# Questions: Declaring uk account interest and CGT



## Jazzyboy (May 13, 2015)

Hola.

1. Last year I received a yearly interest in a UK account in June. 
Now doing the renta, so do I declare the interest amount received gross?

Obviously this payment includes interest coming from the previous year too but I don´t mind about paying tax on that if it makes the paperwork easier.
Or do I need a special statement showing the interest earned between 1st jan and 31dec?

2. What exchange rate do I use to get the amount in Euros?

3. I also had a small profit from selling some shares. I understand here there´s no allowance on CGT, so again the same question, what exchange rate do I use?

4. Annnnnnndddd finally. I also received a cash gift from my parents, who live in the UK, into my UK account. I now understand this is also taxable. 
Is there a document I have to fill in to register this or do my parents have to give me a letter stating it´s a gift or something?
It was by cheque from their bank account and put into mine, so would they need something from their bank and I hand it in here????

I´m seeing a gestor about it all, but always nice to have some info from anyone who has actually lived the experience.

thanks alot
J.


----------



## larryzx (Jul 2, 2014)

Jazz.
It is the income received in the year. So you received it in June 2014, so tax payable in Spain for that year.

The exchange rate is that as at midnight on the 31st Dec 2014, so 1.2873 euros to the pound

I don’t know about the gift, but unless it was significant, I personally would ignore it, but be dvsied by your gestor.

Incidentally, if you still own property in the UK (or elsewhere, say second property in Spain, France etc) you must also pay ‘imputed tax’ on it too. 

It is calculated as 50% of the purchase price (or cadastral value) x 1.1% x 24.75%


----------



## Dave and Anne Galicia (Nov 15, 2008)

The exchange rate as 31st Dec applies to Modelo 720 returns. For La Renta you normally use the average exchange rate for the year which for 2014 is 1.2405. Alternatively you could use the exchange rate on the date you actually received the payment.


----------



## larryzx (Jul 2, 2014)

Or you do as Hacienda say, and use the Bank of Spain's exchange rate at midnight on 31st Dec. I am 99.99% sure that is correct. 

That is what I have been doing for 25+ years, on tax returns I have done in Hacienda's office assisted by a tax inspector, with gestors and when I used to do the Return myself.

This might help http://www.boe.es/boe/dias/2015/01/03/pdfs/BOE-A-2015-56.pdf it says 1.28 euros to the pound


----------



## Dave and Anne Galicia (Nov 15, 2008)

OK, but with respect we can perhaps agree to disagree on this point.


----------



## larryzx (Jul 2, 2014)

I was too late to add this:- 


This might help http://www.boe.es/boe/dias/2015/01/03/pdfs/BOE-A-2015-56.pdf it says 1.28 euros to the pound

Quote from that page:- 

Resolución de 31 de diciembre de 2014, del Banco de España, por la que 
publican los cambios del euro correspondientes al día 31 de diciembre de 
2014, publicados por el Banco Central Europeo, que tendrán la consideración 
de cambios oficiales, de acuerdo con lo dispuesto en el artículo 36 de la Ley 
46/1998, de 17 de diciembre, sobre la Introducción del Euro


Resolution of 31 December 2014, of the Bank of Spain, which
they publish the euro changes corresponding to December 31 of
2014, published by the European Central Bank, which shall be regarded as
official changes, in accordance with the provisions of article 36 of the law
46/1998, of December 17, on the introduction of the Euro[/I]


----------



## Chopera (Apr 22, 2013)

Dave and Anne Galicia said:


> The exchange rate as 31st Dec applies to Modelo 720 returns. For La Renta you normally use the average exchange rate for the year which for 2014 is 1.2405. Alternatively you could use the exchange rate on the date you actually received the payment.


This was my understanding


----------



## Chopera (Apr 22, 2013)

larryzx said:


> Jazz.
> It is the income received in the year. So you received it in June 2014, so tax payable in Spain for that year.
> 
> The exchange rate is that as at midnight on the 31st Dec 2014, so 1.2873 euros to the pound
> ...


Unless you rent that property out, in which case you declare the rental income instead


----------



## Dave and Anne Galicia (Nov 15, 2008)

I suspect there are two schools of thought! Certainly my Gestor is happy with using the average and there are a significant number of discussions on other forums to support this approach. Equally I have heard of some advisors wanting to use the Dec figure. Consistent advice form professional financial advisors in Spain - hmmm!


----------



## larryzx (Jul 2, 2014)

I understand that if one receives the money in Spain, as I do with my OAP, then it is of course the exchange rate used for that transaction, so it varies over the year. I add up the 13 x 4 weekly payments (plus the Christmas bonus) paid into my Spanish bank by DWP and that is my income for my OAP for that year. 

However, my crown pension is paid to a UK bank, thus the funds have not come to Spain, then it is the 31/12/14 rate.


see:- http://www.boe.es/boe/dias/2015/01/0...-A-2015-56.pdf


----------



## CapnBilly (Jun 7, 2011)

The international accounting procedure is to convert foreign income (unless prearranged) at the spot rate of the day. Assets held in foreign currency at the end of the accounting year are marked to market at the rate on the final day of accounting, example 31st December. This is also the procedure used by the Hacienda in respect of business income.

In accounting terms, this means that if you retain a foreign currency asset (say cash) for a full year, then the following year there will be an exchange profit or loss, depending upon the rate at the end of each period. This difference is reflected in the accounts of the year.

So, technically, if you use the rate of the day to convert your income, and you then convert it at a later date, or still have it at the end of the year, then there may be an exchange loss or profit to account for. In reality, this is not really relevant for individuals, and therefore the average rate for the year smooths out the differences.


----------



## Dave and Anne Galicia (Nov 15, 2008)

CapnBilly said:


> The international accounting procedure is to convert foreign income (unless prearranged) at the spot rate of the day. Assets held in foreign currency at the end of the accounting year are marked to market at the rate on the final day of accounting, example 31st December. This is also the procedure used by the Hacienda in respect of business income.
> 
> In accounting terms, this means that if you retain a foreign currency asset (say cash) for a full year, then the following year there will be an exchange profit or loss, depending upon the rate at the end of each period. This difference is reflected in the accounts of the year.
> 
> So, technically, if you use the rate of the day to convert your income, and you then convert it at a later date, or still have it at the end of the year, then there may be an exchange loss or profit to account for. In reality, this is not really relevant for individuals, and therefore the average rate for the year smooths out the differences.


Interesting and makes sense. Thanks. 

However, I would not fancy trying to explain this to my local Hacienda office in NW Spain if they challenged the average exchange rate I use and insisted on a Dec 31rate! I would be interested to know if anyone has had personal experience of such a problem and how they managed it?


----------



## CapnBilly (Jun 7, 2011)

Dave and Anne Galicia said:


> Interesting and makes sense. Thanks.
> 
> However, I would not fancy trying to explain this to my local Hacienda office in NW Spain if they challenged the average exchange rate I use and insisted on a Dec 31rate! I would be interested to know if anyone has had personal experience of such a problem and how they managed it?


I had to provide some information on some of my income a few years ago, and they did not query the fact that I used the average rate.


----------

