10 Questions You Should Ask About Finance and Tax When Moving from the UK to Spain

Relocating from the UK to Spain is an exciting decision that promises a change of pace, sunshine and a rich cultural experience. Beneath the surface of sangria and siestas, however, sits a financial landscape that needs careful attention. Asking the right questions early on can help you avoid costly mistakes and unnecessary complications.

Here are ten essential finance and tax questions to consider before you make the move.

1. What Is My Tax Residency Status in Spain and the UK?

One of the most important questions to clarify is where you will be considered a tax resident. Spain generally views you as resident if you spend more than 183 days in the country during a calendar year or if your main economic interests are based there. This matters because Spanish tax residents are taxed on their worldwide income.

If you do not plan properly, you could find yourself paying tax twice, once in the UK and again in Spain. The double taxation agreement offers relief, but it does not eliminate all issues. Understanding when you become tax resident and how to notify HMRC prevents surprises later.

2. From a Tax Perspective, Does It Matter When I Move?

Yes. The UK offers split-year treatment in certain circumstances, but Spain does not. The date you arrive in Spain can determine whether part, most or all of your annual income falls into the Spanish tax year.

Preparing your affairs before becoming tax resident is essential. The timing of your move can have a significant impact on your overall liability for that tax year.

3. Will My UK Pensions Be Taxed in Spain?

In most cases, yes. Spanish tax residents must declare and pay tax on income from UK pensions. UK State Pensions are generally taxed only in Spain, while government pensions such as civil service or armed forces pensions typically remain taxable only in the UK even after you move.

Private and workplace pensions fall under Spanish income tax rules and may be taxed at higher rates than you are used to in the UK. Understanding how each pension type is treated under Spanish law helps you plan more effectively.

4. What Are the Implications for My UK ISAs and Other Investments?

ISAs lose their tax-free status the moment you become Spanish tax resident. Interest, dividends and gains all become taxable in Spain even though they remain tax-free in the UK.

Spain’s capital gains tax is progressive, ranging roughly from 19% to 28%, and Spanish rules around UK investment platforms can be restrictive. Reviewing or restructuring your investments before moving may avoid unnecessary tax.

5. How Do Double Taxation Agreements Work Between the UK and Spain?

The UK–Spain double taxation agreement prevents the same income being taxed twice, but it does not eliminate tax entirely. Instead, it determines which country has taxing rights.

Certain income types, such as dividends or rental income, may still face tax in both jurisdictions, with credits available for tax already paid. Clarity on this helps you understand where each income stream will ultimately be taxed.

6. What Happens to My UK Property and Rental Income?

If you keep a UK property and continue to earn rental income, you will still owe tax on that income in the UK. As a Spanish tax resident, you must also declare it in Spain. Spain may allow a credit for UK tax paid, but it will still apply Spanish tax rules to the net income.

Capital gains rules also change. Selling UK property as a Spanish resident can trigger higher rates and fewer exemptions, so timing a sale matters.

7. Will I Be Liable for Wealth Tax in Spain?

Potentially. Spain has a Wealth Tax that applies if your net assets exceed regional thresholds, often around €700,000 per person plus €300,000 for a main home. Assets include property, investments, cash and even pension pots.

Rates vary by region and can range between 0.2% and 3.5%. Some regions offer full relief, but solidarity tax may still apply. Assessing your worldwide assets ahead of time shows whether you fall into scope.

8. What Are the Inheritance and Gift Tax Implications?

Spain applies inheritance and gift tax to both donors and recipients, and Spanish residents are taxed on worldwide assets. Rates and allowances differ between regions, and the relationship between the parties heavily influences the calculation.

Planning ahead can reduce cross-border exposure and prevent delays or unexpected liabilities for your family.

9. Can I Use Tax-Efficient Investment Structures in Spain?

While UK tax advantages such as ISAs and certain pension reliefs do not carry over, Spain offers compliant investment structures, including tax-efficient bonds or life assurance wrappers that allow growth to be deferred until withdrawal.

These can be valuable for retirees or those looking to manage income more effectively under Spanish rules.

10. Should I Hire a Dual-Qualified Financial Adviser in Spain?

For most movers, the answer is yes. Spanish tax law is complex, and regional differences create further layers of responsibility. Combine that with Brexit-related changes and cross-border reporting, and trying to manage the move alone can lead to errors and unnecessary tax.

A dual-qualified UK–Spain adviser can help you optimise your residency date, avoid double taxation, use allowances effectively and remain compliant with both systems.

Plan it Now

Moving from the UK to Spain is more than a lifestyle shift. It is a financial transition that affects your tax position, reporting requirements and long-term planning. Preparing well before your move gives you time to understand where you will be taxed, how each income stream is treated and how to restructure your financial life for Spain’s system.

The earlier you begin planning, the smoother and more cost-effective your relocation becomes.