Transfering private pension money

Hi there.

I am writing this note as my sister is pulling her hair out about transferring a private pension...and is now informed that she has to pay 25% tax in the uk and then pay tax over here...before she can touch it...this rule was introduced this year 2017 in the uk...maybe somebody could advise me if there is another way to overcome this issue.She is retired and wishes to move from the south up to Cataunya a and stay with me...She has a Spanish pension as has worked here in Spain for more than 8 years. She has tried to get advice but nobody calls her back or even replies...can anyone help. 

Thanks Simon

If she is obviously a Spanish resident, why would she pay tax in UK on a private pension? Write to HMRC in UK and it will be paid free of tax but, of course, liable for tax in Spain. The only pensions taxed in UK are government pensions (Police, Armed Forces, Civil Service etc).

Besides, under the dual tax agreement between UK and Spain you can't be taxed twice on the same income.

This forum is not the place to seek technical advice on private pension transfers and their tax implications. Whilst there maybe many members on here delighted to advise you, they are not qualified in either pensions or tax.

Despite having received a poor response to your enquires so far, it would be wise to persevere. Try and get at least 3 specialist companies to advise you, preferably well known companies that are fully regulated.  

Jack Warner 

I agree forums are not the best place for any financial or legal advice

However you can get some indicators of who and what to ask. Many do have experience which may help it just a matter of sifting through the drivel and what might be relevant 

During our move we found the uk tax office very helpful.

 Supra

Double taxation between UK and Spain is governed by this
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf

Extract:-
Article 17 

PENSIONS

Subject  to  the  provisions of paragraph 2 of Article 18,  pensions  and  other  similar remuneration  paid  to  an  individual  who  is  a  resident  of  a  Contracting  State,  shall  be  taxable only in that State.

Article 18

GOVERNMENT SERVICE

1.      a)      Salaries,  wages  and  other  similar  remuneration  paid  by  a  Contracting  State  or  a  political  subdivision  or  a  local  authority  thereof  to  an  individual  in  respect  of  services rendered to that State or subdivision or authority shall be taxable only in that State.

b)      However,  such  salaries,  wages  and  other  similar  remuneration  shall  be  taxable only  in  the  other  Contracting  State  if  the  services  are  rendered  in  that  State  and  the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did  not  become  a  resident  of  that  State  solely  for  the  purpose  of  rendering the services.

2.a)      Notwithstanding   the   provisions   of   paragraph   1,   pensions   and   other   similar   remuneration paid by, or out of funds created by, a Contracting State or a political subdivision  or  a  local  authority  thereof  to  an  individual  in  respect  of  services  rendered  to  that  State  or  subdivision  or  authority  shall  be  taxable  only  in that State.

14b)      However,  such  pensions  and  other  similar  remuneration  shall  be  taxable  only  in  the other Contracting State if the individual is a resident of, and a national of, that State.

3.  The  provisions  of  Articles  14,  15,  16  and  17  shall  apply  to  salaries,  wages,  pensions, and other similar remuneration in respect of services rendered in connection with  a  business  carried  on  by  a  Contracting  State or  a  political  subdivision  or  a  local  authority thereof.

Put simple

All pensions,  0ther than Crown Pensions (police, military, NHS,  etc)  are taxed in the country where one is resident.  .  Thus a UK private pension, or an OAP  for a person resident in Spain, is taxable only in Spain.

One just informs HMRC (UK tax office) that you have moved to Spain and the UK and Spanish tax offices liaise. 

One also needs to inform bank, Buildimg Sociey etc., that you tax free in UK as you must declare the income in Spain. You will then get interest etc gross.

This message was last edited by johnzx on 07/12/2017.

Just one correction johnzx, NHS pensions are not government pensions unless they are paid by a local authority. The vast majority of NHS pensions are not taxable at source and have to be declared in Spain unless the person receiving it worked in something like school nursing.

And, jackwarner, whilst people may not be "tax experts" they may be in the same situation and have experience of what to do. I think the two bits of advice gel as they both say contact HMRC for advice.

Thanks mariedave. I knew tere was some variation, If you see the list of who gets a Crown Pension it is incredible confusing.    It does not help that the P60 does not show when it is a crown pension so for gestors it is a real problem

Are you not getting confused with the new "overseas transfer charge" which is 25% introduced this year if someone transfers their private UK pension overseas? You do not say where she wants to transfer it to? However, this 25% tax is only applicable for Non EEA transfers so if you live within the EEA and the pension is being transferred within the EEA this 25% tax does not apply.She can take a 25% tax free lump from the pension as a UK resident but taking it as a Spanish resident means it will be liable for Spanish tax as Spain does not recognise tax free lump sums.

I presumed the OP (and I know one should not presume)  the question was about transferring the monthly payments, not the pension as an entity.  

Deleted by me

Jack Warner,

I don't believe your post is helpful.  Obtaining a few ideas and pointers on a forum like this does no harm at all.  The reality is that obtaining advice from a qualified Financial Services Advisor is neither simple nor cheap and not always the best route. 

You say "Try and get at least 3 specialist companies to advise you, preferably well known companies that are fully regulated.  Sorry in my mind that's not good advice - standards and regulation is comparatively low in Spain, other than Blevins Franks I struggle to think of anone else I would recommend. 

Very few UK based Financial Advisors are qualified to advise re the Spanish implications.  If you managed to track down 3 they would each charge a fee, so that might up a bit expensive.

There's some good thoughts here, which is what the forum is about.

Acer

I have to disagree with you in support of Jack Warner 

There is plenty of free professional advice out there

I agree that forums can give some indicators but anyone acting or relying on forum posts without seeking professional advice would be a bit silly really

Some good advice has been posted and let's hope the original poster takes it

Replying to all who have kindly bothered to reply...

Thank you all for such a quick response.

I have passed all your comments onto my sister..Maybe she can sort it out bit by bit...over the coming weeks.

However, please keep your thought opens....if anyone knows of a GOOD company over here that can give some free advice then. ....as Peter Crampon sang...'Don't hesitate' 

Thanks Simón 

Is Peter Crampon an off-piste Peter Frampton?

I just love your way of saying it though.

Simon,

As I stated, I can recommend Blevins Franks who have representation along the costas - they are highly professional and they are UK based which is a lot more meaningful regulation wise.  They do free seminars to drum up business in Spain, so you may get the chance to ask your question there.

Well it should have....been Peter Frampton. ......so sorry for that...an Ooopa. But my phone decides to change....as l speak castillano....so it thinks ....Mmm..we'll change that when he's not looking....so again sorry folks

Recuerdos Simón 

Hey Simon.   I was only joking!   

When i said I loved the way your way of saying it, it was just because the song goes 

Ooo baby I love your way.    🎶  

Didnt mean anything by it, sorry if I offended 😕

No problem Brian....

Regards 

Simón. ....but my girlfriend thought it was funny too....heyho

No problem Brian....

Regards 

Simón. ....but my girlfriend thought it was funny too....heyho