Living in Spain, self employed in UK

[aliciaw]

Can anyone help? My husband and i live with our daughter in Spain- we have been here for over 2 years. We have a business partnership in the UK and are both self employed with our only income being from the UK. We travel to and from UK regularly to work but also work alot from home.

We are currently paying income tax and NI in the UK because that was what we were advised but now have been told that we ought to be paying social security in Spain. We are happy to do this but it seems that we each would be paying 200 or more every month because the spanish system is expensive for self employed people. We have worked out that it is cheaper to pay for private healthcare insurance.

What we want to know is;
1. Would we both have to pay social security?
2. If we opted to go private, can we still pay into the UK pension scheme?

Any advice appreciated - many thanks

[Stravinsky]

Originally Posted by aliciaw

Can anyone help? My husband and i live with our daughter in Spain- we have been here for over 2 years. We have a business partnership in the UK and are both self employed with our only income being from the UK. We travel to and from UK regularly to work but also work alot from home.

We are currently paying income tax and NI in the UK because that was what we were advised but now have been told that we ought to be paying social security in Spain. We are happy to do this but it seems that we each would be paying 200 or more every month because the spanish system is expensive for self employed people. We have worked out that it is cheaper to pay for private healthcare insurance.

What we want to know is;
1. Would we both have to pay social security?
2. If we opted to go private, can we still pay into the UK pension scheme?

Any advice appreciated - many thanks

You have lived here for 2 years. You are a Spanish tax resident. You are required to pay tax here in Spain which would include income tax and wealth tax. You should also have a Spanish resident certificate, as this is now a requirement under Spanish law. As a Spanish resident you are no longer legally entitled to UK National Health Care as you are no longer a UK resident. You can get an E106 form from DWP Newcastle that will entitle you up to 2 years free state health care in Spain. Presently, from what you say, if your daughter or you became ill you would have no legal health cover at all.

In the same way, all my "income" is generated in the UK, but I pay tax on it here, not the UK. I dont pay twice as there is a reciprocal agreement.

To register as autonomo here you will have to pay about €235 a month for "NI" payments. Afaik, if one person in the family pays it then the others are covered, but you'd need to check. Private health is likely to be less than that with a providor such as Sanitas, but as with all private health systems you will probably find not everything is covered.

Hope this helps

[aliciaw]

Hi there

thanks for making the time to reply. I am now even more confused. The UK tax office in clear in all of their literature that as i am earning in the UK, i pay tax there and i have also been advised directly by them. I wonder if I have missed something - is there a rule that changes after the fisrt two years?

many thanks

Alicia

[Bevdeforges]

Originally Posted by aliciaw

I am now even more confused. The UK tax office in clear in all of their literature that as i am earning in the UK, i pay tax there and i have also been advised directly by them. I wonder if I have missed something - is there a rule that changes after the fisrt two years?

Apparently the UK has recently amended their residence rules. This is what I find on the HMRC website:

What are the residence rules?

A person who is currently not resident in the UK will always be treated as resident in the UK if they spend 183 days or more in the UK in a tax year. If they visit the UK on a regular basis, and spend, on average, 91 days or more in the UK in a tax year (taken over a period of four years) they will be treated as resident in the UK.

If they know that they are going to visit regularly and that the time spent in the UK in that and the next three tax years will average 91 days or more in the UK, they will be resident from the beginning of the tax year in which they make the first visit.

It might not be a bad idea to talk to a Spanish tax consultant to see if/how Spain recognizes your residency in the UK. It may be covered in the tax treaties, but it probably wouldn't hurt to make sure the Spanish tax authority is aware of your status. You probably ought to be paying Spanish social security (if only to have medical coverage while you're in Spain), but it may be possible to stay in the UK retirement system.

In any event, you need to find out the Spanish take on this recent change in the UK rules.
Cheers,
Bev

[Stravinsky]

Originally Posted by aliciaw

Hi there

thanks for making the time to reply. I am now even more confused. The UK tax office in clear in all of their literature that as i am earning in the UK, i pay tax there and i have also been advised directly by them. I wonder if I have missed something - is there a rule that changes after the fisrt two years?

many thanks

Alicia

When you say earn, do you mean you work for a company that employs you in Spain but pays you in the UK?

Spain treats anyone who has been here normally for more than 183 days as a fiscal tax resident. Residency and tax residency are slightly different therefore. I realise there are residency rules in the UK, but at the end of the day you dont live there, you live in Spain. You will never pay tax twice by the way because of the reciprocal arrangement

[Maya01]

We did the same - we moved here but my husband continued paying as self employed in the UK for the first 2 years and then changed to the Spanish autonomo. He pays around 240 euros per month for the whole family and we all have social security cards to carry.

