This guide explains how British people should approach financial planning when moving to Spain. It covers UK pensions, ISAs, investments, wealth tax, currency risk, banking and regulation, highlighting common pitfalls and why early planning matters once you become Spanish tax resident.
Moving to Spain from the UK changes how your money is taxed, reported and, in some cases, how it should be structured. While many British people focus on visas and property, financial planning is often left until later, when decisions are harder or more expensive to reverse.
Spain does not simply “pick up where the UK leaves off”. Tax rules, reporting obligations and the treatment of common UK investments are different, and assumptions that work well in the UK can create problems once you become Spanish tax resident.
This article looks at the key financial areas British people should understand when moving to Spain, including pensions, investments, ISAs, wealth taxes and local options that are often overlooked.
This article is for general information only and does not constitute financial, tax, legal or investment advice. Financial planning when moving to Spain depends on individual circumstances, residency status and the interaction between UK and Spanish regulations. You should seek professional advice before making decisions about pensions, investments or asset structuring.
Once you are considered Spanish tax resident, Spain generally taxes you on your worldwide income and assets, not just income arising in Spain.
Tax residency is usually triggered if you spend more than 183 days in Spain in a calendar year, or if Spain becomes the centre of your economic or family interests. Importantly, Spain works on a calendar year, not the UK tax year, which can complicate the year of arrival.
From that point, UK income such as pensions, rental income, dividends and interest will usually need to be declared in Spain, even if tax is also paid in the UK.
Pensions are often the largest asset British people bring with them to Spain.
The UK State Pension is taxable in Spain once you are Spanish tax resident. It is usually paid gross and declared through your Spanish tax return. Many people are surprised by this, particularly if they were used to it being taxed through PAYE in the UK.
Most UK workplace and personal pensions are also taxable in Spain when paid. Spain taxes pension income as general income, which means it is added to other income and taxed at progressive rates.
Spain does not recognise many of the tax advantages associated with UK pension structures. Drawdown, lump sums and phased withdrawals can be taxed differently than expected, making timing and strategy important.
Decisions made before becoming Spanish tax resident, such as crystallising benefits or restructuring income, can have long-term consequences. This is an area where advance advice often matters most.
Some British people consider transferring pensions out of the UK after moving to Spain, often in search of simplicity, flexibility or alignment with their new country of residence. This is an area that requires particular care.
UK pension transfers are heavily regulated and not all pensions can be transferred. In many cases, transferring a pension overseas is either unsuitable or unnecessary. Defined benefit pensions, for example, are rarely appropriate to transfer due to the loss of guaranteed income and protections.
For those exploring international transfers, the structure of the receiving scheme matters. Transferring to an overseas arrangement does not remove tax obligations and may introduce new risks, including different investment rules, currency exposure and changes in consumer protection.
Spain does not have a direct equivalent to UK pension wrappers and Spanish tax treatment may not align with expectations formed under UK rules. A transfer that appears beneficial from a UK perspective can become inefficient or costly once Spanish taxation and reporting are applied.
Because pension transfers are often irreversible, this is an area where independent, cross-border advice is particularly important, ideally before becoming Spanish tax resident.
ISAs are one of the most common problem areas for British people in Spain.
While ISAs are tax-efficient in the UK, Spain does not recognise the ISA wrapper. Once you are Spanish tax resident, income and gains generated within an ISA are usually taxable in Spain as if the ISA did not exist.
This does not mean ISAs must be closed immediately, but it does mean they often lose their intended benefit. Ongoing reporting obligations can also apply.
Understanding whether to retain, restructure or draw from ISAs is a common planning issue for British people relocating to Spain.
Many UK investment products do not translate neatly into the Spanish system.
Spain taxes savings and investment income under a separate savings tax scale, which differs from UK capital gains and dividend rules. This can affect how and when assets are sold or rebalanced.
Currency movements also matter more once income, expenses and tax are in different currencies.
Spain has additional layers of reporting and taxation that often come as a surprise.
Some regions apply a wealth tax based on the net value of worldwide assets above certain thresholds. Exemptions, allowances and rates vary by region, which means where you live in Spain can materially affect your tax position.
Even where no wealth tax is ultimately payable, reporting obligations may still apply.
Spanish residents may be required to declare overseas assets such as bank accounts, investments and property above certain thresholds. Penalties for non-compliance can be significant, even where no tax is due.
These requirements are administrative as much as financial, but they are taken seriously.
