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Just paid non residence tax for 2011' now resident when do I submit the tax return for 2012. we are only getting Sandra's state pension and my military pension both taxed at source . I also have a private pension for £127.00 per month after tax. Can any one recommend a reliable professional person who they can help with my tax returns. Torrevieja area . Thanks
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Rolley,
The residents tax return is done in May/June in the year following. Thus 2012 is done in 2013
Your military pension can only be taxed at source and is ignored (you do not even mention it) in Spain.
It means that you get tax free allowances in both UK and Spain.
Example. My government employee pension is taxed in UK, my OAP and a few other bits in Spain. Although, like everyone who is resident in Spain but not empleyed, I must make a Spanish tax return, however, as I do not have income in Spain above my tax free allowance,i do not pay any tax in Spain..
Income from letting property in UK is taxed only in UK.
All other income, OAP, Private pensions, Investment income, all, is taxed ONLY in Spain.
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Thanks for that, very helpfull.
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Live life to the full as if every day is your last. You never know!
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A linked question for John - if investment income and interest on savings is taxed at source, and l have all the tax certificates showing what tax was deducted, am l right in thinking that it needs to be declared on a Spanish tax-return but no further tax is payable? I'll be tax-resident from January so won't have to do one for a while, but just want to understand it well in advance :-). And finally, if l want to, can l pay the tax on a UK rental property in Spain?
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Rolley,
If one is Tax Resident in Spain, then you must request any entity stopping tax in UK to pay you gross.
I found that the Nationwide Building Society would not do that, thus they continued to pay 20% tax on the interest to HMRC. (I transferred the affected funds off shore) In such a case the HMRC will refund only 8% of the 20%, but I can use the retained 12% to offset taxes in Spain (but in my case I don’t have any tax to pay here). In the couple years when I did, my accountant could not understand how to use the 12%, so it was lost. Se la vie.
As I said, if one is resident in Spain they have no alternative but to pay tax on their worldwide assets here, (see the new thread, which I will make shortly), NB Spain's double taxation areements with other countries varies, so those who do not have income from UK need to check their postion.
As I also said, government employee pensions and income from UK letting must be paid in UK. But as you will not make your first tax return here until May 2014, I would suggest you check again nearer to that event, as constantly, ’ Things they are a’changing’
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The thing is, Johnx that as you say, building societies and banks won't pay the interest gross, and if you don't want offshore accounts what do you do? I think you just have to show your accountant your bank statements and let them sort it out!
This message was last edited by camposol on 21/11/2012.
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Camposol.
I believe most entities in UK will pay gross, Nationwide is an exception, but as I said I moved my funds to Nationwide Off shore and they pay gross. I have sterling funds in Gib and again no problem. I declare all the interest in Spain as per the rules.
And as I said, my accountant and later a gestor, both were unable to understand what should be done with the 12% retained by HMRC, so I lost the small amount concerned as of course I had to pay tax on the 12% Nationwide interest twice.
Incidentally, one does not show the accountant or gestor, doing the tax return, any official paperwork, you just give them the info. If the interest is paid in pounds then the professional uses a Hacienda table for the conversion rates.
I have my OAP paid to Spain so I just add up the total for the year in euros credited.
NB When you sign the declaration it is your responsibility to ensure that it is correct. The professional does not assume any responsibility.
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If your income including interest is less than your tax allowance in UK, you can complete form R85 and the interest is paid gross. The R85 is sent to the bank or building society. That's what we do in my wife's case.
If you are living abroad permanently and your interest is over the tax allowance, fill in form R105 and interest is paid gross. Again send the form to the bank or building society. That 's what we do in my case.
The whole interest payment is then declared in Spain on our annual tax return.
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how on earth can you give your accountant accurate information in order to do your tax return if you don't show them the paperwork? They ask for statements etc anyway.Surely people don't just state it verbally?
Also, I have tried to get banks in UK to pay interest gross-they won't-they just want you to go offshore.
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how on earth can you give your accountant accurate information in order to do your tax return if you don't show them the paperwork? They ask for statements etc anyway.Surely people don't just state it verbally? Also, I have tried to get banks in UK to pay interest gross-they won't-they just want you to go offshore.
Also johnx you state its the resonsibility of the client to sign the declaration that it is ok, and not the accountants responsibility-why on earth do we employ an accountant then? It's because we don't know how to do it ourselves, and have to trust a professional that it is correct.
This message was last edited by camposol on 21/11/2012.
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Camposol.
how on earth can you give your accountant accurate information in order to do your tax return if you don't show them the paperwork? They ask for statements etc anyway.Surely people don't just state it verbally?
