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Tax on UK pension drawdown

Weakestlinks
Posts: 21 Forumite


Hi
I've just reached 55 and live and work in Spain. I moved here 4 years ago and regard myself as semi-retired. I don't have any UK property and have Spanish citizenship. I work part-time to pay the bills and keep food on the table etc. My earnings are paid in Euros into my Spanish bank account and I pay all my due taxes in Spain. I don't currently have a UK bank account.
My question is regarding a UK personal Pension which I used to pay into when I lived in the UK. I was self employed in the UK and paid into this pension until I left the UK and moved to Spain. As I am now 55 I was considering release 25% of this pension as a tax free lump sum and then drawing down about £1k a month after that.
As I earn a small income now in Spain, will that stop me from being able to draw down up to £12,570 a year from my UK pension without having to pay any tax? As I have no UK income I feel I'm entitled to receiving this income from my UK pension without having it subject to tax, but wasn't sure if my Spanish earnings get factored into my UK tax allowance somehow?
many thanks in advance
M
I've just reached 55 and live and work in Spain. I moved here 4 years ago and regard myself as semi-retired. I don't have any UK property and have Spanish citizenship. I work part-time to pay the bills and keep food on the table etc. My earnings are paid in Euros into my Spanish bank account and I pay all my due taxes in Spain. I don't currently have a UK bank account.
My question is regarding a UK personal Pension which I used to pay into when I lived in the UK. I was self employed in the UK and paid into this pension until I left the UK and moved to Spain. As I am now 55 I was considering release 25% of this pension as a tax free lump sum and then drawing down about £1k a month after that.
As I earn a small income now in Spain, will that stop me from being able to draw down up to £12,570 a year from my UK pension without having to pay any tax? As I have no UK income I feel I'm entitled to receiving this income from my UK pension without having it subject to tax, but wasn't sure if my Spanish earnings get factored into my UK tax allowance somehow?
many thanks in advance
M
0
Comments
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Will depend on where you are tax resident. If in Spain I believe the pension will be liable to Spanish tax, including the 25%. https://www.expertsforexpats.com/country/spain/tax/taxes-in-spain/
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You sounds as though you are resident in Spain, so they have the right to tax your income wherever it arises (as does the UK for its residents), subject to that being overruled by the double taxation treaty between the 2 countries. Article 17 of the UK/Spain treaty deals with pensions and awards taxing rights only to the country of residence, i.e. Spain. Unless Spain has the concept of a tax-free element of a pension, the whole amount will be added to your other Spanish income and taxed accordingly. The UK personal allowance is wholly irrelevant, as is the concept of a UK tax-free lump sum.3
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Hi
Many thanks - that makes sense now.
Just out of interest, is drawing money from a pension pot subject to spanish income tax or spanish savings tax? I see these have different tax rate thresholds.
thanks again0
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