UK Pensions, ISAs and Wills After Moving to Spain

Costa Bridge provides practical relocation preparation and signposting, not legal or tax advice. Rules change — always confirm current requirements with official sources or qualified professionals before acting.

Most British people moving to the costas bring three things that were set up for life in the UK: pensions, ISAs and a will. All three still exist after the move, but Spain treats them differently, and a few decisions are much easier to make before you become a Spanish tax resident than after.

This guide is general information, not financial, tax or legal advice. Read it alongside our guide to Spanish tax residency and the UK–Spain tax treaty, which explains when Spain starts taxing you.

UK pensions

The State Pension

You can claim and receive the UK State Pension in Spain, and it is increased every April as it would be in the UK. Under the UK–Spain tax treaty it is taxable only in Spain once you are a Spanish tax resident. The DWP pays it gross, so the tax is settled on your Spanish return.

Your State Pension also matters for healthcare: it is what usually entitles you to an S1, which registers you for Spanish public healthcare at the UK's expense. See our guide to S1 healthcare for British pensioners.

Private and workplace pensions

Personal pensions, SIPPs and most company schemes are taxable only in Spain. Until HMRC is told you have moved, your UK provider will keep deducting UK tax. To stop it, get a certificate of tax residence from the Spanish tax agency and send it to HMRC with form Spain-Individual; HMRC then issues your provider with a no-tax (NT) code and refunds what was overpaid.

Spain taxes regular pension income as general income on a progressive scale that runs from 19% to 45% or more depending on your region. That can be more than you paid in the UK on the same income, partly because Spain's basic personal allowance is much lower than the UK's.

Government service pensions

Pensions for service with UK central or local government, such as civil service, armed forces, police, teachers' and most NHS pensions, are generally taxable only in the UK. Spain does not tax them, but it does count them when working out the rate on your other income, so they still go on the Spanish return. The exception is if you are a Spanish national as well as a resident: Spain then taxes them instead.

Tax-free cash and drawdown

The UK lets you take up to 25% of a pension pot tax-free. Spain does not recognise that. A lump sum taken while you are Spanish resident is generally taxed in Spain as income, and a large lump sum in one year can push much of it into the top rates. Many people take their tax-free cash before they become Spanish resident for exactly this reason. Flexible drawdown is treated the same way: whatever you take out in a year is taxable income in Spain that year.

Exactly how Spain taxes a UK lump sum depends on the type of scheme and how the payment is made, and practice among advisers varies. Get advice before you take any lump sum as a Spanish resident.

Transferring a UK pension abroad

Moving a UK pension into an overseas scheme (a QROPS) used to be sold heavily to people moving to Spain. Since 30 October 2024, transfers to a QROPS in the EU or EEA have been subject to the same 25% overseas transfer charge as transfers elsewhere, unless you and the scheme are in the same country. Be very wary of anyone pushing a transfer, and check that the adviser is regulated.

Pensions and UK inheritance tax from April 2027

From 6 April 2027, most unused pension funds and death benefits will count towards your estate for UK inheritance tax, where today they usually fall outside it. Whether that affects you after a move depends on the UK's residence rules for inheritance tax, explained below.

ISAs

An ISA is a UK tax wrapper. Spain does not recognise it. Once you are Spanish resident:

interest and dividends earned inside an ISA are taxable in Spain each year, as savings income at 19% to 30%;
gains are taxable in Spain when you sell, even if you keep the money inside the ISA;
cash ISAs and stocks and shares ISAs count towards the modelo 720 thresholds for declaring assets held abroad.

You can keep an existing ISA after you leave the UK, but you cannot pay new money into it while non-resident. Some people sell and repurchase investments before the move, so the gain made while UK resident stays tax-free and Spain only taxes growth from a higher starting value. Whether that is worth doing depends on dealing costs and the sums involved; ask an adviser who knows both systems.

Premium Bonds and other UK savings products that are tax-free in the UK are not automatically tax-free in Spain either. Assume everything is taxable unless your adviser says otherwise.

