Last Updated on 13th January 2026
Spanish retirement is an appealing goal for many British nationals. The most important factor in ensuring those relocations go smoothly and that retirees’ income comfortably finances the lifestyles they anticipate is clear, accurate planning.
Overseas retirement budgets can look considerably different from those in the UK. They might vary based on living costs, property acquisition plans, currency exchange rates and income taxation, which is why it’s advisable to review pension schemes and retirement investments to ensure these remain suitable.
Here we’ll look at some of the aspects to be conscious of when forecasting the real-world income you’ll receive, understanding whether you’ll be eligible for the British State Pension as a Spanish resident, and knowing whether your pension will need to cover the costs of private health insurance.
How Pension Values Fluctuate Following a Move to Spain
Forecasting the value of your pension is advisable regardless of whether you plan to move. This ensures you have clarity about what your pension is worth, the value of any tax-free lump sum you might be entitled to and know whether your monthly pension benefits will easily finance your living costs.
However, once you become an overseas resident in Spain, the same pension fund might become more or less valuable if you don’t take any action, owing to factors such as the following:
- Spanish taxation incurred against regular and lump-sum pension withdrawals
- The administrative and banking charges applied to overseas transactions
- Currency exchange rates, if you receive a pension in Sterling but pay living expenses in Euros
Depending on the structure of your pension, you may also find that the assets your funds are invested in, market performance and interest rates influence the amount you receive, irrespective of where you live – although this won’t apply to pensions with a fixed value, such as defined benefit schemes.
There are various ways to manage pension wealth as an expat. They range from transferring UK-based funds to an HMRC-Recognised Overseas Pension Scheme (ROPS), restructuring your fund into a private Self-Invested Personal Pension (SIPP), reinvesting assets in an entirely different product, or determining that the costs and potential tax implications of a transfer make it more beneficial to leave your pension as-is.
The takeaway is that you must have an up-to-date picture of what your pension is worth and make decisions about how to act if this isn’t going to be sufficient, doesn’t align with your expectations, or isn’t tax efficient.
Accessing a UK-Based Pension as a Spanish Expat Resident
Most British nationals living in Spain remain eligible for the UK State Pension and continue to receive the annual uplift. They must, though, have informed the International Pension Centre of their relocation and have made enough National Insurance Contributions to qualify.
Private pension funds and occupational or workplace schemes may also be accessible from Spain, although this will depend on the set-up and terms of the scheme, and whether it permits holders to draw on their pension benefits from outside of the UK.
Some schemes have flexibility, whereas others do not. If you cannot nominate an overseas bank account, you may need to maintain a UK account and accept the transactional costs and currency exchange implications of remitting your pension funds to Spain.
Understanding Spanish Taxation on Pension Income
All expats should familiarise themselves with the Spanish tax system, particularly additional taxes that don’t exist in the UK, such as wealth tax. Factors that will determine how pension incomes are taxed include:
- The individual’s tax residency position. Foreign nationals who live at least six months of the year in Spain will usually be deemed tax residents and subject to local taxes on their worldwide income and assets.
- Double taxation agreements. These ensure expats aren’t taxed twice in the UK and Spain, but also need to be claimed or applied correctly to avoid non-disclosures of taxable incomes or non-payments.
- The pension fund type and location. If you choose to retain a UK pension, this will normally be taxable in Spain, excluding government pensions that are taxed at source. Other private pensions will usually be subject to domestic tax rates, and you must submit a Spanish tax residency form to HMRC to avoid additional UK-based tax deductions.
Income tax in Spain varies between municipalities, which means it is important to review the local tax rates and brackets in your intended retirement destination, in addition to federal income taxes, and include these obligations in your retirement budget.
Budgeting for Healthcare Costs in Your Spanish Retirement Plans
Finally, healthcare is always a vital inclusion in retirement budgets. The Spanish healthcare system is well-regarded, but as a non-EU citizen, you may be expected to hold private health insurance, at least initially, as this is a common mandatory visa condition.
British citizens who have already retired may be eligible to apply for an S1 form, which entitles them to public healthcare services in Spain, with costs covered by the NHS.
There is sometimes the option to pre-register for the S1, and to provide evidence of this to circumvent the need to purchase private health cover. However, this must be registered with the National Social Security Institute (INSS) in Spain before you are granted a Sistema de Información Poblacional (SIP) card, which enables you to use Spanish state healthcare services.
Further Guidance on Managing Pension Funds for a Retirement in Spain
As we’ve seen, a pension fund held in the UK will often need to be restructured or transferred when retiring in Spain, but there isn’t one solution suited to every expat, and you must make informed decisions based on your own circumstances, financial position and residency status.
Taking the time to research tax rates and the options for accessing your pension from Spain can make a significant impact on your long-term financial stability.
If you’re unsure whether your pension income will be enough to finance your Spanish retirement, are concerned about not having a comprehensive budget, or need help understanding how your pension wealth will be taxed when you become a Spanish tax resident, you are welcome to get in touch with us at Chase Buchanan Private Wealth Management.
Our Spanish teams are located in Marbella and Valencia, and you can organise a convenient time to speak to one of our advisers through our online booking system.
© Chase Buchanan Private Wealth Management.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15 and offers its services in the EU on a cross-border basis as per the provisions of MiFID.
Chase Buchanan Insurance Services, Agents & Advisors is authorised and regulated by the Cyprus Insurance Companies Control Service with License No 6883 and offers services in the EU on a cross-border basis as per the provisions of the Insurance Distribution Directive (IDD).
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*Information correct as at January 2026
