Spain or the UK? Which country offers the best value for your retirement years?

Spain is a popular retirement destination, offering an enviable lifestyle and lower day-to-day living costs – and with the right approach, many UK nationals improve their tax position by relocating here.

The most suitable residence permit for British retirees is Spain’s Non-Lucrative Visa (NLV). To obtain it you must demonstrate an annual income of €28,800, plus €7,200 for each dependent. The application fee is currently £516 per applicant.

You cannot work with an NLV. If you plan to work online, the Digital Nomad Visa may be an option. You must evidence a stable income (around €2,500 per month) and meet the criteria.

Property in Spain is considerably more affordable than in the UK. On average, the cost of buying an square metre in Spain can be 40%-50% cheaper.

If you sell UK property as part of your move to Spain, you can buy a similarly sized Spanish home with the proceeds and have capital left over to invest for income and long-term growth. The timing of the sale is crucial so the gains do not become taxable in Spain.

Spain offers a significantly lower cost of living than the UK, especially for day-to-day expenses such as housing, groceries, public transport and dining out. Your income can go considerably further in Spain, allowing retirees to enjoy a very comfortable lifestyle.

Spain offers a typically very affordable healthcare system. UK nationals of state pension age can apply for Form S1, which provides the same healthcare rights as those paying into Spain’s social security – you will be eligible for free healthcare in Spain.

Otherwise, you may be eligible for the Convenio Especial after one year in Spain. This voluntary scheme allows access to the Spanish public healthcare system for a monthly fee (typically €50–€150). Or private health insurance costs are typically €100–€250 per month.

Tax regimes vary across Spain’s regions, making it imperative to understand and plan for the tax implications of your move. It’s equally important to look beyond the headline rates of tax and explore the planning opportunities Spain offers.

While those on high salaries and/or holding significant assets may face a higher tax burden in Spain, if you are retired Spain offers legitimate tax planning opportunities. With suitable planning, you can enjoy a low tax environment in Spain, in many cases lower than the UK’s.

Tax rates on savings income range from 19% to 30%. Rates for general income vary by region. Andalucía ’s lowest rate is 19% and the top rate 47%. Most UK pension income will only be taxed in Spain, but UK government pensions continue to be taxed only in UK.

Before moving to Spain, assessing your overall financial situation and income sources will allow you to restructure your assets and income streams to optimise your tax situation in Spain. For example, in the UK, you can withdraw up to 25% of your pension pot tax-free, but once you become a Spanish tax resident it is subject to Spanish tax. Income from a UK ISA is tax-exempt in the UK, but taxed as savings income in Spain.

While Spain imposes annual wealth taxes, in Andalucía only wealth over €4 million is affected.

These are just a few of the differences between UK and Spain's tax systems. With the right guidance and planning, you can optimise your finances to make the most of Spain’s favourable tax structures.

Both Spain and the UK levy inheritance taxes but their approaches differ significantly. In the UK, recent changes have largely focused on increasing government revenue, thereby reducing the amount of wealth passed down through generations. In contrast, many Spanish regions have introduced reforms aimed at preserving family wealth. Andalucía now offers significant inheritance benefits, effectively eliminating succession tax between spouses, parents, children and grandchildren.

The UK’s domicile-based inheritance tax system was replaced by an advantageous residence-based approach in 2025. Now, if you move from UK to Spain, after 10 years you'll cease being liable to UK inheritance tax on worldwide assets – only UK assets would be assessed for IHT.

So moving to Spain permanently and relocating your assets could protect your wealth from most or all inheritance taxes. The potential savings for your family are potentially vast.

Early, strategic tax and wealth management is essential for anyone considering a move, and timing is everything. The point at which you become a Spanish tax resident can have a significant impact on how your income and assets are taxed. With the right advice, you can structure your affairs to optimise your tax position in both Spain and the UK and avoid unnecessary liabilities.

Another important factor is choosing the right investment structures. Tax-efficient solutions that comply with Spanish regulations can help reduce exposure not only to income tax, but also to inheritance taxes. When tailored to your personal circumstances, these structures can make a meaningful difference to your long-term financial wellbeing. Take highly personalised, cross-border advice.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice. Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.