Retiring to Spain from the UK: a complete guide

Can a UK citizen retire to Spain?

Yes, UK citizens can retire to Spain, but the process has changed since Brexit. Now classified as non-EU nationals, British retirees must obtain a residency visa to live long-term in Spain. 

The most common option for retiring to Spain is the non-lucrative visa, which allows individuals to reside in Spain without engaging in any work. 

Spain's Golden Visa programme, which grants residency to non-EU citizens through investment, is set to be discontinued, with official termination anticipated by January 2025 - although this may be delayed due to opposition by the Spanish senate. 

To apply for a non-lucrative visa, individuals must submit various documents, including a valid passport, proof of health insurance, a medical certificate, and evidence of sufficient financial resources.

The financial requirement typically involves demonstrating an annual income of around €30,000 (around £25,000) for the main applicant and around an additional €7,000 (nearly £6,000) for each dependent.

The cost for a UK citizen to apply for a non-lucrative visa is £516 plus an application fee of £9.45, and approval can take one to three months.

When preparing your application to retire to Spain, ensure you have bank statements or proof of income that clearly demonstrate your financial stability. This documentation is crucial for satisfying the income thresholds set by the Spanish authorities.

How much money do you need to retire in Spain?

On average, retirees should budget between €1,800 and €2,200 (£1,500-£1,800) per month for a comfortable lifestyle.

For starters, housing costs in Spain are around 30% cheaper than those in the UK. Renting a one-bedroom flat in a major city such as Madrid costs around €1,400 per month (£1,160), whereas smaller towns or rural areas may cost as little as €400 (£331) a month. Utilities, including electricity and water, typically average €130 (£107) monthly.

Groceries and dining out are generally cheaper than in the UK. A couple can spend approximately €200-€400 (£165-£331) on food each month, while dining at restaurants is an affordable indulgence in many areas.

Living expenses can vary significantly by region; areas like Andalusia and Valencia often offer lower costs than tourist-heavy regions like Costa del Sol or Barcelona.

Tax implications are another critical consideration for UK pensioners retiring to Spain. Under the double taxation agreement between the UK and Spain, retirees won’t face double taxation on their income.

However, once considered tax residents (spending over 183 days in Spain), UK retirees must pay Spanish taxes on worldwide income. 

When retiring to Spain from the UK, retirees may also benefit from Spain's Beckham Law, which allows certain expatriates to pay a reduced tax rate on their income for up to six years.

Applying for this tax regime involves meeting certain criteria, registering with the Spanish tax authorities and typically incurring no additional costs beyond standard filing fees.

What are the benefits of retiring in Spain?

Retiring to Spain from the UK offers numerous advantages. The country has a warm climate and a high quality of life. Many retirees appreciate the Mediterranean lifestyle, including outdoor activities and community engagement.

Healthcare in Spain ranks highly compared to other countries. The public healthcare system provides comprehensive services either for free or at a low cost for residents. Many retirees find private healthcare options offer quicker access to specialists and services if needed.

The diverse natural beauty across Spain encourages an active lifestyle such as hiking, swimming, and exploring villages. Retirees can immerse themselves in vibrant cultural experiences through local festivals and events that reflect Spain's rich heritage.

Additionally, retirees enjoy high-quality cuisine and regional specialities. Proximity to the UK makes visiting family and friends convenient with numerous flights available.

What are the drawbacks of retiring in Spain?

While retiring in Spain offers many benefits, it’s essential to consider the potential drawbacks. The cost of living may pose challenges for some retirees accustomed to UK pricing structures. Budgeting is crucial as housing and utility costs vary widely across different regions.

Spain’s tax system includes federal, regional, and municipal taxes that may affect expats differently than expected. Understanding these taxes is vital; federal taxes apply uniformly across the country, and regional taxes can differ significantly based on location, while there may be various municipal taxes.

Although Spain has a national healthcare system that many retirees access through the S1 form (for those who qualify), private healthcare remains an option, but depending on the coverage levels desired, it can be costly.

Language barriers may also present challenges for integration into local communities. So, learning Spanish can enhance communication with locals and your experience.

Can you use your UK pension in Spain?

UK pensions remain accessible for those living in Spain. Even when retiring to Spain, retirees can receive their state pensions while residing there; these pensions continue to increase annually under current agreements between the two countries.

For personal pensions, retirees have options such as leaving their funds in the UK or transferring them into a qualifying recognised overseas pension scheme (QROPS).  Transferring pensions can provide tax efficiencies but may incur fees or taxes depending on individual circumstances.

Accessing pensions typically takes several weeks, so planning is essential. Currency exchange rates also play a significant role in managing finances, and fluctuations can significantly impact purchasing power.

As of April 2027, unspent UK pensions will be subject to inheritance tax (IHT), which may affect long-term financial planning for those with substantial pension funds (and who choose to leave them in the UK). 

What healthcare options are available for UK retirees in Spain?

Spain’s healthcare system offers comprehensive services comparable to the NHS but operates differently regarding access and payment structures.

Many UK retirees find they need private health insurance when moving due to visa requirements; average premiums vary based on age and health status but typically range from €100 to €200 per month (£83-£165).

Applying for healthcare involves registering with local health authorities upon obtaining residency status.

When retiring to Spain from the UK, it is advisable to select an insurance plan tailored specifically to your medical needs, considering factors such as coverage limits and providers is crucial.

What are the steps to retire to Spain from the UK?

Retiring from the UK to Spain involves several key steps:

1. Obtain a visa: Start by applying for a visa based on your financial situation.
2. Secure accommodation: Research potential areas where you wish to live and the expected costs.
3. Apply for a residency permit or card: You’ll need to do this after arriving in Spain.
4. Get a Spanish social security number (NUSS): This is essential for accessing healthcare and if you plan to work in Spain.
5. Open a Spanish bank account: This is important for managing your finances.
6. Financial planning: Consider how best to manage your pension funds, which is where consulting a financial adviser can be helpful.
7. Prepare the necessary paperwork: Ensure all documentation is complete before moving.

Each step requires careful planning; timelines will vary based on your individual circumstances and local regulations.

What lifestyle can you expect when retiring in Spain?

Retiring to Spain offers a lifestyle filled with outdoor activities year-round due to its favourable climate. There are also many cultural experiences, from art galleries to historical sites and local festivals celebrating Spanish heritage.

Popular retirement areas include bustling cities like Barcelona or Madrid and quieter regions such as Andalusia or Valencia, each offering unique lifestyles suited to different preferences.

Learning Spanish will likely help you integrate while embracing local customs will help enrich your experience and engage with the local community.

Understand your retirement options

If you’re considering retiring to Spain from the UK, it’s essential to understand eligibility requirements, financial implications, healthcare options, and lifestyle adjustments necessary for a smooth transition into this country. 

Whether you’re asking yourself, ‘Can I retire to Spain?’ or exploring the best places to retire in this country, thorough research will pave your way toward an enjoyable retirement abroad.

Let Unbiased match you with a professional financial adviser to help you create a secure retirement plan for your golden years.