# U.K. State Pension



## marsol (Feb 23, 2011)

Hi, Can I please ask do you pay tax in spain on a basic uk state pension ?
Also what happens if you wish to become a resident but only have a state pension plus savings as income ? We have wanted to make the move for years & as we are now approaching retirement & no longer have to worry about finding work we would love to go for it !! We would be renting as we do now. A simple basic few years in the sun is all we want .:confused2::confused2:


----------



## Lynn R (Feb 21, 2014)

marsol said:


> Hi, Can I please ask do you pay tax in spain on a basic uk state pension ?
> Also what happens if you wish to become a resident but only have a state pension plus savings as income ? We have wanted to make the move for years & as we are now approaching retirement & no longer have to worry about finding work we would love to go for it !! We would be renting as we do now. A simple basic few years in the sun is all we want .:confused2::confused2:


At the current rate of exchange, no you wouldn't pay tax in Spain on a basic UK state pension, but if the pound were to rise in value substantially against the euro, it might take your income into the taxable bracket.

If your income is over €600 per month each, which I believe the basic UK state pension is currently, then you would be able to satisfy the conditions for residency providing you both also have S1 forms from the DWP which would satisfy the criteria for having comprehensive health cover.

However, are you quite sure you could live happily in Spain on just the basic state pension (plus whatever income you have from savings), if you have to pay rent out of that? In the UK, of course, if you have just the basic state pension you can claim Pension Credit to top up your income, but if you live outside the UK you cannot get that. You'd get free bus travel and free prescriptions in the UK, but pensioners can only get reduced travel fares and have to pay 10% of the cost of prescriptions here(but capped at 8€ per month if your income is below €18,000).

You could probably survive on it whilst there are two of you getting a state pension each, but is surviving really what you want to do? You would be especially vulnerable to any unfavourable changes in the exchange rate which could reduce your actual income in Spain quite quickly, as a lot of pensioners sadly found in 2008 when the global financial crisis happened and many of them had a very hard time.


----------



## marsol (Feb 23, 2011)

Thank you Lynn for your reply, We are still in the planning stages & final decisions will be made when pension is sorted & see how much we can top up savings in the mean time. Seems for us it will be a matter of swings & roundabouts do we stay here stuck indoors most of the winter with the heating on...or take a chance for once in our lives !!! It's all very scary. X


----------



## Lynn R (Feb 21, 2014)

marsol said:


> Thank you Lynn for your reply, We are still in the planning stages & final decisions will be made when pension is sorted & see how much we can top up savings in the mean time. Seems for us it will be a matter of swings & roundabouts do we stay here stuck indoors most of the winter with the heating on...or take a chance for once in our lives !!! It's all very scary. X


You would have no problem being out and about during the day in Spain (well, in the South at any rate) in winter, but at night you would most definitely need the heating on - the temperatures may look at lot higher than UK winter ones, but remember very few Spanish properties have central heating, most aren't well insulated, and above all, once you have been here for a while and are acclimatised to the higher temperatures, you start to feel cold when it goes below 20C! And of course, pensioners living in Spain no longer receive the Winter Fuel Allowance to help with heating bills, that was stopped last year.

Another thing to take account of in your planning is the fact that all dental treatment here is private, should either of you need it in the coming years. It can get expensive.

I realise I must sound like I'm trying to put you off, but I read so many comments from people living here on a state pension a few years ago, when their income really dropped, saying things like "I've broken my glasses and can't afford new ones" or "my old car has broken down and I can't afford to get it repaired, we are stuck without it", and even people whose partner had died and they couldn't pay for a funeral. It was really sad.


----------



## Veronica (Apr 5, 2008)

Lynn R said:


> At the current rate of exchange, no you wouldn't pay tax in Spain on a basic UK state pension, but if the pound were to rise in value substantially against the euro, it might take your income into the taxable bracket.
> 
> 
> QUOTE]
> ...


----------



## Lynn R (Feb 21, 2014)

Veronica said:


> Lynn R said:
> 
> 
> > At the current rate of exchange, no you wouldn't pay tax in Spain on a basic UK state pension, but if the pound were to rise in value substantially against the euro, it might take your income into the taxable bracket.
> ...


----------



## marsol (Feb 23, 2011)

Don't worry Lynn I know your not trying to put me off, I welcome your reply & input, It's a very big step & I can assure you that I will be thinking it all through & weighing it all up before making a drastic mistake.
Gina. X


----------



## Veronica (Apr 5, 2008)

So if I am reading it correctly, for over 65s there is a personal allowance of 6.700euros after which you pay tax

What is the rate of tax?


----------



## Lynn R (Feb 21, 2014)

Veronica said:


> So if I am reading it correctly, for over 65s there is a personal allowance of 6.700euros after which you pay tax
> 
> What is the rate of tax?


If you read a bit further down the link, there is also a general allowance of €2000 which everyone gets, against any kind of earned income (including pensions) and additional allowances for those on the lowest incomes.

The starting rate of tax is now 19% on the first €12,450 of taxable income.

Maybe the fact that Cyprus has such generous tax allowances is one reason why it's economy became so over dependent on a poorly regulated banking system, and we all know what that led to!


----------



## mrypg9 (Apr 26, 2008)

You will have to take into account exchange rate fluctations. In December £1 bought €1.43.
Now it buys €1.28 and looks set to fall further because of uncertainty over the EU referendum.
A loss of almost €150 on a £1000.


----------



## Veronica (Apr 5, 2008)

Lynn R said:


> If you read a bit further down the link, there is also a general allowance of €2000 which everyone gets, against any kind of earned income (including pensions) and additional allowances for those on the lowest incomes.
> 
> The starting rate of tax is now 19% on the first €12,450 of taxable income.
> 
> Maybe the fact that Cyprus has such generous tax allowances is one reason why it's economy became so over dependent on a poorly regulated banking system, and we all know what that led to!


 Yes the banking system was a total shambles with huge amount being loaned to failing banks in Greece. Thankfully things have much improved and are now back on track. No more stupid loans which people cant repay and greedy developers who took advantage of the lax rules are now having to pay what they owe or lose their assets.

Cyprus is well on the way to being out of trouble thank goodness. (unlike Greece)


----------

