Viewing posts from: November 2000

Declaracion De La Renta

By Chris Burke
This article is published on: 25th May 2016

25.05.16

Impuesto Sobre La Renta De Las Personas Fisicas (IRPF)

Declaracion de la Renta, also known as IRPF is the annual income tax return that individuals have to submit/pay to the state/region of Spain where you are tax resident. In Spain the tax year is from 1st January to 31st December and you have to declare all your worldwide income. This is essentially very similar to the annual tax return you have to complete every year in the UK.

The period to submit your tax return is from the beginning of April to the end of June depending on whether you are self employed, employed or retired. During April you can submit your tax return only if your income is from a salary or a state or private pension from Spain. In May and June you can submit all other returns.

The procedure to submit your Declaracion De La Renta is as follows:

You can ask for a draft of your tax return from the tax office, check it and if needed change the details and then submit it. All this can be done online and this system can also be used if you declare a salary.

If you have a professional activity or a business you cannot get a draft, but you can ask for your fiscal information, that is all the information the tax office already have for you. You should always check this information is correct.

If you want to prepare the tax return yourself, in the tax administration web site (www.aeat.es) you can download a program to prepare and submit it (programa PADRE).

If you are a professional or have a business/self employed (what in Spain we call an “autónomo”) it is strongly advisable that you have a digital signature. It will be useful to submit your Income Tax Return and other paper work with the tax office, for both Taxes and Social Security.

Not everybody has to submit a tax return. If you have a salary under €22,000 paid by a Spanish company or income from capital/interest under €1,600 annually, you don’t need to submit it. Nevertheless it could be advisable to check if you are entitled to have some money back, which can happen.

If you are self employed, you don’t have to submit a tax return if your annual income is below €1,000 including income from all sources. As there are other higher limits for income from capital and capital gains only, the key thing here is being self employed.

No matter what, if your capital losses are above €500 you also have an obligation to declare. This, for, example would mean if you disposed of an asset and made a €500 loss on it. Therefore, if you have a salary of €20,000 and capital losses of over €500 you have to declare it/submit a tax return.

If you receive income from outside Spain you have to submit a tax return no matter how much you have earned in one year. So, if your income is below all the limits said before, and you have monies from a bank outside of Spain that has been subject to retention or withholding tax (see EU savings directive) no matter the sum, you have to submit a tax return even if there is no tax to pay.

It might be easier and safer for you to submit a tax return via a Gestor (accountant/tax adviser) so that it is done correctly, on time and perhaps most importantly hassle free.

Company Pension/Final Salary funding update 31st January 2016

By Chris Burke
This article is published on: 8th March 2016

08.03.16

With most UK Final Salary schemes (also known as Defined Benefit) now closing their doors to new members, the schemes are concentrating on trying to manage to make sure there is enough money for those people still in them for retirement. This ‘closing of the doors’ also means there is no ‘New Money’ entering the schemes, which takes away the option of new contributions paying the pensions of those currently retired, as they used to. One of the biggest reasons for this, is that many years ago these often called ’Gold Plated’ schemes were made up on the following mathematics:

People retired at 55, then died at 67.

Thus, approximately 12 years of payments should they live to this point. However, now the mathematics are more likely to be the following:

People retire at 60, and the average life expectancy is 84 in Europe.

You don’t need to be a mathematician to work out why the schemes are faltering, and worryingly in many cases, heavily reliant on their companies contributing millions of pounds to keep them going.

The Pension Protection Fund (PPF) takes these schemes under its wing should the company scheme get to a point that it cannot realistically recover from poor funding. However, it is gaining more and more ‘members’ and will only cover pension income up to a point. Therefore, many client’s believe it is better not to be in the PPF if possible, and have your pension under your own control and in essence not at the mercy of a government body to bail you out. People thought that the Kodak pension scheme would always be ok; unfortunately it was not and left a lot of people with no or little pension benefits.

Below is a transcript of the update from the Pension Protection Funds own website updating what has happened and why. If you have any questions regarding this or what your options are, don’t hesitate to contact Christopher, the article writer (contact information is at the bottom of this article).

