Moving to Spain? Here’s How British Expats Can Protect Their Finances After Brexit
Whether you’ve already made the move to sunny Spain or you’re planning to relocate from the UK, financial planning as a British expat comes with unique challenges — and opportunities. From understanding how your UK pension is taxed under the double taxation treaty, to choosing tax-efficient investment structures under Spanish law, getting it wrong could cost you thousands in avoidable tax. In this comprehensive guide, we’ll cover exactly what British expats should consider when managing their finances in Spain.
1. What Happens to My UK Investments When I Move to Spain?
If you’re moving from the UK to Spain, one of the first things you’ll need to review is whether your current UK investments remain efficient or even compliant under Spanish tax law.
- ISAs lose their tax-free status in Spain — any growth and income becomes taxable
- UK bank interest and dividends must be declared and are taxed
- You’re taxed as a Spanish resident on your worldwide income and assets
- Spanish wealth tax applies to global assets above certain thresholds
- Capital gains on UK investments will be taxed differently than you’re used to
“Many British expats are shocked to discover their UK ISAs aren’t tax-free in Spain. Planning ahead before becoming tax resident is crucial.”
2. Can I Still Contribute to My UK Pension After Moving to Spain?
You can keep your UK pensions (SIPPs, workplace schemes, or even transfer to a international SIPP), but how and when you draw down funds significantly affects how they’re taxed in Spain.
- UK pensions are usually taxed as income in Spain at progressive rates up to 47%
- The UK-Spain Double Taxation Treaty prevents double taxation but doesn’t eliminate all tax
- Lump sums (like the 25% tax-free withdrawal in the UK) are not exempt in Spain
- Timing your pension withdrawals can significantly impact your tax liability
- Government pensions are taxed at source, but private pensions and occupational schemes are taxed in Spain.
Understanding UK-Spain Pension Taxation
A critical distinction exists in how different types of UK pensions are treated for Spanish tax purposes:
- UK Government/Crown pensions (civil service, military, police, etc.) are typically taxed at source in the UK under the Double Taxation Treaty but must still be declared on your Spanish tax return. These pensions may be subject to additional taxation in Spain depending on your overall tax situation.
- UK private pensions and occupational schemes fall under Spanish tax jurisdiction and are taxed at Spanish progressive income tax rates. These must be declared and taxed in Spain, with any UK tax potentially reclaimable.
This dual taxation system creates both challenges and planning opportunities that require careful navigation to avoid unnecessary tax leakage or compliance issues.
3. What Are My Investment Options in Spain as a British Expat?
Spanish bank investments such as Sabadell and BBVA, don’t offer the flexibility or global exposure most British expats want. And UK platforms like Hargreaves Lansdown or AJ Bell may not be suitable for Spanish tax residents.
- Direct stock investing is possible but taxed annually on unrealised gains
- The Beckham Law provides tax advantages for qualifying new residents
- ETFs or mutual funds generate taxable events with each transaction
- Spanish banks typically offer limited investment choices with high fees
- Post-Brexit considerations make some UK investment platforms problematic
- A Spanish-compliant investment bond is often the most tax-efficient route for expats
4. Why Use a Spanish Compliant Investments?
Spanish-compliant investment bonds are tailor-made for British expats in Spain. These tax-efficient life insurance-based investment products allow you to:
- Grow funds without annual tax (tax deferral)
- Withdraw money with reduced tax on gains
- Switch between funds without triggering tax events
- Hold investments in multiple currencies including GBP, EUR, USD
- Simplify Spanish tax reporting significantly
- Pass assets to beneficiaries without falling foul of Spanish succession law
- Potentially reduce your Spanish wealth tax liability
Comparing Top Spanish Compliant Investments for British Expats
Two of the most popular options for British expats are:
Prudential International Bond:
- Lower minimum investment (£20,000)
- “Smoothing” approach with steady returns (currently 7.30% for PruFund Growth)
- Ideal for cautious/balanced investors who want stability
- Limited to Prudential’s in-house funds
- Loyalty bonuses available for investments over £75,000
Utmost International Spanish Bond:
- Higher minimum investment (£90,000/€100,000)
- Open architecture allowing access to thousands of European compliant funds and ETF’s
- Suitable for more experienced investors who want control
- Flexibility to adapt strategies as your needs change
- Multi-currency options within one investment wrapper
5. Should I Declare My UK Rental Income in Spain?
Yes — all worldwide income must be declared in Spain, including UK property rental income. However, you may be able to offset UK taxes paid through the UK–Spain tax treaty.
- UK rental income must be reported on your Spanish tax return
- You’ll need to complete the Modelo 100 form
- Consider whether to hold property personally or through a company
- Spanish tax residents must declare all overseas properties on Modelo 720
6. Can I Still Use My UK ISA After Becoming Spanish Tax Resident?
You can keep your UK ISA, but you won’t get the tax benefits in Spain. Growth, dividends, and income from an ISA are taxable for Spanish residents.
Alternative options:
- Consider moving assets into a Spanish-compliant investment bond
- Restructure investments before becoming tax resident in Spain
- Review whether to keep or liquidate ISAs based on your specific situation
- Understand the implications for both income tax and wealth tax
7. What’s the Best Way to Invest in Spain as a British Expat?
The optimal strategy depends on your age, income, residency status, and long-term goals — but most British expats benefit from:
- A Spanish Compliant Bond for long-term investments
- A properly structured UK pension withdrawal strategy
- Reviewing ISAs and converting them into more tax-efficient structures
- Creating a succession plan that works with both Spanish and UK inheritance laws
- Understanding how the Spanish tax year (January-December) differs from the UK
Final Word: Financial Planning in Spain as a British Expat in 2025
Spain continues to be a brilliant place for British expats to live, but you need the right financial strategy to avoid tax surprises and make the most of your money. With careful planning, British expats can invest smartly, retire comfortably, and pass on wealth efficiently in their adopted home.
Brexit has further complicated matters for many British nationals in Spain, making professional advice more important than ever.
✅ Book a Free Consultation
If you’re unsure where to start, I offer tailored advice for British expats across Spain. Whether you live in the Costa del Sol, Costa Blanca, Madrid, Valencia, Barcelona, or the Balearic Islands, I can help you put a tax efficient financial plan in place.
