Contact

News & Insights

The Plot Thickens on the Pension Agenda…

As you are no longer a resident of the UK, and are therefore not a UK tax payer, you will no longer automatically be allocated a Personal Tax Code – herein lies a potential issue.  Yes, you can still take the 25% tax free lump sum, but the remainder of your pension pot will initially be taxed at either the Emergency Tax Code Rate of 1060L (W1, M1 [allowing you to earn £1,060 before paying tax in any tax year]) OR be allocated a BR (Basic Rate) Code of 20%, until HMRC decides upon which Tax Code you are eligible for as a non-resident.   

Most importantly, in order for you to reclaim any overpayment of tax due, you would then have to apply for a refund with the Hacienda here in Tenerife.  This would, of necessity, require the services of a Gestoria to assist in the completion of the not uncomplicated paperwork involved in such a claim, and also the additional paperwork of an annual tax return (should you not already be required to complete).  In addition to this, if you have not previously completed the Modelo 720, which is a requirement for anyone with Worldwide assets in excess of approximately £40,000 residing in Spain, which of course includes any Pension Provision (and was discussed in last month´s column) then it may well be the case that in order to claim any overpayment via the Hacienda, you will need to declare such assets.

What seemed initially as a great offer from the UK Government in being able to cash in your pension pot is now, for expats anyway, becoming a very difficult and possibility unwise decision to take when considering the overall picture and it may be more tax efficient certainly to consider transferring the whole of the pension elsewhere.

In addition to this, there are a number of Pension Providers in the UK, including Friends Life, who are not actually offering policyholders Flexi-Access Drawdown currently.

If you are in any doubt about how the changes will affect you personally, or are unsure about whether the decision to access a lump sum is right for you now, please seek professional advice.

By Laura Mann, Regional Manager Canary Islands

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Other News

New to France? Here’s what you need to know

Whilst France is one of the most popular destinations for expats to move and settle in, it is also notoriously difficult to navigate in terms of tax efficiency and financial planning. To avoid large tax liabilities, it is a good idea to consider your options beforehand; consulting a financial adviser with the relevant local knowledge […]

Read More

Private Pension – Options Explained by Keith Littlewood, International Financial Adviser Costa Blanca

Many people have pension pots just sitting, not really doing anything, but at every stage in life it is very important that you should keep track of your retirement provision.

If you are in your 30s or 40s look closely to what provision you have and what you might need in the future. State Benefits are not going to kick in for you until you are 67.

If you are in your 50s then this is a very critical period. One bad investment year can affect the income you receive for the rest of your life, so make sure you are looking at setting your investments up in a balanced way so that no unforeseen disasters can hurt you – this is called ‘Life Styling your Pension Pot’.

Read More

Select your country

Please select your country of residence so we can provide you with the most relevant information: