UK Pension in Spain: Drawing Your State Pension Abroad
Nationality Guide15 min read

UK Pension in Spain: Drawing Your State Pension Abroad

New Build Homes Costa Blanca8 February 2026
✓Quick Answer

UK state pension continues to be paid abroad to Spain and remains index-linked (increasing with UK inflation). Spain recognizes UK pensions under EU reciprocal agreements. Tax treatment follows the UK-Spain double taxation treaty. Private pensions and SIPPs can be drawn in Spain, though QROPS/ROPS transfers have strict conditions. Proper planning maximizes income and minimizes taxes.

One of the most important decisions for British retirees is understanding how their UK pensions work when living in Spain. The good news: UK state pensions are paid abroad and continue to be index-linked, meaning they increase annually. However, the taxation, regulatory framework, and optimization strategies are complex.

This guide explains everything you need to know about drawing UK pensions in Spain, from state pension basics through private pension options, helping you maximize retirement income while staying compliant with both UK and Spanish tax authorities.

UK State Pension Abroad: The Basics

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Tax Treatment in Spain

Private UK Pensions in Spain

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QROPS and ROPS (Pension Transfers)

Pension Drawdown Strategies for Spain

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National Insurance Voluntary Contributions

Practical Steps to Maximize Your Pension Income

The Bottom Line

UK pensions in Spain are advantageous: They're paid internationally, remain index-linked to UK inflation (protecting your spending power), and are recognized under reciprocal agreements. The key is understanding the tax implications, planning your drawdown strategy to minimize Spanish taxation, and ensuring full compliance with both UK and Spanish authorities.

Most British retirees find that keeping their UK pensions while drawing them in Spain provides better outcomes than transferring to QROPS schemes. Proper planning—done before you move—allows you to maximize your income while minimizing your tax burden.

We help British retirees understand their financial situation in Spain and connect them with specialist accountants and advisors. Contact us to discuss your retirement planning on the Costa Blanca.

Interested in properties in this area? Book a free 30-minute consultation with our team — with over 12 years of experience, we'll help you find exactly what you're looking for.

Frequently Asked Questions

1Is my UK state pension paid if I move to Spain?▼
Yes, absolutely. UK state pensions are paid to Spain without any issues. You'll need to update your address with HMRC, and payments can be made to a Spanish bank account. This applies to all pension recipients—Spain has reciprocal agreements with the UK.
2Does my UK state pension get frozen when I live in Spain?▼
No, this is a common misconception. Your UK state pension is NOT frozen in Spain. It remains index-linked and increases each April in line with UK inflation. Spain benefits from the same index-linking as any country. Only a few countries have frozen pensions (e.g., some overseas British territories).
3How much Spanish tax will I pay on my UK pension?▼
It depends on your total income. Spanish tax rates are progressive (19-45%). A £12,000 annual pension would face roughly 19% tax. A £30,000 pension might face 21-24% effective tax. More importantly, consult a Spanish tax advisor who can model your specific situation and identify optimization strategies.
4Should I transfer my UK pension to a QROPS scheme in Spain?▼
Generally, no. As of April 2025, transferring to Spain faces a 25% Overseas Transfer Charge, making it economically unattractive. It's usually better to keep your UK pension and simply draw it in Spain, paying Spanish taxes. QROPS transfers are irreversible, so avoid unless you have very specific reasons.
5Can I continue my SIPP while living in Spain?▼
Yes. Most SIPP providers allow you to continue managing your SIPP from Spain. Investment growth remains tax-free within the pension, and you can withdraw funds as needed (taxed in Spain as income). Verify with your provider before moving that they support non-UK residents.
6What's an S1 form and do I need one?▼
The S1 form grants you access to Spanish public healthcare based on your UK state pension. It's critical if you're moving to Spain at retirement age. You must apply BEFORE moving to Spain (takes 4-6 weeks). Without it, you'd pay for healthcare privately (€50-200/month) until you reach state pension age.
7Do I need to file a Spanish tax return as a retiree?▼
Usually yes, if you're resident in Spain (183+ days/year). You must declare your UK pension on an annual tax return (modelo 100). Most British retirees need to file even if no tax is ultimately due. Consult an accountant—costs £100-300/year but prevents costly mistakes.
8Can I fill gaps in my National Insurance record and increase my pension?▼
Yes. If you have missing contribution years, you can make voluntary National Insurance contributions (roughly £200-400 per year gap). Each gap filled adds about £320/year to your permanent pension—usually paying back in less than a year. Check your National Insurance record on the UK government website.
9How should I time my pension drawdowns for tax optimization?▼
If you have flexibility in withdrawal timing, spread large amounts across multiple years to avoid jumping into higher tax brackets. Coordinate state pension (fixed) with private pension drawdowns (flexible). A Spanish accountant can model scenarios to minimize your tax burden.
10What's the UK-Spain double taxation treaty and how does it affect my pension?▼
The treaty prevents paying tax twice on the same income. Generally, Spain has the right to tax your UK pension. The UK withholds some tax (typically 20%), and Spain calculates total tax due. If Spain tax is higher, you pay the difference. If lower, you get a refund. File returns in both countries to reconcile.

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