# UK Service Invaliding/Disabilty Pension



## KIP1958 (Aug 2, 2014)

Hi new to forum and will be relocating to Spain approx April next Year.

I have read quite a lot of the forum and understand most of the requirements for residency etc.

However there is one question I can not seem to find an answer for.

I have a UK Services Invaliding pension/War disablement pension.

It can be paid to Spanish Bank account and I just have to tell them if I move to Spain for the payments to continue.

As I understand it, as part of the EU Tax agreements, as it is a UK Pension and Taxed at source then it would not be also taxed in Spain.

However, as it is also a Invaliding/Disability Pension it has a zero tax liability in the UK.

How would this be treated on a Tax return in Spain? (720?)


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## larryzx (Jul 2, 2014)

In Spain (unless things have changed over the recent years) a pension for invalidity is taxed according to the percentage of disability.

When I was in receipt of Invalidity/incapacity Benefit and enquired of DWP what was the percentage of my disability as far as that allowance was, they said in UK it can only be described as 100%. I explained that to Hacienda and that allowance was tax free in Spain.

That tax is stopped at source in UK does not mean that it is the way it should be. Example: a private retirement pension is taxable only in Spain if you are tax resident here (live here as normally understood by the expression). However, a government employee pension, Military, Prison Service etc. is taxable only in UK. 

So KIP, I would suggest you speak to Hacienda and/or HMRC to clarify your situation, as there is a possibility you may get advice here from someone who is not doing it correctly although they believe they are.

Good luck, John


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## extranjero (Nov 16, 2012)

Do you not have to have a medical examination in Spain to determine the percentage of disability?
How can someone be 100% disabled unless they are totally paralysed?


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## larryzx (Jul 2, 2014)

extranjero said:


> Do you not have to have a medical examination in Spain to determine the percentage of disability?
> How can someone be 100% disabled unless they are totally paralysed?


Yes, very helpful !!!

As I said KIP, call DWP etc, as sometimes one can get very unhelpful answers here


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## xabiaxica (Jun 23, 2009)

extranjero said:


> Do you not have to have a medical examination in Spain to determine the percentage of disability?
> How can someone be 100% disabled unless they are totally paralysed?





larryzx said:


> Yes, very helpful !!!
> 
> As I said KIP, call DWP etc, as sometimes one can get very unhelpful answers here


I thought he was asking a question.........


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## extranjero (Nov 16, 2012)

xabiachica said:


> I thought he was asking a question.........


Exactly, I wan't giving any info, merely querying how a 100% disability can be other than just that .
A friend of ours on incapacity benefit some years ago had to go for a medical in a Spanish clinic, arranged by the DWP in the UK, and it depended on the doctors report as to whether the payment would continue.
I thought perhaps it might apply to the OP
No need to shout me down, John!


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## larryzx (Jul 2, 2014)

extranjero said:


> Exactly, I wan't giving any info, merely querying how a 100% disability can be other than just that .
> A friend of ours on incapacity benefit some years ago had to go for a medical in a Spanish clinic, arranged by the DWP in the UK, and it depended on the doctors report as to whether the payment would continue.
> I thought perhaps it might apply to the OP
> No need to shout me down, John!



Sorry I thought you were making a silly comment, my mistake. 

However if you read my post you will see I said , "When I was in receipt of Invalidity/incapacity Benefit and enquired of DWP what was the percentage of my disability as far as that allowance was,* they (DWP not me) said in UK it can only be described as 100%. *I explained that to Hacienda and that allowance was tax free in Spain."

So I suggest if you really need to get the answer to your question, you too speak to the DWP.


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## KIP1958 (Aug 2, 2014)

Thanks peeps..

Its not DWP incapacity payment.

The main payment is a service Invaliding pension and the amount is fixed for life unless its gets worse for any reason. (Without going into personal details it will not change) This is paid by the Xafinity paymaster like an Armed service pension.

There is also a War Disablement portion that comes from Service Personnel and Veterans Agency.

Both payments have a Zero Tax liability.

Maybe if I contact them, they may tell me what the situation with regards Tax in Spain is, but I just wondered if anyone on here in Spain,may be in a similar situation and might have an answer.