British people often continue to hold UK-based investments, but Spain also has local options that may be relevant.
Spain issues government bonds and savings products that can appeal to residents seeking euro-denominated income or lower currency exposure. These may be taxed differently from UK products and can form part of a diversified approach.
Once living in Spain, many people prefer to align at least part of their portfolio with euro-denominated assets to better match future spending and reduce currency risk.
Access to local products, however, depends on residency status, provider rules and individual circumstances.
British people moving to Spain often assume that financial regulation works in the same way as it does in the UK. In reality, regulation, consumer protections and who is allowed to advise you depend on where you live, who you are dealing with and what type of product is involved.
The UK’s Financial Conduct Authority (FCA) regulates financial advice and products in the UK. FCA authorisation provides important consumer protections, including suitability requirements, disclosure standards and access to complaints and compensation mechanisms.
However, once you are living in Spain, UK-regulated advice does not automatically apply to all situations. FCA-authorised firms may still be able to advise on certain UK-based products, such as pensions or investments held in the UK, but this depends on the firm’s permissions and your residency status.
It is important to understand what an adviser is regulated to advise on, and whether that advice remains appropriate once you are resident abroad.
Financial services provided in Spain are regulated under Spanish and EU frameworks, which differ from the UK system. Consumer protections, disclosure rules and compensation schemes are not identical to those in the UK.
Products offered locally, including Spanish investments, insurance and savings products, fall under Spanish or EU regulation rather than FCA oversight. This means complaint processes, guarantees and investor protections may operate differently.
British people should not assume that EU regulation is weaker or stronger than UK regulation, but they should recognise that it is different, and that familiarity with UK protections does not always translate directly.
One of the most common risks for British people living in Spain is receiving advice that falls between regulatory systems.
Examples include:
Understanding who regulates the advice you are receiving, and under which legal framework, is as important as the advice itself.
Banking is one of the first practical adjustments British people make when moving to Spain, and it has implications beyond day-to-day convenience.
Many British people keep at least one UK bank account after moving to Spain, particularly if they continue to receive UK income such as pensions, rental income or investment distributions.
However, not all UK banks are willing to service customers who are no longer UK resident. Some accounts may be restricted or closed once your address changes, which can disrupt income flows if not planned for in advance.
UK accounts may still be useful for:
It is important to confirm residency policies with your bank before moving.
A Spanish bank account is usually essential once you are resident. It is often required for:
Accounts are typically euro-denominated. Requirements vary by bank, but commonly include identification, proof of address and a foreigner identity number. Some banks offer non-resident accounts initially, with resident accounts opened later.
Fees, account structures and service levels differ from the UK. Free banking is less common, and charges for maintenance or transactions are normal.
Holding money in both sterling and euros is common for British people living in Spain. This helps manage currency exposure and avoid unnecessary conversion costs.
Some people use:
The key consideration is how often money is converted between currencies and at what cost. Frequent small conversions at poor rates can have a larger long-term impact than a single large transfer.
Spanish tax authorities expect transparency around bank accounts held abroad.
Once you are Spanish tax resident, overseas accounts may need to be reported if balances exceed certain thresholds. This applies even if the account is rarely used.
Keeping clear records of accounts, balances and transfers helps simplify tax reporting and reduces the risk of errors or omissions.
Addressing your banking requirements early helps everything else run more smoothly.
Once living in Spain, your everyday expenses, taxes and long-term planning are likely to be euro-based, while income, pensions or investments may remain in sterling. This creates ongoing exposure to exchange rate movements.
Exchange rates affect the:
Short-term currency movements can materially change outcomes, particularly for people relying on fixed sterling income to fund euro expenses.
People often focus on large, one-off transfers, such as moving savings or buying property, but regular transfers matter just as much.
Pension income, investment withdrawals or rental income paid in sterling may need to be converted monthly. Poor exchange rates or unmanaged volatility can erode income over time.
Some people choose to:
There is no single correct approach. The right strategy depends on income sources, spending needs, time horizon and tolerance for risk.
What matters is recognising that currency is not a one-off issue at the point of moving, but an ongoing consideration that can affect long-term financial stability.
Some of the most frequent issues include:
These mistakes are rarely intentional. They usually arise from a lack of early planning rather than poor decision-making.
Specialist advice is often appropriate if you:
Early guidance can help avoid unnecessary tax, reduce reporting risk and bring clarity to complex decisions.
