Britons living in Spain set to save thousands of pounds

Britons living or working temporarily in Spain are set to save thousands of pounds following cuts to Spanish Capital Gains Tax, says Banco Halifax Hispania.

From 1st January 2007, Capital Gains Tax on property sales and personal income for non-residents in Spain will drop from 35% to 18%. This change was ordered following the European Courts upholding a complaint that is was unfair for the tax to be charged at 35% for non-residents, but only 18% for Spanish residents.

Recent research from Mintel states that 800,000 Britons now own a second home abroad. Spain is the most popular location amongst more than four in ten respondents who have either already bought or who are looking to buy abroad. The change in taxation will benefit those Britons who live temporarily in or who work for short periods in Spain and are therefore not registered with the Spanish authorities as residents.

Ian Smith, head of European Operations at Halifax plc said: "This is fantastic news for Britons living or working temporarily in Spain."

Over sixty five year olds who have lived in their home in Spain for the last three years are currently exempt from Spanish Capital Gains Tax.

In Britain, Capital Gains Tax is charged at 40 per cent of the sale of a second home, but is not charged on someone's first home.

Banco Halifax Hispania advises anyone buying property or working in Spain to seek qualified and independent legal and financial advice.