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## Goldeneye (Nov 12, 2011)

.
I've spent ages trying to get to the bottom of this, to no avail thus far... Our predicament is similar yet different.....
.
Similar in so much as when my husband was self employed I took out a Private long term disability plan in the 'unlikely' event my then very healthy (3 sick days in 25 years) hubby became sick and could no longer continue in his career... Well... He ended up with 3 potentially life threatening illnesses in quick succession and was told by the Doctor he had to stop work... Here in Canada his disability payments are Tax free.... ZERO TAXABLE ... thanks to an awesome accountant that told me to pay the premiums out of his salary with after tax $$ rather than have 'the company' pay them...

I've tried to discover if these payments would still be deemed as non taxable 'income' I've written to numerous accountants, even wrote to 'A place in the Sun' team hoping that one of their list of contacts would know... I've in gone local to Blevins Franks in Javea 3 times.. No one knows.. 

If you do get an answer Kip.. Please let me know...  I'll do likewise...
.
.


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## larryzx (Jul 2, 2014)

KIP. sorry I think I misunderstood.

I have a government pension for my police service, I also have an injury award which is tax free in UK. My government pension an the injury award are taxable only in UK. Until now (it is I understand changing this/next year) I was not required even to mention the government pension when I make my Spanish tax return, for my OAP (which is only taxable in Spain) and some other income.

Golden Eye. 
I have a Canada friend and as such I know that the Double Taxation Agreement between Spain and Canada is different from that between Spain and UK. My friend I understand has the option of paying, I think it is, 15% on all his income in Canada and then it treated as non taxable in Spain.

I would suggest to speak to the Canadian taxation , overseas, dept


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## KIP1958 (Aug 2, 2014)

larryzx said:


> KIP. sorry I think I misunderstood.
> 
> I have a government pension for my police service, I also have an injury award which is tax free in UK. My government pension an the injury award are taxable only in UK. Until now (it is I understand changing this/next year) I was not required even to mention the government pension when I make my Spanish tax return, for my OAP (which is only taxable in Spain) and some other income.


Thank you.

I don't suppose you know how it is changing this year do You?


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## larryzx (Jul 2, 2014)

KIP1958 said:


> Thank you.
> 
> I don't suppose you know how it is changing this year do You?


Not exactly, but I understand they will use the level of one's income, say in UK from a government employee pension, to set the 'starting level' for income tax, on the rest of one's income, say the UK OAP. Of course if one's income is below below the Spanish tax free allowance, it will/should not make any difference.

I have not researched it as I will not be concerned until the time come to make the next Declaration in May/June 2015, and only then to the extent necessary to ensure my gestor gets it right !


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## extranjero (Nov 16, 2012)

government pensions will have to be declared in Spain next year, although they will only be taxed in UK. this change is to work out your taxable base and will likely result in more income tax being paid.there is an article today on ThinkSPAIN, legal and financial section, about Spaniards who went abroad to seek work in Franco's time, and are receiving a pension from that country.
Previously they had not had to, or did not know they had to, declare these pensions on their yearly returns. Now they have to and may be fined for not declaring them as assets, and apparently will pay backdated tax from 2008.
Ex pats have always had to declare their pensions from abroad( except government) and pay tax on them in Spain, so why not these elderly Spaniards who have received them for many years.
WE were told pensions from abroad were only to be mentioned on the assets form if they were from annuities, but from this article, the tax office seems to regard them allas assets.
there is also a section on disability pensions, as they are hoping to make them exempt from tax in Spain, as at the moment they are taxed quite a lot.
According to Larryzx they already are!
confusing!


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## larryzx (Jul 2, 2014)

extranjero said:


> WE were told pensions from abroad were only to be mentioned on the assets form if they were from annuities, but from this article, the tax office seems to *regard them all as assets.*!


According to the Double Taxation Agreements, between Spain and UK, all pension income, including invalidity/disability allowances, and *almost all* other income, except government employee pensions (police, military etc) have been taxable only in Spain for many years.  Certainly for more than 25 years. If one paid tax to HMRC, in error/ignorance, that does not change the tax liability in Spain. 

That of course applies to private pensions and OAP and premium bond winnings etc..

However, pensions are not assets but income.


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