Moving to Spain

Some Key Issues

This is not intended to be a definitive list but I come across so many problems amongst UK nationals in Spain which can be put down to poor or even no planning. Even though there are costs, to get professional advice is almost always cheaper in the long run.

1.    Research

In the internet age there are huge numbers of resource waiting to be read. However, I always ask you to consider who is giving you the information. Beware of vested interests!

The more independent information you can gather, the better. The archive to my blog or my website are based on my own experiences but I encourage you to look at other resources. Financial Pages in Spain

2.    Know your area before you move

If you’ve been somewhere on holiday, and loved it, do you really know it? From my experience many people move on that basis and only then begin to know the place. It’s part of your initial research really.

I found the British Embassy in Madrid very helpful and follow them on Twitter (@ukinspain)

3.    Consider ‘Rent before you buy’

My Estate Agency friends and contacts will tell you I’m wrong because there are so many bargains to be had! I still think this caution is good advice and I’ve written about it before Rent before you buy in Spain

If you do buy, the research and knowing your area are even more important.

4.    Take health very seriously

Spain has one of the healthiest lifestyles in Europe and generally has excellent medical facilities. You must remember that whilst a European Health Insurance Card (EHIC) covers you as a tourist, once you settle in Spain, you need to register locally. This procedure can be different according to area so you need local information about health services and facilities

5.    Work out your finances including tax

I apologise if this seems obvious, but based on my INBOX, it doesn’t happen often enough!

Choosing a Bank is often an early decision. It can be a problem if you choose the wrong one. Personally, I prefer Internet Banking but it doesn’t suit everyone. Whether you can speak Spanish is another key issue, as the local service you get can vary. Another reason to ask around and see which one gets the most positive comments. There is no ‘best’ or even ‘worst’ bank but local knowledge is, in my opinion, key.

Getting Professional Advice for which there is no substitute is also very important. I often refer people to advisers that I have checked out or my contacts have recommended. After 11 years experience, in Spain, I’ve learned only to recommend the very best advisers.

Tax is vital and often misunderstood. Some people have said to me (in summary) ‘I thought it would be the same as in England’, that’s so, so wrong. From my own experience the starting point is that it’s always different from the UK! Especially in the early days and vitally if your Spanish is poor, you need a Fiscal Representative, mainly to help with the endless paperwork. It maybe a service your solicitor could provide but if you need specialist tax advice please Email me.

6.    Get independent legal advice

If you were buying a house in the UK, chances are you’d choose your own Conveyancing Solicitor or one recommended by a friend. That should apply in Spain too, but buyers seem happy to accept the recommendation of the builder – he’s not independent or even on your side – he’s the builder’s solicitor

Your solicitor, knowing your situation, is also the best person to advise on a Spanish Will which you do need

If you don’t know a solicitor, please ask around or I will recommend one if I know a proven one in your area. Certainly in your early days in Spain, you need an English-speaking legal adviser. Email me for a recommendation.

7.    Put your UK affairs in order

In many respects it’s the mirror image of what you need to do in Spain. I would however suggest in particular that you tell the tax authorities. If you don’t then HM Revenue & Customs (HMRC) will chase you for years to come. Timing your departure can also be beneficial in having a tax-free year, if applied correctly. Email for more information.

The Department of Work & Pensions need to know of the change in circumstances whether or not you are retired and should be informed. You should also tell your local authority and GP.

8.    Don’t become isolated

Even if you get to know many British expats, learning Spanish can really help your life in many respects. I’ve always found the Spanish very tolerant even if you only try to speak their language.

Courses are widely available and always of value

There is much more information on many subjects in my BLOG ACHIVE but the following are especially recommended;

La Torre Fx – Foreign Exchange

Offering better rates and service than the banks, internet facility available 24 hours per day.

UK Savings

If you live in Spain, should your savings be in the UK. It’s worth considering.

Spain – The sun still shines and the lifestyle is healthy

Serious reasons to move to Spain but my light hearted review

David Goodall

Financial Pages in Spain

davidgoodall.spain@gmail.com

Explaining Pensions Terms and Expressions

This is an alphabetical list which helps to cut through the jargon often used when discussing pensions.

Incorporates changes made from 6 April 2013

·       UK pension plans / schemes applicable to expats

·       ALWAYS Get a professional Adviser

·       Understanding QROPS & QNUPS

A Day
6 April 2006 was the day the UK Government pension simplification rules came into effect.

