Why the increase in UK citizens searching for Spanish Inheritance Tax Law free advice on Google?

Over the last year I have noticed a definite increase in the volume of search queries for ‘Spanish Inheritance Tax Law – free advice‘ coming in to us at Spanish Property Eye and www.spanish-inheritance-tax-law.co.uk

The majority of these queries for free Spanish Inheritance Tax Law advice are coming from UK citizens who are either already living permanently across in Spain or have second holiday/retirement homes there.

More often than not affected individuals have held property across in Spain, the Canary Islands and the Balearic Islands for quite a number of years but have only just become aware of the legal implications relating to Spanish Inheritance Tax Law.

Unfortunately, for many the awareness has come far too late. A partner or loved one has a passed away and the surviving partner or heirs have been thrown headlong into the confusing, expensive and stressful nightmare that is Spanish Inheritance Tax Law, Wills and Probate.

The surge in enquiries is partly fuelled by couples who originally purchased Spanish property 10-15 years ago when in their 60’s as part of their dream retirement in the sun. At the time of purchase many did not receive any or good quality advice regarding planning for Spanish Inheritance Tax or arranging for dual UK and Spanish Wills. The UK citizens and expats that we now find ourselves assisting never dreamed that they would end up facing the wrong end of the Spanish Legal system.

Other enquiries are made up of badly transacted Probate affairs such as a recent enquiry made to us in December 2014. This came from a UK citizen whose father passed away in 2007 and was left a 20% share in the property, with the remaining share going to her father’s new partner.

Her father’s partner bought her out of her inherited 20% share advising that she would sort the legal process. The daughter accepted the buyout and carried on with the rest of her life…up until now that is.

HMRC in the UK came calling on behalf of the Spanish Authorities requesting immediate payment of a 10,000 Euro Spanish Inheritance Tax bill, which included additional daily interest backdated for the last few years, for the non-payment of Spanish Inheritance Tax on the 20% share that she originally received at the time of her mother’s death way back in 2007!

All of the cases we assist show misunderstandings regarding Spanish Inheritance Tax and Probate – many of which could have been easily avoided if the parties concerned had take proper legal and financial advice before the death of their partner/mother/father.

By far the biggest mistake or misconception we see made is that Spanish Inheritance Tax Law works the same as it does in the UK – whereby the surviving spouse receives an exemption of up to £325,000 before paying any Inheritance Tax. This is not the case.

Unlike in the UK, in Spain there is no exemption from Spanish Inheritance Tax between husband and wife.

A Spanish Inheritance Tax form must be completed, the taxes due are then calculated on a sliding scale of allowances depending on the relationship of the deceased to the inheritors and region of Spain that the property is located within and the taxes due must be paid within 6 months of death. Failure to pay within the 6 month period means daily interest and fines will be applied to the amount due meaning the final amount owed could be considerably higher than the original bill.

For those unaware of Spanish Inheritance Tax Law this news comes as a shock as it leaves them financially and emotionally unprepared to deal with the ramifications of failure to plan ahead.

Key facts to be aware of are:

  • Inherited property cannot be sold/used as collateral to secure a loan/mortgage in order to pay the Spanish Inheritance Tax bill. If there is no life insurance, savings must be plundered to clear the Spanish Inheritance Tax bill.
  • Common law partners or spouses and very distant relations/associates come off the worst. Common law partners or spouses are not recognised in Spanish law and so are classed as non-relatives. This means that they are not allowed any allowances so are taxed at the highest rate of Spanish Inheritance Tax (double that of married partners).
  • In Spain it is the heir who is taxed and not the estate.

These are just some of the important considerations to take into account when planning for Spanish Inheritance Tax, which applies to each inheritor not to the total estate.

By taking expert advice on Spanish Inheritance Tax planning and Dual Spanish and UK Wills many UK owners of Spanish property can ensure that their loved ones avoid added stress, financial problems and bureaucratic difficulties.

