Spanish Property? Declare It! By John Hill At Isnare.com Ezine Articles

If you have a Spanish bank account, a Spanish property, rental income from a Spanish property, or a capital gain from the sale of a Spanish property, and you've not yet declared it to the UK tax authority, now is the time to do so.

The UK tax authority, HM Revenue and Customs (HMRC), has instigated a massive crackdown on unpaid tax. The Offshore Disclosure Facility (ODF), which some are calling a 'tax amnesty' (although it's not), is aimed at UK residents who are not declaring their offshore assets, income or gains.

People have until 22nd June to come forward and notify the tax authority of their intention to disclose, and then until 26th November (some five months later), to make a full disclosure of all tax irregularities, and to pay the outstanding tax, plus interest at 7.5%, and the 10% penalty charge.

An elite crack team from the Special Civil Investigations Unit within HMRC is poised to rapidly target suspected tax evaders, and will send out letters immediately after the deadline of 22nd June to those who have not notified their intention to make a disclosure and where information suggests that tax may have been underpaid. Outstanding taxes, plus interest at 7.5%, and a penalty of up to 100% will then become payable.

HMRC is offering, in effect, to cap penalties at 10% of the maximum 100% allowed. It would be unwise for anyone who has undeclared assets, income or gains, to ignore this opportunity to come clean and benefit from the 90% reduction in the penalty.

Spanish tax on rental income for non residents is a flat 24% of gross income. The net income is also liable to UK income tax, at a rate of up to 40% for higher rate taxpayers, but any Spanish tax paid can be deducted from the UK tax due.

The sale of a second home in Spain will attract a capital gains tax levy of 18% in Spain, and up to 40% in the UK above the tax free amount of GBP 9,200.

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