# Crown Pension.



## GallineraGirl (Aug 13, 2011)

Hi. A friend has been told by her Gestor that she does not have to put her Teacher's Pension on her Spanish Tax return as she pays no tax in England on it. Apparently Her Gestor has checked with Hacienda. She understood that a change in the law last year meant that she did have to declare this pension in Spain this year ( even though she will not pay tax in Spain on it). Can anyone clarify the situation? Thanks for any help, as she is now very worried about things.


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## thrax (Nov 13, 2008)

Yes, she does have to declare it but she won't pay tax on it as it is taxed in UK. However, it will be used against her allowances on any money earned here.


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## GallineraGirl (Aug 13, 2011)

thrax said:


> Yes, she does have to declare it but she won't pay tax on it as it is taxed in UK. However, it will be used against her allowances on any money earned here.


Thank you. Do you have a link to anything official that actually says this? As, I mentioned, the Gestor actually phoned Hacienda, in her presence, and was told that she did not have to declare it as she paid no tax on it in England.


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## mrypg9 (Apr 26, 2008)

GallineraGirl said:


> Thank you. Do you have a link to anything official that actually says this? As, I mentioned, the Gestor actually phoned Hacienda, in her presence, and was told that she did not have to declare it as she paid no tax on it in England.


If as you say she pays no UK tax it must be a very small amount..so maybe it won't count against allowances.
I pay a lot of UK tax on my pension incomes so it is offset against Spanish allowances.


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## GallineraGirl (Aug 13, 2011)

mrypg9 said:


> If as you say she pays no UK tax it must be a very small amount..so maybe it won't count against allowances. I pay a lot of UK tax on my pension incomes so it is offset against Spanish allowances.


She pays a lot of tax in Spain though - doesn't the amount of UK income get added to her Spanish income now, to determine her tax band? Then even a small amount of UK income could change the band she is in.


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## stevesainty (Jan 7, 2011)

Just to make things clear there are three types of UK income. 

1 Only taxable in UK for example Government pensions
2 Taxable in both UK and Spain for example income from UK property lettings
3 Only taxable in Spain for example private pensions, bank interest, UK employment.

In type 1 above you are required, from this year, to declare this income on your Spanish tax return as exempt income. This is because of the changes to the Dual Taxation Agreement between UK and Spain that was ratified in 2015. The result of this is you will not be taxed on it but it will be taken into account when deciding the rate of tax you will need to pay on your Spanish income, IE lift you into a higher tax bracket.

In type 2 above You need to declare this income on both the UK tax return and the Spanish tax return. You will be able to offset any tax paid in UK against the tax due in Spain.

In type 3 above, in theory, you should able to get this income paid tax free in UK with any UK tax paid in error refunded by HMRC


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## GallineraGirl (Aug 13, 2011)

stevesainty said:


> Just to make things clear there are three types of UK income. 1 Only taxable in UK for example Government pensions 2 Taxable in both UK and Spain for example income from UK property lettings 3 Only taxable in Spain for example private pensions, bank interest, UK employment. In type 1 above you are required, from this year, to declare this income on your Spanish tax return as exempt income. This is because of the changes to the Dual Taxation Agreement between UK and Spain that was ratified in 2015. The result of this is you will not be taxed on it but it will be taken into account when deciding the rate of tax you will need to pay on your Spanish income, IE lift you into a higher tax bracket. In type 2 above You need to declare this income on both the UK tax return and the Spanish tax return. You will be able to offset any tax paid in UK against the tax due in Spain. In type 3 above, in theory, you should able to get this income paid tax free in UK with any UK tax paid in error refunded by HMRC


Thank you. This is as I have understood it - she does have to declare her Teacher's Pension in her Spanish Tax Return. The problem is that I need a concrete link to the Hacienda website which says this in Spanish for her Gestor who is Spanish and speaks only a little English.


