An ISA is an Individual Savings Account in the UK and allows you to have tax-free savings and investments.
The UK government says that in order to open an ISA you must be “a resident in the UK or a member of the armed forces or a Crown servant (for example diplomatic or overseas Civil Service) or their spouse or civil partner if you do not live in the UK”.
The maximum you can save in the tax year 2025 to 2026 is £20,000.
But if you move to Spain and already have an ISA it can be tricky to know what to do with it. This is mainly because as a Spanish tax resident, income and capital gains from your ISA are subject to Spanish taxation and are not tax free like they would be if you lived in the UK.
Your interest, capital gains and dividends will be taxed as savings income at the following rates:
- Up to €6,000 – 19 percent
- €6,000.00 to €50,000 – 21 percent
- €50,000 to €200,000 – 23 percent
- €200,000 to €300,000 – 27 percent
- Over €300,000 – 30 percent
You will have to declare them during your annual income tax return and pay accordingly, which means that they don’t really have the same advantages as they did in the UK if you live here and are not really ISAs anymore.
READ ALSO: What Brits should know about SIPP and QROPS pensions if moving to Spain
The amount in your ISA will also have to be declared as part of your worldwide assets on the Modelo 720 form if you have more than €50,000 abroad.
Firstly, you could close your ISAs to reinvest the capital in your new property or other type of savings account.
A popular alternative is a Spanish Compliant Bond which is a life insurance policy with an investment as part of it. It offers tax advantages within the framework of Spanish tax system, even though they’re not really part of Spain.
The way it works is that you pay a lump sum to an insurance company and they invest the money in different funds and manage it for you.
They are designed for foreign residents and allow deferral of tax payment on capital gains, so that the growth effect is more efficient and you can save more.
They also offer proportional tax relief so that when it comes to withdrawals, the Spanish government will only tax you for that part of the withdrawal, not all of it.
The key is that they are long term investments, and are not really worth it if you only want short-term investments of a few years.
They are also not subject to be included on the Modelo 720 asset forms we mentioned above.
However, they are not for everyone and can have their risks, like any type of investing.
It's best to speak to a financial adviser when considering one of these to see how it could work for you.
Another option is a high-interest savings account.
Unfortunately, there are not as many options for these as there are in the UK.
For example you may be able to find many 5 or even 6 percent yield rates back in the UK, but in Spain that's not the case and almost all savings accounts max out at the 2.5-3 percent level, so you can make as much from them.
These are known as cuenta remuneradas and different banks and financial institutions are offering continually different conditions and rates all the time. It’s worth shopping around to see what you can find.
Again these are subject to Spanish tax if you live here, there aren't any tax free high-yield savings accounts, so they don't have the same advantages as ISAs.
Whatever you decide to do with your ISA money or even keep in the UK, it's important you speak with a professional and get advice on what to do.
READ MORE: What are the best high yield saving accounts in Spain?
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