Off to Spain and burning boats!

srcandas

If anyone could sanity check this or offer anything we've missed I’d be very grateful as once done no turning back.

My Spanish wife (57) and I (62) are going permanently to Spain. We will be UK tax resident 2015/16. Spanish tax resident 2016/17 onward.

Wanted to sell house and get into Euros before General Election as pound so strong at moment. However house sale delayed until September.

So to buy some Euros we will raid our SIPPS now. (Spanish tax is higher than UK and SIPPs there offer no tax benefit so SIPPs will not benefit us in the future).

Wife’s SIPP only has £16000 so extract the lot after April 6th and pay very little tax as she hasn't had her 25% yet and has a £10600 personal allowance. Extract £37000 from my £73000 SIPP (already in drawdown) paying 20% on most of it (only PA to play with and allowing for my £5000 annuity). And convert the approx. £47000 proceeds into Euros deposited in Isle of Man before GE. (Need to be invisible to Spain to avoid CGT on house sale).

My wife can this year still earn £30000 from my small limited company and only pay base rate. The company owes me money so I’ll try and extract all of that.

I have enough state pension contributions. My wife can buy a state pension contribution for year 2015/16 if no earnings.

If we had one more year I could extract the rest of my SIPP but due to Spanish family needs can’t wait. So I’ll just suck it out over next 2 years and suffer Spanish tax.

Qs still struggling with:

I have more than enough years state pension contributions (although been awaiting a statement for several weeks now like many:(). Is there any value in getting more when not earning a salary?

I understand delaying state pension is not as profitable as before but with this SIPP raid I could easily delay state pension for 2 years. Is it likely to be worthwhile if I live to say the average 83 years? I thought not but would appreciate any thoughts.

My wife has 29 years pension contributions in Spain, 6 in UK. Will she be able to buy more in the UK in the future? She will not work in Spain.

And finally just on the off chance any expats passing know how SIPPs are taxed in Spain with regard to gain and/or income?

Sorry bit long and a bit belt and braces but any thoughts very welcome as this is a burning the boats campaign. Tx. :beer:

DaveMcG

Extract £37000 from my £73000 SIPP (already in drawdown) paying 20% on most of it (only PA to play with and allowing for my £5000 annuity)

Think you might get taxed @ 40% on this and have to reclaim (if you withdraw early in the tax year), you should check with your provider.

srcandas

DaveMcG wrote: »

Think you might get taxed @ 40% on this and have to reclaim (if you withdraw early in the tax year), you should check with your provider.

Dave you're a star. Thank you. So I'll only have £35000 and not £47000 to change to Euros. And need to wait possibly a year or more for a rebate.

I'll give HL a buzz. Hopefully I can persuade them I will not be earning in the upper tax bracket but appreciate they have rules .

Last year I earned (incl. pensions/drawdown/salary) £10000 and probably £15000 the year before so have a non higher tax paying history .

I wonder if I could try a reclaim from HMRC in April based on knowing my yearly income is less than the higher tax limit?

jamesd

Is Portugal too horrible a place to live for a little while? Given that it has 0% income tax on foreign pension income? Maybe if family is close enough to the border it'd work. You could take some money now and then use flexi-access drawdown to take out all of the rest of the pot tax free after becoming tax resident in Portugal. Big catches if you return to the UK as a tax resident within a couple of years, though.

srcandas

jamesd wrote: »

Is Portugal too horrible a place to live for a little while? Given that it has 0% income tax on foreign pension income? Maybe if family is close enough to the border it'd work. You could take some money now and then use flexi-access drawdown to take out all of the rest of the pot tax free after becoming tax resident in Portugal. Big catches if you return to the UK as a tax resident within a couple of years, though.

Tx James always a pleasure to hear from you. Sadly we are going faster than we would have wanted to look after my Spanish MIL and although we will head to Cadiz not far from the border moving MIL over the border for if nothing else her medical needs is a no no.

Personally I much prefer port to sherry