10. Paying more tax than you should? – You don’t deserve to pay so much tax!

Fiduciary Wealth Team

This article will be of interest to you if you are Spanish tax resident and

1. You are earning interest on savings you hold in bank deposits either offshore or in Spain

2. You are drawing income from a UK private pension

3. You have a UK investment bond or ISAs.

Don’t we all want to pay less tax? The good news about proper financial planning is that when your adviser works with you to establish your financial goals and objectives they will also take into account the impact of taxation. That is why it pays to work with an adviser who understands the tax rules both in the UK and here in Spain. For example there has been much press about pension busting and New Zealand QROPS prior to the amendments to legislation recently introduced by HMRC. But why would you have wanted to take 100% of your pension fund as a lump sum and then be taxed on this at possibly 43% and then presumably be taxed again when you invest this money to generate income. Where is the sense in that and yet many so called experts were recommending this route.

Or what about a UK adviser not understanding the Spanish tax laws and not realising that a client holding a UK bond is liable to pay income tax on an annual basis on the bond whether withdrawals are made or not when there is a legitimate alternative acceptable to the Spanish authorities that can provide income in a particularly tax efficient manner.

Again keeping money offshore can either mean a withholding tax of 35% or declaring the interest received to Hacienda whilst keeping money in a bank in Spain, which at the moment would seem particularly dangerous to the risk averse, will still mean tax being levied at a minimum of 21%.

If you draw income from a UK private pension this will be taxed at local income tax rates and yet by transferring your pension into a HMRC approved QROPS there is the possibility of paying tax at less than 3% on the very same income stream.  

No one wants to pay more tax than they have to on savings and retirement funds that they have built up over a lifetime but without taking professional advice that is potentially the risk that you take.

There is a solution however. You can sit down and discuss your financial objectives with the experts at Fiduciary Wealth Management who specialise in providing cross border advice to those moving to and from the UK and to expatriates already resident here in Spain. They will be able to look at your current arrangements and overall financial situation and then advise you on what adjustments or amendments are needed so that you minimise your tax liability.

Pick up the phone and speak to one of our advisers on Tel: 956 796 911 or alternatively email

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