my pension for 3 years in the UK. A few months ago I received my lump sum of £20000. However, it was taxed at 40%, so they kept back £8000 of the lump sum in tax, and I only received £12000 in the end.
-
Thatch1 - Posts: 119
- Joined: Tue Feb 17, 2015 3:37 pm
- Which part of Spain are you from?: Rojales Hills X1
- Gender: Male
Re: Taxation of pension lump sum
by jpeg » Wed Jan 23, 2019 7:36 pm
Had you consulted a good Financial adviser you would have been able to save paying all that tax .
- jpeg
- Posts: 9418
- Joined: Tue Jun 27, 2017 11:24 am
- Which part of Spain are you from?: Dolores
- Gender: Male
Re: Taxation of pension lump sum
by Thatch1 » Wed Jan 23, 2019 10:35 pm
jpeg wrote:Had you consulted a good Financial adviser you would have been able to save paying all that tax .
How do you know my financial position to say that? I worked in the financial industry all my working life....I advised myself!!!!
-
Thatch1 - Posts: 119
- Joined: Tue Feb 17, 2015 3:37 pm
- Which part of Spain are you from?: Rojales Hills X1
- Gender: Male
Re: Taxation of pension lump sum
by Shiva » Wed Jan 23, 2019 10:59 pm
Thatch1 wrote:I deferred my pension for 3 years in the UK. A few months ago I received my lump sum of £20000. However, it was taxed at 40%, so they kept back £8000 of the lump sum in tax, and I only received £12000 in the end.
Am assuming you mean you were fiscally resident in the UK at that point and taxed by the UK authorities? It doesn't sound like Spanish tax rates.
In which case neither does it sound like you are talking about a defined benefit occupational pension scheme - final salary or career average - where you have a balance of pension and tax free lump sum.
In which case your situation is different to the one raised by the OP.
Sounds more like it was a lump sum taken from a private pension scheme which by taking it in one go tipped you into the top rate of tax for that year so you ended up paying 40% on it, which you obviously must have chosen to do as you wouldn't have taken the money without being aware of that. Though it's a bit strange you were taxed 40% on the full £20,000 rather than on 75% of it ( but your situation was probably more complicated eg if you had already drawn down some of the pension before and got the tax relief then etc etc. )
The issue raised by the OP is more to do with the tax fee lump sum people get from defined benefit occupational schemes and is an important point for people to be aware of when making their future plans .
It has been pointed out that if it is not a government pension ( and USS, Teachers schemes etc are not government pensions ) the sum that would be tax free in the UK will be taxable if drawn down while fiscally resident in Spain.
If it can't be taken before becoming resident ( clearly preferable!) , it could be worth thinking about commuting much of the lump sum part into annual pension instead. I also gather that if you buy an annuity there is special,possibly advantageous, treatment of that in Spain but you really need to see a spanish tax advisor on that.
Its another point for people to note that you also ( from a private ' money purchase'pension) won't get the 25% tax free allowed in the UK, all of it is liable to Spanish tax and I gather things like maturing endowment policies etc are also treated differently from the UK, so really worth checking this all out so there are no nasty surprises.
-
Shiva - Posts: 1570
- Joined: Sat May 16, 2015 12:46 pm
- Gender: Female
Re: Taxation of pension lump sum
by jaspercabbage » Wed Jun 26, 2019 10:18 pm
I am in the same situation as the original poster, and I am in the process of taking a lump sum from my UK pension, which will be taxed at source in the UK. I gained residency in January, so will not be tax resident in Spain until next year when I have to make my first tax return.
According to the Blevins Franks webpage that jpeg linked above, I fall into this category:
'The Spanish tax authorities (Agencia Tributaria or Hacienda) will generally want the tax due on your UK pension to actually be paid for the first time (in May/June of the following year) before they will issue a Certificado de residencia fiscal. This might not be until almost 18 months after you have taken up Spanish residence. If this is the case, you will ultimately be repaid any PAYE tax deducted at source in the UK while you were actually resident in Spain. '
How do I reclaim the tax that will be deducted? Has anybody else been through this process?
According to the Blevins Franks webpage that jpeg linked above, I fall into this category:
'The Spanish tax authorities (Agencia Tributaria or Hacienda) will generally want the tax due on your UK pension to actually be paid for the first time (in May/June of the following year) before they will issue a Certificado de residencia fiscal. This might not be until almost 18 months after you have taken up Spanish residence. If this is the case, you will ultimately be repaid any PAYE tax deducted at source in the UK while you were actually resident in Spain. '
How do I reclaim the tax that will be deducted? Has anybody else been through this process?