ASP - Alternatively secured pensions
At the age of 75 an alternatively secured pension would allow an individual withdrawal of income, similar to an unsecured pension fund such as income drawdown

Since 6 April 2011, no new ASP can be commenced but existing ones can continue until the next review date. The existing ASP fund can be transferred to Income Drawdown (Unsecured Pension) plan or an annuity commenced.

AVCs – Additional Voluntary Contributions
A pension top-up for an occupational pension scheme. The scheme members pay contributions into an arrangement run by the employer to boost the main pension.

FCA - The Financial Conduct Authority
The FCA has taken on the role previouslyundertaken by the FSA - the UK's financial services regulator. The FCA also ‘passports’ authorised advisers to operate in other countries. For a recommended adviser click here.

FSAVCs – Free-Standing Additional Voluntary Contributions
A pension top-up policy for an occupational pension, but separate from the employer’s pension scheme and normally run by an insurance firm.

FSA
The Financial Services Authority - was replaced by the Financial Conduct Authority (FCA) in April 2013

Group Personal Pension
A type of personal pension offered by some employers but not classified as occupational (see money purchase pension).

Lifetime allowance
This is a limit on the value of retirement benefits that you can draw from approved pension schemes before tax penalties apply. The Lifetime Allowance was £1.5m in the 2012/13 tax year but reduced to £1.25 million in 2013/14, from 6^th April 2013. Anyone whose fund is approaching or is already above these figures needs to act soon! Please email me

Lifetime annuity

A lifetime annuity converts money from a pension fund into pension income, which is taxable. There are different types to suit different circumstances and often treated more favourably for tax purposes in other countries.

Money purchase pensions
Some occupational pensions and all personal, group personal, stakeholder, FSAVCs and some AVCs are money purchase pensions. The contributions are invested in, for example, the stockmarket or bonds. The size of the fund depends on the contributions and how well the investments perform. At retirement, there is a choice of options to provide you with a retirement income.

Occupational pension
These are only available through employers and run by pension scheme trustees. There are two types – salary-related (defined benefit) and money purchase (defined contribution).

Pension Commencement Lump Sum (PCLS)
Though often referred to as ‘Tax-Free Lump Sum (see below), PCLS is more accurate as it MUST be taken as the first benefit.

Pension Liberation
Increasing numbers of pension savers are being targeted by unscrupulous companies encouraging them to access their pension savings early. This is commonly known as 'pension liberation' and has significant tax consequences. This is from HMRC Website

Personal pension
A pension policy taken out by an individual from an insurance company or another financial institution and into which personal contributions are made. It may also be offered by employers.

Protected rights pension
This is the part of a pension fund which was used to contract out of the UK State Second Pension (SERPS or S2P) that must be used to buy a protected rights annuity.

QNUPS -  Qualifying Non UK Pension Scheme, which means it meets the criteria set by the regulations the UK government brought out in February of 2010. This means that or a UK or non-UK resident, there is an opportunity to make contributions to overseas schemes, established as QNUPS, with the knowledge that those funds will be sheltered from UK IHT. Individual advice should be taken in all circumstances from a regulated and authorised adviser. Please email for a recommendation.

Q - Day
6^th April 2012 is the day on which fundamental changes to QROPS became effective.

QROPS - Qualifying Recognised Overseas Pension Schemes
These became available from A-Day. It is a pension scheme set up outside the UK that is regulated and recognised for tax purposes as a pension scheme in the country in which it is located. The QROPS planholder and the QROPS policy don’t have to be in the same country and this is almost always an advantage. QROPS have been established in various countries across the world, many in jurisdictions with beneficial tax rules. QROPS can now also be established with similar rules to SIPP (please see below). For specialist advice click here

Salary-related pension scheme (final salary or defined benefit)
A type of occupational pension. The amount of pension you get is worked out on your salary at or near retirement, or when you left employment, and your pensionable service.

Self invested Personal Pension (SIPP)
Essentially the same as a Personal Pension described above. However, with a SIPP the individual can exercise discretion over the investment policy, subject to the rules of the SIPP provider. This should always be done with professional guidance and if you want access to a specialist, please Email me

Stakeholder pension
A type of personal pension that has to meet certain standards set by the UK Government. An individual can take one out or it may be available through an employer, but is not classified as occupational. 

State Pension
The UK Pension Service (part of the Department for Work and Pensions) will pay the basic State Pension based on an individual’s National Insurance contribution record. In addition, individuals may also qualify for the State Second Pension based on their own earnings and National Insurance contributions.

State Second Pension
The State Second Pension is an additional State pension paid on top of your basic State Pension. This was called SERPS. Self-employed people cannot build up a State Second Pension.

