# Spanish tax on UK ISA's



## tightgit (Jul 31, 2018)

I am a UK citizen, retired, and turn 65yrs in June 2019. I have a property in Spain and also in the UK. I am looking to sell the house in the UK next year and become resident and move over to Spain full time.
At the moment I am a non tax payer on my private pension, but may pay a small amount of tax when my state pension kicks in.
I have stocks and shares ISA's amounting to around 350k, plus around 40k cash, and will also have the proceeds from the house sale. I understand that I may have to pay capital gains on this sale
My question is, what is the best way to keep my ISA's tax free, if any?, as i understand that these will become taxable on my being resident in Spain.
I would obviously like to keep the UK tax free investments wrapper if possible, or is there any sort of alternative investments to keep from paying tax on these investments.
If it isn't possible to keep the tax free wrappers on the ISA's, how would the tax on the gains, or indeed the losses, be worked out.
I don't imagine that i am unique in this situation, and would be interested to know it there is an easy or alternative solution.
I am based in Roquetas de Mar when in Spain, so if anyone could recommend an English speaking tax adviser locally that would be great.
Thanks in advance,
tightgit.


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## stevesainty (Jan 7, 2011)

If you become a tax resident in Spain, you will not have a choice, all your income with become taxable income in Spain.

The tax paid on UK investments and interest will be taken into account to offset any Spanish tax due. 

The interest paid on the ISA's will need to be declared as they are not recognised as tax free in Spain even though they remain tax free in UK after you leave.


If you are going to sell your UK house and not use the proceeds to buy a Spanish house then you need to time moving to Spain right to avoid capital gains in Spain. There will be no capital gains involved if you just sell in UK and buy in Spain, the same as if you sold and bought in UK

You would also need to declare all your investments over 50K euros on Modelo 720 before the April in the year that you become tax resident in Spain to avoid being fined for non declaration.


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## Williams2 (Sep 15, 2013)

tightgit said:


> I am a UK citizen, retired, and turn 65yrs in June 2019. I have a property in Spain and also in the UK. I am looking to sell the house in the UK next year and become resident and move over to Spain full time.
> At the moment I am a non tax payer on my private pension, but may pay a small amount of tax when my state pension kicks in.
> I have stocks and shares ISA's amounting to around 350k, plus around 40k cash, and will also have the proceeds from the house sale. I understand that I may have to pay capital gains on this sale
> My question is, what is the best way to keep my ISA's tax free, if any?, as i understand that these will become taxable on my being resident in Spain.
> ...



Do you have a SIPP or thought of opening a Self Select SIPP before you retire and *before* you leave the UK or become Non Resident UK.
As you can put up to a certain amount of your annual income in a Self Select SIPP and get tax back ( 20 per cent back for the
normal rate tax payer ) from HMRC.
The age limit for opening and maintaining a SIPP being upto 75.

Also once you have the SIPP up and running, you can still put money into your Self Select Shares SIPP after you have left work and
moved to Spain for upto 5 years.
The limit ( on non earned income ) being £3600.00 representing £2880 from yourself and £720 back from HMRC when you have
stopped working and moved to Spain for upto a maximum of 5 years after you have left the UK.

Like ISA's you will have to declare profits in your Self Select Shares SIPP ( in Spain ) even though its for your pension
( for example at age 75 but you can crystallize it into an anuity Pension earlier ) but at least you get 20 per cent tax back
from HMRC for the first 5 years in Spain.

The SIPP might be small beer compared to your other investments but it might be the only cash you could see back from
the taxman once you moved to Spain - as there are no tax free ISA lunches with the Spanish taxman.


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## daveunt (Sep 7, 2017)

tightgit said:


> If it isn't possible to keep the tax free wrappers on the ISA's, how would the tax on the gains, or indeed the losses, be worked out.


It is worked out in the same way it would be outside of a tax-free environment in the UK, except for each buy and sell transaction needs to be converted into Euros at the ECB exchange rate for the date in question. Partial sales are always tallied against the oldest purchase first if you've made multiple purchases of the same shares on different dates.

You should also note that it is also necessary to declare dividend income from a stocks and shares ISA on the Spanish Tax Return.


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## Hepa (Apr 2, 2018)

You should really consider taking professional advice, I have used Blevins Franks here in the Canary Islands, there are ways to legally avoid paying tax, or paying only a minimal tax. With the amounts you have accrued, it might be worth a consultation before you move.


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## Williams2 (Sep 15, 2013)

Personally, so long as you can afford it and you value your ISA Tax Free allowances, why don't you continue,
as you have done before by being Resident UK and Non Resident Spain ( so long as you watch the number
of days your over here, of course )
Into retirement.


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## tightgit (Jul 31, 2018)

stevesainty said:


> If you become a tax resident in Spain, you will not have a choice, all your income with become taxable income in Spain.
> 
> The tax paid on UK investments and interest will be taken into account to offset any Spanish tax due.
> 
> ...


The ISAs are stocks and share ISAs so no interest is paid on them. 
Dividends and capital growth hopefully increase the value, this is not paid to me but it accumulates into the funds/ISAS. 
If i don't draw an income from this and just leave the account frozen in the UK, albeit accumulating or even decreasing in value, do i have to pay tax on any gains within the ISAs?
I fully understand regarding the timing of the UK house sale, and will cross that bridge when i come to it, as i have not even put the house up for sale yet, and when i do it may take a while to sell.


