I am in a very similar position.
With regard to National Insurance, there are exceptions for short periods of time - 1 year or so, 2 years in exceptional circumstances where you may still pay NI in the UK. You need an E106 form i think it is which gives you cover in Spain for what you pay in the UK. However, generally speaking if you are not a UK resident then you cannot pay UK NI. I am still awaiting a response from the Overseas section of the UK DSS on how to get around this to enable me to get affiliated to the Spanish health service. It may be that you have to become automono (self employed) in Spain and pay your own Spanish National Insurance Contributions. As long as you can show you are trading in or doing something i.e. getting paid then you should be able to do this (you can’t just be unemployed and decide to pay the contributions)...however, as i say, i am still waiting.
Income tax is a little easier…or not. From HMRC - “If you leave the UK permanently, you are treated as not resident and not ordinarily resident, subsequent to your departure, if your visits to the UK: -
- Total less than 183 days in any tax year, AND
- Average less than 91 days a tax year”
The advice I received from HMRC was to download and fill in form P85 and “The completed form should be sent, to the tax office handling your UK tax affairs, with a request that they issue code NT retrospective to 6th April and reappraise your liability for the year to 5th April 2008 to reflect that your earnings for duties in Spain are not taxable.”
If you can show you have moved permanently (sold your house in the uk, bought a house here etc) there is no need to wait a full tax year to prove you are non resident in the Uk. it should be immediate. Any tax paid this financial year while you are in Spain should be repaid and your uk employer should deduct no further tax. You would then declare your income to the Spanish authorities next year and pay the relevant tax on your income for the preceding year. If you live in Spain (and as an EU national you must register if you live here for more than 90 days) and you have an income, you are liable to Spanish tax straight away not after 6 months. the saving grace is that there is an EU double taxation treaty which means you only have to pay the tax once, and you have done…in the UK. Of course, if you get it refunded in the UK you will then have to pay it again in Spain. Simple. :ahhh:
Of course this might all be different if you have any other source of income in the UK, I haven’t.
the websites of HMRC are very confusing but the info above is actual advice from one of their technical advisors based on my info - living permanently in spain, been here 6 months, employed by a uk company with no presence in Spain, working from home, over the internet as an IT consultant, paying UK income tax and NI.
I would be very interested to hear any additional or conflicting advice that anyone else has been given!