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bigduckontax, Accountant
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I am a resident of spain i am now able to take my whole private

Customer Question

i am a resident of spain i am now able to take my whole private pension out its with the prudential with a total of £44.000 who will i have to pay the tax to spain or the uk
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Firstly when you left the UK for Spain did you send a Form P85 to HMRC or the Inland Revenue before HMRC was formed? If you did not you should do so immediately, fortunately there is no time limit as to its submission, it is available on the web and can be filed on line. On receipt HMRC will classify you as non resident. The situation is excessively complex and as yet the full implications unclear. www.professionaladviser.com warns: 'that despite being non-resident in the UK, expats may be caught under certain double tax agreements or local tax rules if planning to encash their UK pension. For those with reasonable size pension pots then cash taken out will be taxed at the highest marginal rate, which in the UK is 40%-45%.' That throws us on to the double taxation convention between the UK and Spain. Fortunately this is an Income Tax matter and that tax is covered by the Convention. However it does not protect you from differences in tax rates. Tax deducted in one country is allowed as a tax credit in the other. Thus this pension freedom might be taxable in the UK (well 75% of it) at marginal rates of tax [ie up to 45%]. If the UK does not tax it Spain may well do so. Abgloinfo gives the following guidance: 'In order to notify the UK tax authority that a tax payer is registered for and paying tax in Spain they should obtain a certificado de residencia fiscal NEN - España Convenio from the local tax office. This certificate should then be sent to:HM Revenue & Customs at the Centre for Non-ResidentsFitz Roy HousePO Box 46NottinghamNG2 1BDTel: +44(###) ###-####(if calling from outside the UK) Tel: 0845(###) ###-####(if calling from the UK)'Whichever way this particular tax cat jumps you are going to be caught by Benjamin Franklin's dictum that in life there are but two certainties, death and taxes. Unfortunately the position remains unclear and may well probably so continue as HMRC gets itself in a mad scramble to gobble up pension pots as people begin to cash in in April next year. I am sorry to have to be so vague, the only certainty is that your release of your pension pot will be the subject of one or the other state's taxation regimes.
bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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