We were advised that he could choose whether to continue paying into the UK system or change to the Spanish system. We decided to choose Spain as this is home now and we're settled here so it just made more sense.

The only reason he didn't switch immediately was incase he couldn't get work here and needed to work back in the UK. At the time (2004) the Inland Rev. were changing the rules for the self-employed, in the building trade, and he didn't want to give up his card, incase it became difficult to get back, if things didn't work out here.

Maya

[Stravinsky]

Originally Posted by Maya01

We did the same - we moved here but my husband continued paying as self employed in the UK for the first 2 years and then changed to the Spanish autonomo. He pays around 240 euros per month for the whole family and we all have social security cards to carry.

We were advised that he could choose whether to continue paying into the UK system or change to the Spanish system. We decided to choose Spain as this is home now and we're settled here so it just made more sense.

The only reason he didn't switch immediately was incase he couldn't get work here and needed to work back in the UK. At the time (2004) the Inland Rev. were changing the rules for the self-employed, in the building trade, and he didn't want to give up his card, incase it became difficult to get back, if things didn't work out here.

Maya

Hiya Maya

Yes you can of course voluntarily continue your payments in the UK which go towards your pension years. But as a Spanish resident you would no longer have been able legally to access thr National Health Sytem in the UK any more, so I'm afraid you were ill advised there.

The two years you paid will go towards your pension years though, and for some I think the number of years for a full UK pension is 30 years now.

[Ellan_Vannin]

Originally Posted by Stravinsky

Hiya Maya

Yes you can of course voluntarily continue your payments in the UK which go towards your pension years. But as a Spanish resident you would no longer have been able legally to access thr National Health Sytem in the UK any more, so I'm afraid you were ill advised there.

The two years you paid will go towards your pension years though, and for some I think the number of years for a full UK pension is 30 years now.

I have been researching this quite deeply and there are circumstances whereby you can be Spanish resident and still legally access the NHS. This is the case if you have an E106 issued by the UK whereby the NHS remains responsible for the health care of the holder, you can then return to the UK specifically for treatment and can contact the hospital directly to arrange treatment.
I have this in writing in an email from the Dept of Health.
It would also seem that you can still legally access the NHS if you are still paying compulsary Class 1 or Class 2 NICS and all you would need is proof of your employment although I have yet to get this confirmed in writing but anyhow if this was the case you could get an E106.

[jpiers]

You can apply a social security and you can just specify it as self employed..

[Stravinsky]

Originally Posted by Ellan_Vannin

I have been researching this quite deeply and there are circumstances whereby you can be Spanish resident and still legally access the NHS. This is the case if you have an E106 issued by the UK whereby the NHS remains responsible for the health care of the holder, you can then return to the UK specifically for treatment and can contact the hospital directly to arrange treatment.
I have this in writing in an email from the Dept of Health.
It would also seem that you can still legally access the NHS if you are still paying compulsary Class 1 or Class 2 NICS and all you would need is proof of your employment although I have yet to get this confirmed in writing but anyhow if this was the case you could get an E106.

Yes if you have proof of Class 1 or class 2, but then you are working in the UK I guess and a UK resident so you'd get it anyway .

There seems to be a bit of confusion here ....... An E106 is soley a "certificate of entitlement to sickness and maternity insurance benefits in kind for persons residing in a country other than the competent country" I.E, it is issued in the UK soley for health care in another country. Its not issued in one country for cover in that same country. Its also a temporary cover form. It will only cover you for up to 2 years in the country you have moved to. On the forum the UK authorities complete your details, and when you get to Spain you go to the local Dept of Seguridad and they endorse your forms and send a copy back to the UK.

I researched it quite thoroughly as well when we moved here and had numerous conversations with DWP as didi many people I know. You need to speak to the Department of Works and Pensions in Newcastle ... I think you might get a different answer, because in all the hundreds of times this has been discussed on various forums that I've seen over the last many years, no one has ever managed to get legal free NHS treatment in the UK whilst they are a resident in Spain.

In point of fact, if you ever go back you have a hell of a job convincing them they you are definately going to be a UK resident, as they think you are just popping back for treatment


Now ....... when you get your E106 registered in Spain and get a temporary SIP card you can then get an EHIC card that will cover you in the UK for emergencies etc when you are on holiday there.

I'd be very interested to see the circumstances and details on the email you got, because it flies in the face of every bit of advice given by the UK authorities so far