Update from the Pension Protection Fund (PPF) of its members

The aggregate deficit of the 5,945 schemes in the UK Pension Protection Fund (PPF) Index is estimated to have increased over the month to £304.9 billion at the end of January 2016, from a deficit of £222.4 billion at the end of December 2015. The funding ratio worsened from 84.9 per cent to 80.5 per cent. Total assets were £1,258.7 billion and total liabilities were £1,563.6 billion. There were 4,923 schemes in deficit and 1,022 schemes in surplus.

The aggregate deficit of the schemes in the PPF 7800 Index is estimated to have increased to £304.9 billion at the end of January 2016, from £222.4 billion at the end of December 2015. The position has improved from the previous year, when a deficit of £367.5 billion was recorded at the end of January 2015. The funding ratio of schemes decreased over this month from 84.9 per cent to 80.5 per cent at the end of January 2016. The funding ratio is higher than the 77.6 per cent recorded in January 2015.

Within the index, total scheme assets amounted to £1,258.7 billion at the end of January 2016. Total scheme assets increased by 0.9 per cent over the month and decreased by 1.2 per cent over the year. Total scheme liabilities were £1,563.6 billion at the end of January 2016, an increase of 6.4 per cent over the month and decreased by 4.7 per cent over the year.

The aggregate deficit of all schemes in deficit at the end of January 2016 is estimated to have increased to £338.4 billion from £265.8 billion at the end of December 2015. At the end of January 2015, the equivalent figure was £392.6 billion. At the end of January 2016, the total surplus of schemes in surplus decreased to £33.6 billion from £43.4 billion at the end of December 2015. At the end of January 2015, the total surplus of all schemes in surplus stood at £25.2 billion.

The number of schemes in deficit at the end of January 2015 increased to 4,923, representing 82.8 per cent of the total 5,945 defined benefit schemes. There were 4,679 schemes in deficit at the end of December 2015 (78.7 per cent) and 5,175 schemes in deficit at the end of January 2015 (85.4 per cent of the 2014 population of schemes). The number of schemes in surplus fell to 1,022 at the end of January 2016 (17.2 per cent of schemes) from 1,266 at the end of December 2015 (21.3 per cent). There were 882 schemes in surplus at the end of January 2015 (14.6 per cent of the 2014 population of schemes).

Understanding the impact of market movements Equity markets and gilt yields are the main drivers of funding levels. Scheme liabilities are sensitive to the yields available on a range of conventional and indexlinked gilts. Liabilities are also time-sensitive in that, even if gilt yields were unchanged, scheme liabilities would increase as the point of payment approaches. The value of scheme assets is affected by the change in prices of all the major asset classes, not just equity markets. However, due to their weight in asset allocation and volatility, equities and bonds are the biggest drivers behind changes in scheme assets; bonds have a higher weight in asset allocation, but equities tend to be more volatile. Over the month of January 2016, liabilities increased by 6.4 per cent. Conventional and index-linked 15-year gilt yields fell by 34 basis points and 20 basis points respectively. Assets rose by 0.9 per cent in January 2016. The FTSE All-Share Index fell by 3.1 per cent over the month. Over the year to January 2016, 15-year gilt yields were up by 33 basis points and the FTSE All-Share Index was down by 7.9 per cent.

Retiring in Spain with a UK State Pension – How does it work?

By Chris Burke
This article is published on: 7th March 2016

07.03.16

Many people understand that the UK is in the EU (for now at least) and therefore when you retire, it should be simple to understand how you claim your State and personal pensions. The main questions people have are what pension will you receive, how will you receive this, where should you be paying your taxes and how when retired, can you receive your pension in Euros and what could happen if you don’t have this organised correctly?

Over the last few years this has changed and, as of now, works in the following way.

Never worked in Spain but retiring here

In this scenario, having never paid Spanish taxes you will receive the UK State pension by contacting the HMRC on the following links:

How to check what State pension you have

www.gov.uk/check-state-pension

How the State Pension works

www.gov.uk/state-pension

How the new state pension will work

www.gov.uk/new-state-pension

How to claim your state pension online

www.gov.uk/claim-state-pension-online

Early retirement and State Pension

www.gov.uk/early-retirement-pension

You will be able to find out exactly what you will be entitled to and how it works. UK State pensions are always paid gross and never taxed, it is your duty to report this in your annual earnings whichever country you are resident in and along with your income, pay the relevant tax. State pension does come under the tax bracket as income tax.

www.gov.uk/tax-uk-income-live-abroad

You can choose to have your UK State pension paid into a UK bank account in sterling, or into a Spanish account in Euros at the rate of exchange that day (i.e. almost no costs for doing this).

