Bank charges, reducing pension tax, proving address

Avoiding bank charges

A number of banks have a variety of current accounts. It would appear that customers are not always advised by their bank what is the best account for them. For many expatriates, especially those buying and selling property, when money is paid into or from a bank account, the charges made by banks can be huge. It is quite common for charges to be made on both the money entering the account, after a sale of a property, and then again on the same money when a new property is purchased and money is transferred to another party. Some banks have accounts which do not attract fees. There will almost certainly be conditions such as a minimum deposit into the account each month. However, and for many retired expatriates, these conditions are not likely to be too difficult to satisfy. You may even be paid interest on balances or receive bonuses on direct debits.  Make certain that the account you have is the best for you.

Paying too much tax on pension income

Reduce Spanish tax on pensionWhen submitting an annual tax return in Spain, there are (at least) two ways of calculating the tax due on UK sourced income. One way is to tell your accountant how many pounds you received and the accountant will convert this into euros using the exchange rate from the previous 31st December. For example, the exchange rate used for annual tax returns submitted in June 2017 will be based on the rate as at 31st December 2016. The problem is that, with fluctuating exchange rates, one could be paying tax on money that was never received. Let’s say that each month from January to November you received monthly income based on an exchange rate of 1.15 but then by 31st December it had increased to 1.20 euros to the pound. Your tax bill will be based on 1.20 even though you had only received 1.15 for 11 months. The alternative way of submitting the return is to ignore P60s etc. and simply submit evidence of exactly what euros you received through the year. If you are not certain, talk to your accountant.

Obtain proof of your current address

Proof of address in SpainMore and more often, financial institutions will be asking for evidence of where you live. In so many cases, all bills are put in the name of only one partner and in these days of online banking, people are no longer sent bank statements and not all companies accept printouts from the internet. Make certain you have a bill (not mobile phone) in your name or obtain an updated Padron certificate.

For more information on pensions, QROPS, investments, currency exchange, mortgages, and all other aspects of personal finance, email john.hayward@spectrum-ifa.com, call 618 204 731/ 96 558 7633 or visit www.financialadviceinspain.es.

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