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## stevesainty (Jan 7, 2011)

GallineraGirl said:


> Thank you. This is as I have understood it - she does have to declare her Teacher's Pension in her Spanish Tax Return. The problem is that I need a concrete link to the Hacienda website which says this in Spanish for her Gestor who is Spanish and speaks only a little English.


BOE.es - Documento BOE-A-2014-5171

This is the link. I do not know the relevant section although this page also has a link to an analysis.

Unfortunately my Spanish is not good enough to read through it and point to the relevant section.


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## mrypg9 (Apr 26, 2008)

GallineraGirl said:


> She pays a lot of tax in Spain though - doesn't the amount of UK income get added to her Spanish income now, to determine her tax band? Then even a small amount of UK income could change the band she is in.


You say she pays a lot of tax in Spain so I'm presuming she works, has been working or has income from assets in Spain or the UK and she has only just become eligible to receive her TP.
In which case her TP should be added to the income on which she is already paying tax in Spain.
As thrax pointed out, it may affect her allowances.
I went and did my declaration this morning. Simplicity itself...


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## GallineraGirl (Aug 13, 2011)

stevesainty said:


> BOE.es - Documento BOE-A-2014-5171 This is the link. I do not know the relevant section although this page also has a link to an analysis. Unfortunately my Spanish is not good enough to read through it and point to the relevant section.


 Thanks very much for the link. I think that it is Article 22.1.b which roughly translates as: b) Where in accordance with any provision of the Convention income derived or capital owned by a resident of Spain is exempt from tax in Spain, Spain may nevertheless, in calculating the amount of tax on the remaining income (or capital) of such resident, take into account the exempted income.

BIngo!


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## stevesainty (Jan 7, 2011)

GallineraGirl said:


> Thanks very much for the link. I think that it is Article 22.1.b which roughly translates as: b) Where in accordance with any provision of the Convention income derived or capital owned by a resident of Spain is exempt from tax in Spain, Spain may nevertheless, in calculating the amount of tax on the remaining income (or capital) of such resident, take into account the exempted income.
> 
> BIngo!


Well done, I was just getting there myself after consulting my own Spanish tax return submitted a couple of weeks ago.


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## ElaineG (Jun 4, 2015)

A friend declaring his crown pension this year, for first time, has paid 150% more tax this year than he paid last. (almost 3,000 against 1,100 last year). The taxable income in Spain is the same this year as it was last. 

Seems like the crown pension was taxed albeit by a devious means


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## Rabbitcat (Aug 31, 2014)

So just to be clear- are we saying Crown pension still stays taxable only in UK BUT must be declared in Spain?

Thanks


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> So just to be clear- are we saying Crown pension still stays taxable only in UK BUT must be declared in Spain?
> 
> Thanks


Correct. The Crown Pension should go in a separate box on the Tax Return, called Renta Exenta.


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## ElaineG (Jun 4, 2015)

According to the 2013 Agreement, Crown Pensions are only taxable in UK (unless one is both a Spanish national and resident in Spain). However as from this year (the tax declaration for 2015) they are 'taken into consideration.' It is shown in box 470.

It was generally thought that would lead to a small increase, not 150% more.


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## stevesainty (Jan 7, 2011)

ElaineG said:


> According to the 2013 Agreement, Crown Pensions are only taxable in UK (unless one is both a Spanish national and resident in Spain). However as from this year (the tax declaration for 2015) they are 'taken into consideration.' It is shown in box 470.
> 
> It was generally thought that would lead to a small increase, not 150% more.


It all depends on the amount of Spanish Income. The effect of declaring a crown or government pension as exempt income usually means that, because of the level of worldwide income, your Spanish income is pushed into the higher tax brackets. In my case I only have a very small Spanish income, I do not yet receive my UK old age pension, and so 30% or 40% of that is very small. If you have Spanish income / a UK old age pension / UK rental income / a UK private pension in addition to your government pension then 30% or 40% can amount to a lot of extra tax to pay.


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