If you have a private or company pension scheme in the UK, you should register on the following link and make sure this is also paid gross to you:

www.gov.uk/government/publications/double-taxation-united-kingdomspain-si-1976-number-1919-form-spain-individual

Then, you should be declaring this income in your annual tax return here in Spain (Declaracion De La Renta) and pay the relevant taxes, it’s advisable to find a good gestor to guide you.

A word of note here, unlike in the UK where your accountant/tax advisor is accountable for the advice they give you, here in Spain YOU are liable, even if the advice you are given is wrong. This stems back from Spanish culture, which you may remember when you learnt Spanish that they say in essence ‘The pen fell from my hand’ whereas in English we would say “Oops, I dropped the pen”.

Worked in Spain & the UK, Retiring here

In this scenario, as the UK is part of the EU, you should approach the local tax office in Spain and inform them of your situation. They in turn, would then contact the other countries you have worked in and where you paid tax and National Insurance contributions. This would then be paid to you by them directly as they collect from the relevant countries.

Different countries have different ages that they start paying your State pension from, so you need to bear that in mind.

Failure to correctly declare your pension income

What if you are or planning to be a resident here in Spain, but collect your UK state and private pension directly from the UK and do not declare here and in essence pay no taxes here? Surely, as the UK and Spain have a Double Tax Treaty (DDT, which means that you will not pay tax twice on any income you receive) as long as you are paying tax somewhere it’s not a problem? Well, consider that you are living in Spain as a resident, using their services, taking advantage of the healthcare and all the other things that make living here so enjoyable. Yet, you are paying UK taxes even though you are not living there. As you can see this doesn’t seem right! And it isn’t! Therefore, if you are found declaring your income incorrectly, it could result in you being fined, maybe even substantially. What is more, there is usually a minimal difference in the tax you might pay, whether it be in the UK or here, depending on your situation and income.

Also, give the fact that WILLS have now changed as of last August, meaning in essence you can choose which jurisdiction (country, laws) your estate would apply to, there seems little reason to risk this and not declare and pay your taxes as they should be. It would certainly stop a nasty knock at the door at some point down the road, especially as of next year when Common Reporting Standards come into rule (CRS – where countries around the world will be sharing information on the finances of their passport holders) meaning it’s even more likely you could be ‘found out’. Please note, this does not change where you are taxed for succession issues.

Therefore, we recommend making sure you are doing things properly, whether this involves you declaring this yourself or through a gestor, as well as making sure your WILL is up to date.

UK Pension Tax Changes 6th April 2016 (lifetime allowance)

By Chris Burke
This article is published on: 3rd March 2016

03.03.16

Anyone who has a private or company pension in the UK could be affected by the changes being brought in on the 6th April this year. This may be anyone with private pension(s) whose combined value is around £1,000,000, or a company pension scheme which would give an income in retirement of approximately £40,000 per annum.

In essence, the changes affect the tax you would pay on this money. Up until now, any pensions combined under £1,250,000 in real value would not be subject to any further taxes than those of normal income or inheritance tax. However, any pension with a value higher than this would be subject to additional taxes. This allowance is called a ‘Lifetime Allowance’ (LTA). The tax on pensions over this value can be up to 55%.

As from April this year, this Lifetime Allowance Value is being reduced to £1,000,000. Therefore, any pensions combined worth more than this would now be liable to these potentially additional taxes.

If you have a Corporate, Company, Final Salary or Defined Benefits Scheme this will also be tested against the new Lifetime Allowance. These Schemes are based on your final salary when leaving your employer as opposed to contributions and investment growth, and the amount usually has to be multiplied by a factor of 20 in order to calculate the capital equivalent value. These Schemes also usually pay a tax-free lump sum, and this also has to be included in the LTA calculation. Therefore, depending on the pension(s) this new limit may affect you.

What are the key factors involved in the Lifetime Allowance testing?

Retirement after age 55: Once a lump sum/income is taken from a Pension, these are tested against the LTA.

At age 75: Any Pensions that have not been accessed will be tested against the LTA at this time. Pensions in drawdown will also be tested again at this time.