Further information on Spanish Inheritance Tax Law, Dual Wills and Probate can be found on the Spanish Property Eye website here. www.spanish-inheritance-tax-law.co.uk

Winter Fuel Allowance scrapped for UK expats in Spain

New measures to scrap the Winter Fuel Allowance are to be implemented by the British government in September 2015.

UK pensioners living in Spain (the country which receives the most in winter fuel payments) have expressed mixed reactions to the news that they are to lose their Winter Fuel Allowance worth between £100-£300 per annum.

The Social Fund Winter Fuel Payment (Amendment) Regulations 2014 seeks “to ensure that the payment is better targeted on people who live in countries with a cold climate”.

As from September 2015, expats in Spain will cease to receive winter fuel allowances that total £8.7 million (€11.1 million). In total the bold move to scrap the allowance, which will affect over 95,000 British pensioners living outside of the UK in Spain (including the Canary and Balearic Islands), Gibraltar, Portugal, France, Greece, Malta and Cyprus, stands to save approximately £16.5 million (€21 million) a year for the UK government.

Work and Pensions Secretary Iain Duncan Smith has commented; “It’s absurd and offensive that taxpayers are funding these payments for people who have retired to the Mediterranean and enjoy warm weather. The European Union has frustrated our attempts to address this issue in the past, but with our new temperature-based eligibility criteria we’re able to satisfy EU rules as well as prevent this obscene waste of taxpayers’ money.” “Winter fuel payments exist to help Britain’s pensioners keep themselves warm,”

The new ‘temperature test’ will determine which expat pensioners living overseas are entitled to the allowance. Payments will be stopped to pensioners living in countries where temperatures are above the average annual winter temperature of the warmest part of the UK – 5.2 degrees Celsius. Average Spanish temperatures during December and January are 13 degrees Celsius, more than double the average of that in the UK, meaning Spain falls foul of the new temperature test.

The decision to scrap the allowance is estimated to affect around 50,000 UK pensioners currently living in Spain.

There is however a small upside to this latest news – anyone who has not previously claimed the Winter Fuel Allowance can still receive the 2014/15 payment if they lodge their claim before March 31. To qualify you must:

  • Have been born on or before July 5, 1952
  • Live in the EU or Switzerland

Details on how to claim can be found here.

When asked, many UK pensioners who do not live overseas have supported the move to scrap the Winter Fuel Allowance for those living abroad, stating that the decision brings the payments back in line with the official guidelines which state that the allowance is made “to help pay your heating bills” and is designed as a payment for pensioners to put towards home heating costs during the freezing UK winter months.

Are you affected by this ruling?

Comment and share your views on whether you think this is the correct move by the UK government.


Advertise your property for free in 2015 with Spanish Property Eye

If you have a Spanish or UK property that you wish to sell or rent then we are offering a select handful of property owners and agents the opportunity to advertise their Spanish or UK properties on Spanish Property Eye and via our newsletters free of charge.

This ‘non-managed’ service simply advertises your property to our interested client base and site visitors – all enquiries will be sent directly through to you in order for you to continue liaison with interested parties, arrange viewings, negotiate terms etc.

To see your property featured on the site and promoted in our newsletters for free in January 2015 then please contact us with:

  • Brief property details including regional location in Spain
  • Asking / rental price
  • Contact details for enquiries to be sent through to (these will not be published for public viewing)
  • Property photo(s)
  • PDF copy of the valid Energy Performance Certificate (EPC) known as a CEE in Spain for the property – if you do not have a valid CEE then we can provide you with a quote to supply one via one of our Domestic Energy Assessors in Spain. More information on CEEs can be found on our webpage here: www.spanish-inheritance-tax-law.co.uk

Should you prefer a traditional ‘managed’ agency approach to marketing your property then we can connect you with one or more of our estate / letting agency partners who will be happy to advise you of the packages that they offer. For more details please e-mail: info@spanish-inheritance-tax-law.co.ukitf308s004