If you are a Spanish resident and paying your income tax here (as you should be!) but you have a UK bank or building society account you can get the interest paid gross of tax by sending them the inland revenue form R105 downloadable from http://www.hmrc.gov.uk (search for R105).

I’m having trouble finding out how I can be resident in Spain and still retain a UK bank account never mind not pay tax on the interest. All the UK banks need you to be UK resident. Any help or advice appreciated. My wife has a similar problem - her disability pension can still be paid while resident in Spain, the DSS will happily pay into a UK or Spanish account. She has a Spanish account so no problem for us but how would she keep a UK account if she wanted to do it that way?

It is perfectly legal to have a UK bank account and be resident in Spain. It may be more difficult to open a UK account once you have left and is probably impossible to open an account online via the net.

Just leave your UK account open and advise them of a change of address. Many people are unable to have their private pensions paid directly into a foreign bank account so obviously retaining a UK account is their only option and of course many people still want to have easy access to pounds for any UK visits or retain their UK investments.

To be honest I dont know what your problem is ?

Thanks for the info. Maybe I am worrying unnecessarily it’s just that when I enquired at my bank about informing them of a change of address to Spain, they said I would have to close the account as I would no longer be a UK resident. Maybe the clerk I asked was not fully informed!

I really fail to understand your banks attitude - I know lots and lots of people who are resident here and retain their UK bank accounts and also many people who remain resident in the UK but have Spanish bank accounts!

I suggest you return to the bank and ask to speak to someone in higher authority who knows what they are talking about. I would suspect to say you cant is actually against EU law.

On a point regarding my original posting it does appear that some banks/building societies will not agree to pay interest with gross of tax to non UK residents - the Inland Revenue form does say that it is at the banks discretion and it not a legal obligation. But its worth asking.