Death pre-age 75: Pensions will be tested against the LTA to ensure that the limit has not been exceeded.

Transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme – when you transfer your pension outside of the UK): If a UK Pension Scheme’s funds are transferred into a QROPS, the value of the transferred funds are tested against the LTA.

Of course, the main point here for many people is death before age 75. If this happens, as is stands your pension will be subject to this potential tax from £1,000,000 and above.

What are the tax charges?

If the Lifetime Allowance is exceeded, then the tax charges will depend on how the excess is paid from the Scheme.

If as a lump sum (normally the case in inheritance): subject to a 55% tax charge.
If as a Pension Income: subject to a 25% tax charge.
Transfer to a QROPS: subject to a 25% tax charge on the excess above the LTA.

Is there any protection against Lifetime Allowance charges available?

The UK Government has confirmed that from April 2016, the following two protection regimes will be available, allowing individuals a fixed or individual LTA dependent on the value of their Pensions and/or the type of protection:

Fixed protection 2016: This ‘fixes’ the LTA at the current £1.25m. In order for this to apply, no further Pension benefits can be accrued in a Scheme on or after 6 April 2016.

Individual protection 2016: The LTA will be set at the value of the Pension on 6 April 2016, when the new £1m LTA is introduced, so long as it is valued between £1m and £1.25m. This protection does allow further contributions, but any Pension in excess of the protected LTA will be taxed on the usual way when tested.

What about a transfer to a QROPS/Overseas pension scheme?

This currently enables an individual to safeguard their Pension Fund against this tax charge and allows the fund to carry on growing. As detailed above, the fund is tested against the individual’s Lifetime Allowance at the point of transfer, rather than at the point of each pension being tested as per above scenarios, i.e. death before pension accessed etc.

Perhaps the most important information to know regarding this, is that not so long ago the Lifetime Allowance for pensions was £1,800,000 in the UK. It is consistently reducing, which is worrying considering every twenty four years historically inflation doubles, and yet the Pension Lifetime Allowance is dramatically being reduced instead of increased, such as the tax bandings for income tax have been after years of lobbying by the general public. This could lead us to one main conclusion, the UK governments’ need to collect more and more taxes. Therefore, as the years pass by it could be this differential continues to grow and grow, in real terms meaning individuals will pay more and more tax.

The key points to consider with this are:

Having your pension(s) in the UK will enable them to be liable to the UK rules and the government’s ability to change them, including the uncertainty of what these changes may be in the future.

The Lifetime Allowance is consistently decreasing, meaning taxes are consistently increasing.

Understanding of these changes and how it might affect you could save you or your loved ones considerable money in potential taxes.

If you have no plans to retire in the UK and have pensions there, it could be worth having these evaluated to see whether it would be beneficial for you to transfer them securely outside of the UK.

Talking your personal circumstances through will put your mind at rest, or enlighten you on what your options are and how you can best plan for this eventuality.

If you would like to ask any questions regarding this subject, or speak to Christopher, a UK pensions expert who wrote this article, feel free to contact him on the details below.

To QROPS or Not?

By Chris Burke
This article is published on: 25th February 2016

The rapidly changing landscape of pension schemes in the UK has led to a great deal of confusion, and it’s not just UK pensioners who are affected. The rule changes also impact expats living outside the UK, especially those considering the benefits of a Qualifying Recognised Overseas Pension Scheme (QROPS).

As an expat, it’s hard to know which route to take. Should you transfer to a QROPS or leave your pension in the UK? What are the benefits and drawbacks? What impact have recent changes had on your options?

Let’s look at the QROPS facts…

Up to 100% of the pension pot is available, depending on the jurisdiction. 25% could be tax-free if you are UK resident but could be taxable if resident outside of the UK.
Uncertainty of more UK tax changes, with several ideas being muted which all in essence make you liable to pay more tax or have less allowances on your pension.
No pension death tax, regardless of age, in Gibraltar and Malta.
Greater investment freedom, including a choice of currencies and investments which could make a difference to the amount of money you receive.
Retirement from age from 55.
Income paid gross from Malta (with an effective DTT), and only 2.5% withholding tax in Gibraltar.
Removal of assets from the UK may help in establishing a Domicile outside of the UK (influences UK inheritance tax liability).