Tax-free lump sum
An amount of cash set by tax law which you can take at retirement free of tax. Salary-related occupational pension schemes may have different rules on the amount of tax free cash you can take. This is only tax-free to UK residents. Tax-free cash should correctly be called ‘Pension Commencement Lump Sum’ (PCLS) since it can only be taken as the first benefit from a pension Plan

Unsecured Pension (Income Drawdown)
This is an alternative to buying an annuity but provides an income whilst the pension is still invested. At age 75, the unsecured pension must cease and be replaced by either a Lifetime Annuity or ASP. For non UK residents or those intending to become non-resident, QROPS could be another alternative.


Pensions Advisers, including the ones that I recommend, will be happy to cut through the jargon. Email me for a recommendation

Additional Posts

QNUPS
http://expatsfrombritain.blogspot.co.uk/2012/07/qnups-qualifying-non-uk-pension-schemes.html

QROPS
http://expatsfrombritain.blogspot.co.uk/2013/06/qrops-comparing-jurisdictions.html

UK Pension Plan but you live in Spain
http://expatsfrombritain.blogspot.co.uk/2011/08/uk-pension-scheme-or-plan-but-you-live.html

David Goodall

Financial Pages in Spain

Email: davidgoodall.spain@gmail.com

Getting Professional Advice

IMPORTANT : I never recommend advisers who charge up front fees

Follow Financial Pages in Spain

This is one of the major issues affecting British and Irish expats and property owners in Spain. On first view it may not look ‘major’ but I know from emails received that it certainly is, especially if things go wrong.

No trick question but where do think is the best place to seek advice?

• Hearsay. The classic quote I hear so often is ‘I heard somewhere  ……’ What often follows is either wrong or out of date!

• An unauthorised, non regulated and unqualified person or company who call themselves an ‘adviser’. Always ask about their qualifications.

• A properly trained, fully qualified, authorised and regulated, individual or company who not only give you the best advice, but as part of their professionalism carry PI (professional indemnity) cover in case things go wrong.

Is there really a choice?

Why would you not use a professional? If you think that cost might be a problem, ask up front! I am playing my part in establishing why expats should always get PROFESSIONAL advice, whilst at the same time convincing professionals that their advice should represent VALUE FOR MONEY.

Apart from owning property in Spain for ten years and originally struggling to find professional advice, in the last year and a half through my Blog I have found many professionals. If you need advice, please email me.

My own connections included the following professionals;

• Regulated financial advisers
• Suitably qualified accountants
• Professional lawyers
• Chartered surveyors in Spain
• Members of the Association of International Property Professionals (AIPP)
• Company formation for property ownership specialists

If you email please let me know your question and where you live. I may be able to answer myself, just point you in the right direction or refer you to a suitably qualified person.

Never trust Unauthorised Advisers

I always recommended qualified and regulated advisers

Please remember that my Blog is about unbiased, factual financial information. You can look elsewhere for information but remember that an advert will certainly be biased towards the company who paid for it. I have no problem with that but remember it’s biased!

David Goodall

Financial Pages in Spain

davidgoodall.spain@gmail.com

PS

Testimonial

 "I stumbled across David's blog one Sunday afternoon when looking for advice on living and working in Spain. 

Each post encouraged me to email him for advice, so I did. However, imagine my surprise when I got an answer a few hours later. Don't forget this is a Sunday! He's referred me to a specialist who sounds like she can help.

Thanks again David.

Al Elliott, Manchester, UK ' 

Unauthorised Advisers UPDATE

I have written about this before but I have credible information that the problem is getting worse.

Back in November 2010 I wrote this Unauthorised Advisers about

Many of the Financial Advisers operating in Spain are doing so without any regulation, with no authorisation and if anything goes wrong YOU the client has no recourse to putting this right. The only acceptable Spanish Regulators are;

CNMV

Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products. A CNMV adviser can be recommended, please click here

DGS

Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain. Email me to be referred to an authorised adviser

However it is also right to point out, that, using European law, UK regulated firms CAN apply to be ‘passported’ into Spain. Under those conditions the adviser MUST be authorised in the UK. A recent change in the rules of the Financial Services Authority, surrounding qualifications means that many advisers are no longer authorised.

Also there will be future changes to the FSA which will be covered here at Financial Pages in Spain.

To protect yourself, please ask for help. I can

·       Check the regulation of an adviser you already know

·       Check if an advertisement you see is from a valid company

·       Recommend properly qualified and regulated advisers who ARE authorised in Spain

Just email me your details with anything you want to ask

David Goodall

Financial Pages in Spain

davidgoodall.spain@gmail.com