As I understand it, by article 17 of the DDT between the UK & Spain, UK private pensions paid to Spanish Residents (with no UK residence, presence, ties etc) are only taxable in Spain. So you leave them out of the tax return calculation and declare them in the white space, saying why (DTT Art 17). Otherwise, you end up getting taxed on the UK tax return (a software thing?) and there seems to be no way of getting the tax return software to recognise Art 17.
All well and good you'd think, but then this.
Rather than take a small pension, a Spanish resident decides to take their UK pension (having reached retirement age) as a lump sum. The provider duly deducts UK tax on a month 1 basis, (Ouch), and issues a year end P60. Plugging this into a tax return results in a reclaim, but not for all of the tax deducted.
But if the pension is only taxable in Spain, shouldn't all of the tax deducted be available for refund?
So. Is there a way to do this on the tax return, or do we need to write to HMRC to make it happen?
Or are we stuffed and into paying the UK tax on it anyway?
Thanks!
Puzzled Death & Taxes
Replies (3)
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For a one-off payment I would normally claim the relief in box 22 of the Tax Return "Residence, remittance basis, etc." supplementary page. You also need to attach a completed "Helpsheet 304".