What will happen if you leave your personal pension in the UK?

On death over the age of 75, a tax of 45% on a lump sum pay-out.
Income tax to be paid when receiving the pension, with up to 45% tax due, likely deducted at source.
Registration with HMRC and the assignment of a tax code which could start as a higher emergency tax code.
Proposed removal of personal income pension allowance for non-residents. Although this is still on the agenda, it has been confirmed that there will be no change to non-residents’ entitlement to personal allowance until at least April 2017.
Any amounts withdrawn will be moved into the client’s estate for IHT purposes, if this is retained and not spent.
As the client will be able to have access to the funds as a lump sum, these could potentially be included as an asset for care home fees/bankruptcy etc.

What Does All This Mean?

Regardless of the proposed legislation amendments, transferring to a QROPS still provides certain benefits that the UK equivalent would not be able to offer, although it’s fair to say that both still hold a valid place in expatriate financial planning. The answer to which pension is more suitable for you will ultimately depend on your individual circumstances and long term intentions. It is vital you talk to a Financial Adviser who can advise you correctly on this.

Financial seminar for expats in Catalonia

By Chris Burke
This article is published on: 25th February 2015

25.02.15

The Spectrum IFA Group’s Chris Burke spoke at a recent financial seminar alongside Spanish Lawyer, Nuria Clavera Plana, in Llafranc. The event was attended by 30 people and was followed by a Q&A session and a chance to meet the speakers over coffee.

Chris’s presentation covered:

Currency forecast, thoughts and ideas to implement for 2015.
UK Government Pensioner Bonds – 2.8%-4% per annum for anyone holding a UK bank account and debit card.
UK Pension & QROPS changes – Is your pension being managed effectively and is it in the right place?
Spanish Life Assurance Bonds/Investment – potentially Tax efficient, historically good returns (Prudential) and potentially succession planning friendly.

Chris ran through the concept of ‘the magic bank account’ for over 65’s in the UK, and many people were surprised to find out that you do not have to live in the UK to benefit from these – you just need a UK bank account and debit card and can achieve between 2.8% to 4% per annum with the savings also government backed. He discussed predictions and thoughts on currency, which highlighted last year’s most successful currency forecaster, stating that the Euro/Dollar will be at parity at 1-1 by the end of 2015. Still just as unnerving for those living in Spain, was the prediction that the Euro would reach 1.42 by the end of 2015 against the pound, particularly if the EU have to keep printing money to solve the crisis.

The new rules on UK pensions and QROPS were also highlighted. QROPS is a UK pension that has been moved overseas to benefit from EU rules (please note your pension should be evaluated by a qualified pension evaluator before you consider doing this) and although the new UK rules give much more flexibility, everyone acknowledged that hefty tax could have to be paid to access these. Qrops still has benefits over and above leaving your pension in the UK depending upon your situation, and from April 2015 should have nearly all of the benefits a UK pension will be entitled to, and potentially more.

Tax efficiency was perhaps the most popular subject Chris presented on, with most people interested in saving money on taxes both on their savings and with succession planning. In fact, passing on their money tax efficiently was the main interest over coffee after the presentations.

Presentation From Nuria Clavera Plana (Lawyer):

New income tax for Catalonia 2015 and what are the exemptions.
New Capital gains Tax for 2015 in Catalonia.
What assets need reporting.
Pension income from sources outside of Spain Amnesty.

Nuria as ever gave a very interesting presentation on what you now have to pay in taxes throughout Catalonia, the reasons why and how this works. By far the most popular conversation was the changes to Inheritance tax rules now in Catalonia, which in essence are the same now for Spanish Nationals and Foreigners residing here. This incorporates a big reduction in tax compared to before. It was also surprisingly good news for those leaving behind assets up to €1,000,000 with potentially limited tax to pay.

There were many questions surrounding what does and doesn’t need reporting for the Modelo 720 overseas asset declaration, ranging from classic cars to items not reported before. This topic always throws up major questions as always!

This year in Spain it is now a requirement to report any overseas pension income you are receiving up until the 30^th June 2015. This generally would not have been taxed in most cases in the respective overseas countries due to the amount in question. However this should be reported in Spain and could therefore be subject to Spanish tax laws. It was discussed that this new law has been brought in mainly to find those Spanish Nationals who have been receiving pensions from working abroad previously and have not been declaring them or paying the relevant tax.