I have been doing it for 25 years. It is YOUR declaration, YOU sign it as being CORRECT. If the info is incorrect it is YOUR responsibly.
It is the same if you do your own declaration, you don’t send copies to prove anything to Hacienda, it is your return.
It would be the same if you do your own tax return in the UK. You show the figures, you do not have to send copies to the HMRC.
Re the interest in UK. Seems Bobaol has more luck than you
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johnx-you said do not show the accountant or gestor official paperwork-why?( I am not talking about sending it to HMRC). do you just verbally give your info? they surely must have paperwork to do the job properly. Despite what you say, I sent the appropriate forms to my bank, and they would not pay interest gross.All they did was refer me to their branch in the channel islands.
As for responsibility, how do you know if the accountant has worked it out correctly? I have had 4 different accountants each one making the amount payablw widely different. I think they should be resonsible for their work!
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Camposol.
I am telling you the way it is, not the way I, or you, would like it to be, and I did not say I agree with the MO.
I type out the info on a plain sheet of paper and give it to my accountant. If you prefer to show him original paperwork its not a problem i am sure, it's just that one has no obligation to do so and it is noit necessary.
For me putting the info on one sheet is much more straightforward than handing over a bundle of papers and less likely that an item may be missed.
Gross interest.
For sure, there are at least some, and I think most banks and building societies in UK, as Bobaol says too, that will pay gross. If your bank will not, then it means that if you do not pay tax in Spain you lose the 12% retained by HMRC, or if you do, and your accountant does not understand how to offset it against your Spanish liabilty, again you lose. That was why I changed banks.
This message was last edited by johnzx on 21/11/2012.
This message was last edited by johnzx on 21/11/2012.
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Thanks all - the responses (in between the sniping!) have been really useful. I need to get it right and transfer my fiscal residency next year (albeit that there is an overlap of tax-years between the UK and Spain) and get it clear enough in my head that I can talk sensibly to an accountant.
Thanks again!
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Blog about settling into a village house in the Axarquía. http://www.eyeonspain.com/blogs/tamara.aspx
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My accountant is fullly conversant with UK savings tax interest etc-I will leave her to sort it out. My bank in UK is one of the big ones, advised me to apply for savings interest to be paid gross, and then when I did, referred me to offshore accounts!
Oh for the days when tax was deducted at source, and we didnt have to worry.
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Camposol.
Out of interest, I said my bank, Nationwide will not pay gross, may we know who you bank with ? So others may avoid them.
I am not being pedantic about this but others may want to know that gross payments by UK banks are possible.
This is the HMRC info on it. (I have highted in red the part applicable)
http://www.hmrc.gov.uk/tdsi/faqs.htm
When do building societies deduct tax from payments of interest?
Building societies deduct LRT when they make any payment of interest unless the payment is a gross payment.
Gross payments are payments of interest falling within any of the gross payment categories.
Some of the main categories are payments to
- companies including friendly societies and unincorporated clubs, societies and associations (such as members clubs) but not those savings clubs, thrift clubs or Christmas clubs where interest is paid in proportion to the individual member's investment
- local authorities, including parish councils and schools under local authority control
- individuals who are not ordinarily resident in the UK
- individuals who are ordinarily resident in the UK who have registered to receive their interest without deduction of tax
- charities, and
- pension funds.
Investors in some of the above categories are required to complete the form 'Building society interest to be paid without tax taken off' (Form 38(INP)) before interest can be paid without deduction of LRT.
This message was last edited by johnzx on 22/11/2012.
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I bank with Barclays. No doubt someone will post that they applied and successfully received gross interest, boy they did not, in my case, and I am not going through all that hassle again.
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Camposol,
I guess you knew this was coming !!
I think you gave up too easily with Barclays.
I just called them on 0044 1452828309 and they confirmed that they will pay interest gross, if their customer is ordinarily resident outside the UK and has submitted an R85.
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Now for the right info! Previously I had tried to get interest paid gross on my UK savings account using R105; I was refused and referred to Barclays international, which I did not want. On discussing this on the forum, Johnx, probably to prove me wrong, said he had rung Barclays, and they confirmed they would pay interest gross on receipt of R 85 , even though it states it is for UK residents only. However, after his advice, I did apply using this form, and guess what? - got a letter back saying No-UK residents only. So if anyone else has suggestions feel free.
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Campo
I cannot understand your post as in our private exchanges I said it was an R105, which is specifically for the purpose of paying non UK residents interest gross.
I even sent you the HMRC web page where you can download the R 105.
I confirm (as per my private message) a Barclays supervisor told me they would pay gross, but as I do not bank with them it is not really my concern.
Good luck.
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