BREXIT: The money matters Brits in Spain need to consider

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BREXIT: The money matters Brits in Spain need to consider
Photo by Scott Graham on Unsplash

December 31st 2020 is looming ever closer and with it the end of the transition period and the deadline for Brits to move to Spain before Brexit changes everything. But for those making the move, are your finances in order?


Those who are lawfully settled before 31 December 2020 can lock in a lifetime of citizens’ rights under the UK/EU Withdrawal Agreement. This protects access to healthcare, social security, education and employment opportunities for as long as you remain resident.

But you will also need to adjust your tax, investments, pension and estate planning to suit your new home.


Most people are focussed on getting into the Spanish system as quickly as possible. However, without careful planning, changing residency can have unexpected financial pitfalls, not least because residency in Spain makes you subject to Spanish tax and succession rules. It is also advisable to review your investments and pensions to ensure they are suitable for this new chapter of your life.  

Getting it right from the outset makes things easier and cheaper, so do your research on living in Spain and seek professional advice if you think you need it.

Here financial advisors, Blevins Franks provides a simple guide for The Local Spain readers to consider.

Taxation in Spain

Photo: AFP


Anyone moving to Spain needs to prepare for a completely new tax regime. Be aware that the autonomous communities can adjust tax rates and rules, so you need to research your particular area.

First of all, establish when you become liable for Spanish tax on your worldwide income, gains, wealth and estate.  

In Spain, you are considered to be a tax resident if you spend more than 183 days in Spain during the Spanish tax year (calendar year) or if your main professional activity or most of your assets are based in Spain.

You can also be considered resident if your spouse and/or minor children live in Spain (unless you prove otherwise). There is no split year treatment; you are either resident or non-resident for the whole year.

Spanish taxation can appear complicated and potentially high. But the good news is that, with expert planning, it is possible to structure savings, investments and assets to be tax-efficient – and potentially pay less tax in Spain than you did in the UK, depending on your circumstances. 

Be aware that, besides income taxes, Spain imposes an annual ‘wealth tax’ calculated on your total assets, though individuals benefit from a €700,000 allowance plus a €300,000 main home deduction for residents. It’s worth noting that it is easier to lower this liability on capital investments, using compliant tax planning, than on property.

Disposing of UK assets

Understanding when to liquidate UK assets could lower your tax liabilities. Here are some examples:

  • While UK residents can generally take 25 percent of their pension as a tax-free lump sum, it will be liable to income tax in Spain if you take it after you are resident there. 
  • Once you leave Britain, UK investment products such as ISAs lose their tax benefits, with interest, dividends and capital gains taxable in Spain. So encashing before you become Spanish resident can allow you to benefit from the UK tax wrapper. Alternative investment vehicles are available to Spanish residents that offer tax-efficiency as well as estate planning and other benefits.
  • Timing is key when disposing of UK property. In the UK, you do not pay capital gains tax when selling your main home, providing you meet the ‘principal private relief’ conditions. Other property is liable to tax, even for non-residents. Spanish residents are exempt from capital gains tax on a main home if you are over 65 years or reinvest the proceeds into a new main home. You can only have one ‘main home’.

Estate planning for Spain

Photo: AFP



Spanish succession law and taxes differ greatly from the UK’s. Good estate planning should be a key part of your strategy to become Spanish resident.

Under Spain’s ‘forced heirship’ rules, children are entitled to receive two thirds of an estate’s assets (you cannot, for example, leave everything to your spouse). The European succession regulation enables you to elect for your relevant UK law to apply to your estate instead, but take advice first.  

Succession and gift tax is paid by each recipient, with tax rates varying and based on the relationship between the donor and beneficiary. There is no blanket spouse to spouse exemption.

Your savings and pensions

Photo: AFP

Whenever there is a big change in your life, like moving to a new country, you should review your savings and investments to check they are suitable for you now. Are you holding the right spread of assets to meet your objectives, time horizon and risk tolerance? Since you’re living in Spain, you may need to hold more assets in Euros and diversify away from UK investments. 

Retirees should review their pension funds and the options now available to them. Can you maximise your retirement savings without unnecessary risk? Should you move your pension out of the UK? If you are considering a Qualifying Recognised Overseas Pension Scheme (QROPS), remember the UK could start imposing a 25% ‘overseas transfer charge’ once it sheds its EU obligations.

Strategic financial planning for Spain

Although the Brexit countdown is on to secure Spanish residency, take the time to ensure your finances are in the best possible position for your life in Spain. Every family is different, so your financial planning must be carefully designed for you. All the various aspects should work cohesively together to create an overall wealth management plan that provides long-term financial security for yourself and achieves your wishes for your heirs.  

Contact Blevins Franks for personalised, professional advice. Their cross-border specialists are highly experienced at helping UK nationals settle in Spain and make the most of the opportunities there.




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