Advice for UK investment holders from Blacktower Financial Management (Int.) Ltd.
Keith Littlewood offers tips for expats with investments in the UK
Many people come to Spain and are quite content with the investments and bank accounts that they hold in the UK, and this is understandable. You can continue to receive statements in English, they are easy to understand and are generally very safe. However, this can lead to serious problems and very unexpected tax bills later down the line for you as a Spanish resident.
UK give very generous allowances now on savings. The current personal allowance for income is £11,500 per annum and if you earn less than this you can enjoy up to £5,000 savings income tax free each year. Even if you receive a higher level of income you will receive up to £1,000 tax free each year which reduces to £500 for higher rate taxpayers.
UK and Spain do have a reciprocal arrangement which means it is ok for institutions to deduct tax at source, but in many circumstances tax is not deducted unless the amounts are very large. The problem is that Spain will expect to receive the difference between the tax deducted and what is owed as a Spanish resident. Spain has personal income allowances much lower than the UK and does not have the same generous breaks on savings so the probability is you will owe tax in Spain.
It is very easy to be complacent especially in a low interest environment but the same rules apply to most investments. Serious problems can arise for investment Bonds, PEPs, TESSA’s and ISA’s. Large amounts built up in these tax advantageous investments not taxable in the UK can give you an unexpected shock in 2018 when the Hacienda tax bill drops in your Buzón. Most countries (including UK and Spain) are adhering to the Common Reporting Standards next year so the respective tax office WILL know about your holdings and WILL expect their tax.
Hopefully you will have completed a Modello 720 and reported assets outside Spain where required, if not you need to act now and speak to a Financial Adviser about the best course of action.
It is not all doom and gloom because quite often a few small tweaks to your investments and savings can still remain tax efficient whilst abiding by the rules applying to you in Spain. It is essential you speak to a Financial Adviser if only for the peace of mind and all discussions are completely confidential
If you feel like this and/or would just like a helping hand to review what you have, contact me and I will sit down and go through your portfolio with you.
In today’s financial climate it is essential you do everything you can to make sure your money is safe and secure and what you want to transpire in the future has the best chance of happening. If you need advice or if have any questions regarding the above you can contact me, Keith Littlewood DipPFS on 657 684 094 or email keith.littlewood@blacktowerfm.com
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity. Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) and is registered with both the DGS and CNMV in Spain.