Nuria as ever gave everyone detailed analysis on these changes, so everyone left the event with a better knowledge of their own personal situation.

If you would like more information on this or any other questions you may have regarding Tax advice, please do not hesitate to contact Nuria on nuriaclavera@icab.cat or Telephone 972305454.

Chris and Nuria would like to thank all the attendees for asking such pertinent questions and joining in, making the event such a success.

Chris will also be presenting at future seminars in the coming months. Please feel free to contact him on chris.burke@spectrum-ifa.com or telephone him on 936652828 if you would like to know more about these, or wish to discuss any of the above details.

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Smart Ways to Make the Most of Your Finances

By Chris Burke
This article is published on: 10th February 2015

10.02.15

The year 2015 is picking up speed, and now is the perfect time to stop and re-evaluate our finances before we slip back into our old comfortable routines. A time to review the past year and determine those areas with potential for improvement, to make sure we are getting the most out of our investments and reaching all our financial goals.

Do you know where your money goes each month? Could you be making more if you invested elsewhere? Is your credit rating a true reflection of your financial situation, and are there things you could be doing to improve your standing?

Follow these smart ways to make the most of your finances and put you and your family on the right track for a wealthier future.

Study your Credit Report
Have you ever seen a copy of your credit report? Most people haven’t and it may surprise you to hear that they very often contain errors. Research online and get access to your report and make sure there aren’t any mistakes which could be having a negative impact on your rating. If you don’t, you could be at risk from undiscovered inaccuracies.

Study your Cash Flow
Set some time aside to study your cash flow. Go over all your statements from the past year and crunch those numbers to gain a true understanding of where your money goes each month. How much are you spending? Where is it all going? Where can you make cuts to your monthly outgoings?

Credit Cards & Banks
Check the Terms and Conditions of all your credit cards and compare terms, rates and fees with those of other cards. Are you getting the best deal or are you just renewing cards out of habit? Get rid of credit cards which don’t give anything back, and compare rewards and cash back with other offers. If your current bank is letting you down and not providing the service you need, change.

Understand Investments
Most of us don’t fully understand investments. Be the minority. Do your research and find out as much as you can about viable investment options. Use the Internet and its many free tools, and study the market to assess how to make the most of your finances.

Seek Professional Advice
Ultimately, the best advice is professional advice. The Spectrum IFA Group can assist you in reviewing your financial situation and advise you on smart ways to make the most of your finances. For more information or to contact one of our Financial Advisers please use the contact form below.

The Financial Implications of Moving Abroad

By Chris Burke
This article is published on: 30th January 2015

Moving abroad can be a stressful and confusing experience and starting from scratch in a new location can often be overwhelming.

If you have recently decided to up sticks and move to Barcelona, or if you’re a recent arrival in the sunny Catalan capital, then you will have many choices to make. Aside from the immediate practicalities of moving to a new country, such as choosing schools, buying or renting property, and setting up residency for you and your family, there are many other (often overlooked) factors to take into consideration:

Pensions:
Unlike the UK, most companies in Spain don’t provide a private pension scheme or private health insurance. However, as an Expat, you may have unique opportunities available to you. An adviser will be able to discuss each of the options enabling you to make a decision.

Banking:
Having the right banking arrangements is a key part of life overseas. It’s best to sort your finances out before you go, as local banks usually require a credit history and proof of address to set up an account – which you won’t have when you arrive.

Tax:
Dual-Country financial arrangements are complex and should not be taken lightly, as even the most innocent transaction can be costly if not well planned.

Savings and Investments:
There are many factors that go into determining the best country in which to locate your investments. Bear in mind that you may have access to, and potentially benefit from, onshore and offshore savings and investment assets.

ISAs:
If you currently have an ISA and are planning to move abroad, they are not tax efficient in Spain. You also need to be fiscally resident in the UK to pay into one.

Will & Testimony:
Your Will (and those of your family members) will need to be updated so that it is compliant in Spain

Financial Advice:
The complexities in managing currency risk, an investment portfolio, and dual-nation tax reporting are many. It is important for expats to have a trusted adviser who understands the financial nuances of living an international lifestyle.