- jaspercabbage
- Posts: 47
- Joined: Sun Feb 03, 2019 8:14 pm
- Which part of Spain are you from?: El Chaparral
- Gender: Male
Page 2 of 2 • 1, 2
19 posts
• Page 2 of 2 • 1, 2
Related topics
-
- Similar Topics
- Replies
- Views
- Last post
-
-
Taxation changes in Spain that took effect from 1st Jan...
by Upstream » Tue Jan 02, 2024 5:39 pm in Quesada general discussion - 1
- 430
-
by marcliff
Tue Jan 02, 2024 5:49 pm
-
Taxation changes in Spain that took effect from 1st Jan...
-
-
Taxation question - PLEASE REPLY IF U 100% certain
by Rokhsareh_s » Thu Dec 07, 2023 2:35 pm in Quesada general discussion - 7
- 438
-
by Rokhsareh_s
Fri Dec 08, 2023 10:14 am
-
Taxation question - PLEASE REPLY IF U 100% certain
-
-
UK Pension up
1, 2, 3 by Chrisdee » Wed Nov 22, 2023 3:12 pm in Quesada general discussion - 27
- 1127
-
by JCoop
Thu Nov 30, 2023 2:12 pm
-
UK Pension up
-
-
How not to collect a pension
by RJC » Sun Jul 23, 2023 3:47 pm in Quesada general discussion - 1
- 550
-
by Steve wilkins
Sun Jul 23, 2023 5:43 pm
-
How not to collect a pension
-
-
state pension
1 ... 4, 5, 6 by dennisthemenace » Tue Jan 30, 2024 11:02 am in Quesada general discussion - 59
- 2398
-
by Ginner
Thu Feb 22, 2024 5:13 pm
-
state pension
Return to Taxes in Spain: Suma, NIE and general tax advice
Who is online
Users browsing this forum: No registered users and 3 guests
Login
Find in Quesada
Quesada pages
Quesada discussion
- Quesada general discussion
- Banking and finances
- Broadband, Wifi, Phone and TV
- Buses and public transport in and around Quesada
- Driving to Spain / Car hire in Spain / Buying and owning a car in Spain
- Fiestas in Quesada
- Flights, baggage and airports
- Health services in Quesada
- Insurances and wills in Spain
- Items for sale and wanted in and around Quesada
- Interesting articles about Spain
- Jobs and careers in Quesada
- Lost and found in Quesada
- Market days
- Places to go for free Wi-Fi
- Recommended restaurants / cafes / bars
- Recommended Tradesmen and Companies
- Residency in Spain: padron, residencia and passport advice
- Safety / security information and property in Spain hints and tips
- Taxes in Spain: Suma, NIE and general tax advice
- Taxis in Quesada
- Things to do and places to go in and around Quesada
- Utilities in Spain: Electric, gas and water recommendations and advice
- Weather in Quesada
- Where to buy things in and around Quesada
- Where to hire things in and around Quesada
Properties discussion
Businesses and places in Quesada
- Bars and pubs in Quesada
- Beaches near Quesada
- Beauticians / Beauty salons in Quesada
- Bedding and soft furnishings shops in Quesada
- Butchers in Quesada
- Car dealers in Quesada: new and used car dealers
- Car garages, mechanics, tyre fitter centres in Quesada
- Car hire in Quesada
- DIY / Bricolage / Ferreteria stores in Quesada
- Equipment hire centers in Quesada
- Estate agents in Quesada
- Furniture shops in Quesada
- Garden centres and garden furniture shops in Quesada
- Golf Courses in Quesada
- Grills / gates / metal items shops in Quesada
- Hairdressers in Quesada
- Hotels, guest houses and bed and breakfasts in Quesada and nearby
- Internet service providers that cover Quesada
- Launderettes / dry cleaners in Quesada
- Markets in Quesada
- Medical / Health centers in Quesada
- Pet shops in Quesada
- Pharmacies / Chemist shops in Quesada
- Restaurants in Quesada
- Shopping centres in Quesada
- Sports centres and gyms in Quesada
- Supermarkets in Quesada
- Swimming pool services in Quesada
- Town Halls (Ayuntamientos) in Quesada
- Waterparks/Aquaparks in Quesada
- TalkQuesada » Board index
- The team • Delete all board cookies • All times are UTC [ DST ]
- Our other websites:
- Costa Blanca forum
- Costa Calida forum
- Costa del Sol forum
- Costa de Almeria forum
- Costa de la Luz forum
- Costa Dorada forum
- Costa Brava forum
- UK forum
- Jobs in the UK
- Our policies:
- Privacy policy
- User agreement
- Content policy
- Website created and operated by JSM Forum Websites