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## tightgit (Jul 31, 2018)

Williams2 said:


> Do you have a SIPP or thought of opening a Self Select SIPP before you retire and *before* you leave the UK or become Non Resident UK.
> As you can put up to a certain amount of your annual income in a Self Select SIPP and get tax back ( 20 per cent back for the
> normal rate tax payer ) from HMRC.
> The age limit for opening and maintaining a SIPP being upto 75.
> ...


I have already retired and not really interested in any more pensions or annuities. 
My main stumbling block is to try to retain tax free status on my investments.


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## tightgit (Jul 31, 2018)

Williams2 said:


> Personally, so long as you can afford it and you value your ISA Tax Free allowances, why don't you continue,
> as you have done before by being Resident UK and Non Resident Spain ( so long as you watch the number
> of days your over here, of course )
> Into retirement.


Britain for me is finished, its rapidly being turned into a third world country, so i would prefer to enjoy my retirement in Spain.


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## uk03878 (Jul 4, 2018)

tightgit said:


> The ISAs are stocks and share ISAs so no interest is paid on them.
> Dividends and capital growth hopefully increase the value, this is not paid to me but it accumulates into the funds/ISAS.
> If i don't draw an income from this and just leave the account frozen in the UK, albeit accumulating or even decreasing in value, do i have to pay tax on any gains within the ISAs?
> I fully understand regarding the timing of the UK house sale, and will cross that bridge when i come to it, as i have not even put the house up for sale yet, and when i do it may take a while to sell.


Note that investment growth on assets such as shares, ISAs and premium bonds is taxable regardless of whether you have taken any income or withdrawals.

From
https://www.spectrum-ifa.com/uk-investments-tax-treatment-in-spain/

You will also might be liable for wealth tax with those numbers as well


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## uk03878 (Jul 4, 2018)

I am in exactly the same situation as the OP, and after talking with my IFA and others there really isn’t much you can do.
The QROP fixed term 5 year annuity (taxed at a small rate in Spain) was straight away discarded due to lots of example of extremely high fees (10% of the investment is not uncommon)
I am taking my 25% tax free out of the pension pots into ISAs and maybe the 4K back into a SIPP as mentioned earlier 
Selling the house and banking the cash in investments and a buy to let 
Those will still attract Spanish tax but some at lower rates

Then setting up income drawndiwn where it will be taxed almost like a salary in Spain

Unfortunately there isn’t much more you can do


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## daveunt (Sep 7, 2017)

tightgit said:


> The ISAs are stocks and share ISAs so no interest is paid on them.
> Dividends and capital growth hopefully increase the value, this is not paid to me but it accumulates into the funds/ISAS.
> If i don't draw an income from this and just leave the account frozen in the UK, albeit accumulating or even decreasing in value, do i have to pay tax on any gains within the ISAs?
> I fully understand regarding the timing of the UK house sale, and will cross that bridge when i come to it, as i have not even put the house up for sale yet, and when i do it may take a while to sell.


You have to declare and pay tax on dividends, regardless of whether you withdrawn them, they remain in the account as cash or are immediately reinvested.

You also pay tax on any capital gains (offset against losses) made from selling shares.


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## emlyn (Oct 26, 2012)

tightgit said:


> Britain for me is finished, its rapidly being turned into a third world country, so i would prefer to enjoy my retirement in Spain.


Like you I am retired and prefer to enjoy my retirement in Spain and have been following this thread with interest ,in particular what is it about Britain that you think is causing it to become a third world country?


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## Williams2 (Sep 15, 2013)

emlyn said:


> Like you I am retired and prefer to enjoy my retirement in Spain and have been following this thread with interest ,in particular what is it about Britain that you think is causing it to become a third world country?


So really for you and the OP there's no arguement, move to Spain and take the taxes, on the chin and
pay up when its due.

The only other way round this for the OP to take your chances with Spread betting which will be regarded as gambling by the Tax man in Spain.
Not sure how much the Spanish tax man allows on profits on Spread betting but it might be an avenue 
to explore.

Finally as for Britain becoming a third world country - well the writing will be on the wall of the
Extanjeros office soon enough, for those new British Expats registering their residency after Brexit.

It will say Non EU - Queue Here !!

:lol:


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## emlyn (Oct 26, 2012)

Williams2 said:


> So really for you and the OP there's no arguement, move to Spain and take the taxes, on the chin and
> pay up when its due.
> 
> The only other way round this for the OP to take your chances with Spread betting which will be regarded as gambling by the Tax man in Spain.
> ...


My circumstances are different to the OP and I am not seeking financial advice.
I am simply trying to elicit why he thinks Britain is becoming a third world country.


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## far_wide (May 7, 2020)

Williams2 said:


> Do you have a SIPP or thought of opening a Self Select SIPP before you retire and *before* you leave the UK or become Non Resident UK.
> As you can put up to a certain amount of your annual income in a Self Select SIPP and get tax back ( 20 per cent back for the
> normal rate tax payer ) from HMRC.
> The age limit for opening and maintaining a SIPP being upto 75.
> ...


Hi @stevesainty 

I was just reading through this old thread and it looks like you have some interesting information for me re:"once you have the SIPP up and running, you can still put money into your Self Select Shares SIPP after you have left work and moved to Spain for upto 5 years" .

Is this still true, and if so do you know of anywhere on the net that covers this in more detail, as it certainly would be handy if it still applies.

Many thanks!


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