Saving for Retirement in Spain

By Chris Burke
This article is published on: 28th December 2014

How do you save for retirement in Spain and what are the best options for expats?

These days there are quite a few choices on how to receive your pension as a British expat and, if you qualify for a UK state pension, you can claim it no matter where you live. The money can be paid into a UK bank or directly into an overseas account in the local currency. If you move to Spain before retirement and work there for a number of years, it may also be possible to receive a state pension from more than one country.

If you’ve qualified for a state pension from the UK, it will be paid (and taxed) in Spain but uprated every year in the same way as the UK. The personal tax allowance in Spain is €6,069 (£4,923) compared with £10,000 in the UK. The basic rate of tax is also higher, at around 24% compared to 20% in the UK. And in Spain there is no 25% tax free lump sum available when retiring, and any Isa’s you have in the UK will be liable for tax if you become resident in Spain.

A lot to consider…

Saving for Retirement: Tips

Plan Ahead: Pay off debts and take advantage of tax free personal allowances.

Do Your Homework: Before sitting down with an independent financial adviser, make sure you have a clear picture of your current finances and what you need to consider in order to achieve the lifestyle you want over the years ahead.

Consider Your Saving Options: The recent Budget announced radical changes to pension schemes – good news for savers. From April 2015, individuals may withdraw as much or as little from their pension fund in any year with 25 per cent being withdrawn free of tax.

Regularly Review Investment and Retirement Plans: Review your investment and retirement plans every six months to ensure any advice received is up to date and relevant.

Prudential: Flexible Savings for Retirement

The Prudential Flexible Retirement Plan gives access to a range of flexible retirement and investment solutions to suit your changing needs and priorities. Whether you are approaching retirement or some way off, the flexibility provides an easy transition from saving for retirement, through to approaching retirement and then taking an income.

Professional Advice for Expats

The earlier you get your financial planning in order, the better. Make a mistake with your pension, and you could end up paying for it for the rest of your life.

A pensions expert will be able to point you in the right direction. You will need to take Spanish rules into consideration, so taking advice from an adviser conversant with both UK and Spanish pension and tax rules is essential.

Finding a Financial Adviser in Barcelona

By Chris Burke
This article is published on: 27th December 2014

The number of British people moving abroad is rising, with about one in 10 British people now living overseas.

Despite its obvious economic difficulties, Spain continues to be one of the most popular destinations for British expatriates, as the laid-back lifestyle and improved transport links with the UK gives it an allure that is hard to resist.

However, setting up residence in a Spanish city, such as Barcelona, involves a great deal of upheaval, both on a personal and practical level, and it’s a sad reality that expats can be particularly vulnerable to poor financial advice.

How to Choose a Financial Adviser

In practical terms, one of the most important things to get right as an expat is your finances, and having the right banking arrangements is a fundamental part of life overseas. Banking services should ideally meet at least two main criteria: flexibility (money should be easy to access and transfer between countries); and financial security (in a reputable bank that complies with international financial regulations and has a solid capital base).

But what other factors should you take into consideration when searching for a Financial Adviser in Barcelona?

Are they regulated? Do your research, visit websites, and confirm registration with the IFA before choosing an adviser.
Qualifications: Every nation has different rules relating to how qualified a financial adviser needs to be to gain authorisation, but the UK is a world leader in terms of required qualifications. So if you’re speaking to a British adviser abroad, you can gauge their industry education based on the British qualifications they have.
Experience: You can ask your adviser how long they’ve been qualified and giving advice, and you can research the brokerage to see how long they’ve been in business.
Are they independent? Ensure that your adviser is independent rather than tied to one financial institution, so that they are able to advise you on suitable products from the entire financial market place.
Testimonials: If your IFA is good at their job, they are highly likely to have a list of satisfied clients, from whom you can request a testimonial.

The Spectrum IFA Group

At The Spectrum IFA Group, we provide financial advice to expats on all aspects of living, moving and working in Spain. From calculating the cost of living to choosing a good school for your children, our guides to money management and family finances will help you prepare for the challenges of living and working abroad – so you can make the most of your expat experience.

We provide Insurance Intermediation advice and assist clients in their choice of Investment Management Institution. Mutual respect is earned by working together, looking after your best interests and by adding value to your financial planning through qualifications, experience and enthusiasm.