Pensions. Tax. - Page 2

Hi there,

If your civil service pension and your state pension, when added together, mean that you pay tax in the UK, an element of the tax you pay there will be in effect for your state pension. They take it from your civil service pension. This happened to me. I applied for and received a declaration from the Spanish tax authorities that I am tax resident in Spain. I sent this, along with the appropriate form to HMRC and received a refund of the tax paid as a result of my state pension taking me over the threshold in the UK. The double taxation agreement covers UK government pensions but not the state pension. For me, it was worth doing, as if I hadn’t, I would have paid tax in both countries on my state pension. Everyone’s situation is different, so I can’t predict if and how much you may receive.

 I hope that makes sense and that it helps

only in the first year but worth completing the claim form if you didnt at the time! Find it on HMRC or DWP website

Thanks for that

Thank you

Not sure what you mean by the first year. I was able to reclaim for 2 full years and the current year. As I have said on each of my posts on this subject, everyone’s situation is different.

Good luck

Phil

Will60 is correct.

Once you are a permanent resident in Spain and have been here for more than 6 mths, it is required that you become a fiscal resident in Spain. ALL income, apart from Civil Servant & I believe UK Military pensions, will be subject to Spanish tax. 
The UK Civil Servant & Military pensions must continue to be taxed in the UK.

The dual taxation rule applies. You can only be taxed on any specific item of income once. Is Spain levies a tax, the UK can't have it too & vice versa.

My wife's Civil Servant pension is taxed in the UK, but her National pension is taxed in Spain. All my pensions are taxed here.
It is important to get the document chain right. Pat & I recently had  'discussions' with the UK Infernal Revenue about tax they had taken in error. The correct tax codes were applied & refunds happened.

Also, the Spanish Tax people are looking hard at foreigner tax submissions. Lots are being queried. Mine from last year was recently, I had to resubmit evidence of my income AND pay a legal accountant to act on my behalf. A much more complex process than simply submitting a tax return.
The Lawyer /  Accountant advised me this week that they had received a letter saying that all was well with my record. It was a worrying 6 weeks and I'm down about €300 in Lawyer bills.
I understand that there are many more still being scrutinised. 
It simply is not worth the risk of trying to buck the system.

Some people are getting confused between a pension being taxed and it being declared.

ALL income from anywhere must be declared, whether you pay tax on it elsewhere or not.

The essential fact is that a Crown pension is declared as ‘exempt’ not added to other incomes. You are not taxed on it as things stand at present, but it does affect the amount of tax you pay. As you are not being taxed on it in Spain you obviously cannot claim any refund under a dual taxation agreement.

NOT declaring it can involve swingeing penalties, and they can go back four years.

The vote by some to leave the EU has put all joint agreements in peril, so I if Spanish residents of the UK start being taxed on their equivalent of Crown pensions I would not think it long before the same will apply here to UK Crown pensions.

I would love to hear from any tax residents here in Spain from other foreign countries who get a pension from a government job how their pension is treated as this could be an indicator of what may happen.

Yup. Spot on.

Even the income that is taxed in the UK has to be declared.

Hi we pay all our taxes in the UK, our choice, as we were pre Brexit, so come under the origional agreement.

The UK government state there is no tax on the government pension, but of course this is crap, they take it of your Civil Service pension, by adding the amount to your tax free allowance, so up goes your tax.

Always get a accountant to check your tax here, and of course fill in your 720 declaration, as you can be fined a great deal for not doing it .

“we pay all our taxes in the UK, our choice,”

This is not a choice you can make - if you live in Spain you must declare all worldwide income annually to the Agencia Tributaria. If you pay tax in the UK this will be in addition to the tax you must pay in Spain, a slightly lunatic choice.