Foreign resident with money in UK account

BrunoSpain

Not sure if this should be in banking or tax. I am a UK citiizen who has been resident in Spain where I am officially self-employed for many years. My elderly mother has recently sold her house and moved into a care home in the UK. My sisters who have power of attorney have divided the money from the sale of the house and other assets of my mother between my 3 siblings and me, leaving enough to cover care home costs and future inheritance tax . As a result I now have a large amount in my UK bank account. I am not very sure what I have to do if anything regarding tax in UK and Spain. Do I have to declare anything to UK tax authorities? I believe UK banks are obliged to inform Spanish tax authorities if any Spanish resident has significant amounts in accounts but have no idea how much would be considered significant or if Brexit has changed the situation. Do I have to declare amount in UK account to the Spanish tax authorities? The money was transferred to my UK account on 7th April so in new UK tax year. Spanish tax year is calendar year. I`m in Andalusia - I know situation may depend partly on which region I`m in. Friends in the UK have mentioned possibility of needing a translated document (expensive and time consuming no doubt) for Spanish Hacienda. My siblings seem relaxed as they`ve left enough to pay for future inheritance tax and had some advice. but my situation in Spain is obviously different. Any advice or recommendations of who I should contact would be welcome.

Browntoa

If you have residency then you are subject to Spanish tax on ANY income

https://www.expertsforexpats.com/expat-tax/expat-tax-advice/tax-in-spain-for-expats/

colsten

I can't comment on Spanish tax law - you might be best advised to consult a Spanish tax adviser.

For the UK, the money you and your sisters have received is considered a gift. There is no tax on gifts but if your mother passes away within 7 years, the gift is treated as part of her estate and might be subject to inheritance tax. Details on https://www.gov.uk/inheritance-tax/gifts

unforeseen

Would it be within POA powers to give money away? I fail to see how that can be for the benefit of the mother.

Have the sisters overstepped their powers in this matter? 

PRAISETHESUN

I agree that dividing up the money like you have is probably overstepping the POA remit, but that's another issue entirely.

My understanding is that for UK IHT purposes, only UK-assets are considered. I can't comment on the Spanish side of things, but it's possible there might be an inheritance tax that considers non-Spanish assets that you'd need to look into.

As for dual tax residency, you'll need to see if there are any double taxation treaties in effect between the UK and Spain. It sounds like you are non-tax resident in the UK (assuming you spend enough time outside of the UK each year), so you'll only need to submit UK self-assessment for your UK-based income (interest, dividends, etc). For your Spanish affairs however, you'll be taxed on your worldwide income (including UK income). The DT treaties will then determine who you claim tax relief from in order to not be taxed twice on the same income. With different tax years it makes things slightly awkward, but you only need to report income which was earned in the corresponding financial year. If you have a decent sum or on-going dual residency issues it's probably best to get professional advice.

colsten

Inheritance is not normally considered income for taxation purposes. Despite the existence of double taxation agreements (and yes, there is a UK/Spain one), inheritance tax is usually subject to the law of the country in which the inheritance occurs, and due in that country only. Definitely a case for professional advice.

born_again

Do your UK bank know your tax status?

Does your mother know about the funds being shared out? As like others this could be a abuse of POA. Could also lead to issues if your mother lives for a long time in care & funds start to run out.

xylophone

 Your sisters were sure  that the PoA gave them the authority to make substantial gifts?


https://www.rochelegal.co.uk/news/beware-attorneys-bearing-gifts-making-payments-under-a-power-of-attorney/

BrunoSpain

Thank you for all comments so far. Much appreciated.  I will obviously need to get some more advice and maybe bank will be able to help too though I have my doubts.

brianposter

If you are living in Spain you should become accustomed to using a "gestor". Ask around to find one who is suitable.

And, before anyone sends you any money, be aware that gifts received in Spain are taxable.

Teahfc

https://www.gov.uk/lasting-power-attorney-duties/health-welfare

This will give you a guide on POA responsibility.

Google also Intentional Deprivation of Capital. Knowing how much money for care your Mother will need is a huge gamble.