Wills

Why a Spanish will helps

A valid UK will is recognised in Spain, but using it for Spanish property means getting it translated, sometimes certified, and proving English law to a Spanish notary, all while your family is grieving. A short Spanish will covering only your Spanish assets, made before a notary, is usually cheaper and faster for your heirs. Notary fees for a straightforward will are modest, and a lawyer's fee on top is worth it if your circumstances are complicated.

The two wills must fit together. Each should say it covers assets in its own country only, and neither should revoke the other. A standard UK will that opens with "I revoke all former wills" can cancel a Spanish will made earlier.

Which country's law applies

Spain applies the EU Succession Regulation (Regulation 650/2012) to deaths since 17 August 2015. By default, your whole estate is governed by the law of the country where you were habitually resident when you died. If you live in Spain, that means Spanish succession law, including forced heirship: under the common Spanish civil code, children are entitled to a large share of the estate (two-thirds) whatever your will says. Some regions, including Catalonia, have their own rules.

The regulation lets you choose instead the law of your nationality. A British national can state in their will that English law (or Scots or Northern Irish law) governs their succession. That generally lets you leave your estate as you wish, for example everything to your spouse first. The choice must be made expressly in a will. Spain applies it even though the UK is not part of the regulation.

Inheritance tax in Spain

Spanish inheritance tax (impuesto sobre sucesiones) is paid by each heir, not by the estate, and the rates and reliefs are largely set by the region. Andalucía, the Valencian Community, Murcia and Catalonia all give spouses and children substantial reliefs, but the details differ and change with regional budgets. Heirs normally have six months from the death to declare and pay, which can be extended once if they ask in time.

UK inheritance tax after you move

Since 6 April 2025 UK inheritance tax on worldwide assets depends on residence, not domicile. If you were UK resident for at least 10 of the previous 20 tax years, you remain in scope for UK inheritance tax on your worldwide estate for between 3 and 10 years after leaving, depending on how long you lived in the UK. For most British movers who spent their whole adult life in the UK, that means up to 10 years. UK property stays within UK inheritance tax whatever your residence. Where both countries tax the same estate, relief for the tax paid in the other country may be available, but the UK and Spain have no specific inheritance tax treaty, so get advice.

Step by step before and after the move

List your pensions and find out which are government service pensions.
Decide about tax-free cash before your Spanish residence date.
Review your ISAs with an adviser and record the values on the day you become Spanish resident.
Make or update your UK will so it covers UK assets only and does not revoke a Spanish will. Consider a choice of law.
Make a Spanish will before a notary once you have an NIE and Spanish assets.
After the move, get a Spanish tax residence certificate and send form Spain-Individual to HMRC.
Tell your family where both wills are kept and who your Spanish notary and gestor are.

Common mistakes

Taking pension tax-free cash in the first year of Spanish residence.
Leaving ISA income and gains off the Spanish return.
Paying UK tax on private pensions for years because no NT code was requested.
A new UK will that accidentally revokes the Spanish one.
Assuming leaving the UK ends UK inheritance tax straight away.
Transferring a pension on the advice of an unregulated adviser.

When to get professional help

For pensions and ISAs, use a regulated financial adviser who advises on both the UK and Spain, and an asesor fiscal for your Spanish returns. For wills, use a Spanish notary (with an abogado if your family situation or assets are complex) and a UK solicitor for the UK will, and make sure each sees the other's draft. Our guide to when to hire a lawyer or gestor explains who does what.

Key takeaways

State and private pensions are taxed in Spain; government service pensions stay taxed in the UK.
The UK's 25% tax-free cash is not tax-free in Spain. Decide before you move.
ISAs have no tax shelter in Spain and count for modelo 720.
Make a Spanish will for Spanish assets, keep both wills consistent, and consider choosing the law of your nationality.
UK inheritance tax can follow you for up to 10 years, and will include most pension funds from April 2027.

Sources and review date

Reviewed on 11 October 2026.

UK Pensions, ISAs and Wills When You Move to Spain