Thinking about how to transfer your UK pension to Spain?
Before you do anything, you must know the critical tax trap: Spain does not recognise the UK’s 25% tax-free lump sum.
Taking it at the wrong time could cost you thousands in Spanish tax.
This 2025 article explains how to navigate this trap, whether a QROPS or International SIPP is right for you, and exactly what to do with your UK State Pension for a secure retirement in the sun.
Living in Spain as a British expat offers a sought-after lifestyle, but managing your finances can be complex.
A common challenge is deciding how to transfer your UK pension to Spain efficiently. If your pension remains in the UK, your hard-earned retirement fund could be exposed to currency volatility, unnecessary taxation, and inflexible rules.
Many expatriates are unsure of their options, facing questions about QROPS, SIPPs, and the tax implications of their move.
This article explains your options for managing your UK pension as a Spanish resident, ensuring your assets are structured securely and tax-efficiently.
By the end of this article, you will understand:
This is the most common and important question, and the answer is straightforward: No, you cannot transfer a UK pension directly into a Spanish-based pension scheme.
As of 2025, there are no Spanish pension schemes that are recognised by HMRC as a ‘Qualifying Recognised Overseas Pension Scheme‘ (QROPS).
This does not mean you are without options.
The correct strategy is not about moving your pension to Spain, but about moving it to an international structure that is optimal for a resident of Spain.
The two primary solutions are a different QROPS (based elsewhere) or an International SIPP.
Before exploring your options, you must be aware of a critical tax trap.
In the UK, you are typically allowed to take 25% of your pension pot as a tax-free lump sum (the Pension Commencement Lump Sum or PCLS).
Spain does not recognise this tax-free status.
If you become a Spanish tax resident and then take your UK lump sum, it will be treated as income and taxed in full by the Spanish authorities.
To retain its tax-free status, you must take it before you become a tax resident of Spain.
This strategy involves moving your pension from a UK-based scheme to an international one that offers greater benefits for a Spanish resident.
A QROPS is an HMRC-recognised pension scheme based outside the UK. While there are no QROPS in Spain, British expats often use schemes domiciled in EU jurisdictions like Malta or Gibraltar.
Best for: Long-term residents of Spain who have significant pension funds and do not plan to return to the UK.
Key Benefits for a Spanish Resident:
An International SIPP is a UK-registered pension that operates under UK regulations. However, it is specifically designed for non-resident members, offering multi-currency functionality and broader investment flexibility.
Best for: Expats who may eventually return to the UK, prefer the security of UK regulation (FCA), or have smaller pension pots.
Key Benefits:
| Feature | QROPS (e.g., Malta-based) | International SIPP |
| Regulation | EU (e.g., Malta) | UK (FCA) |
| Currency | Full multi-currency (EUR, GBP, USD) | Full multi-currency (EUR, GBP, USD) |
| UK Inheritance Tax | Typically outside the UK IHT net | Remains within the UK IHT net |
| UK Lifetime Allowance | Tested at transfer, then no further LTA | Remains subject to UK LTA rules |
| Best For | Long-term non-UK residents | Those who may return to the UK |
Choosing the right structure is a complex decision that depends on your residency plans, pension value, and financial goals.
If you need more information about the differences between QROPS and SIPPs, you should click here.
Need Help Transferring Your Pension?
The simplest option is to do nothing and leave your pension in its existing UK scheme.
This “do nothing” approach often fails to adapt to life abroad and can lead to several pitfalls:
Yes, you can. Most UK pension providers will pay your pension income (via drawdown or annuity) directly to an international bank account, including your Spanish one.
However, this does not solve the core problem. The payment will still be sent in GBP and converted by your bank, exposing you to volatile exchange rates and potential bank transfer fees for every single payment.
This is a key part of your retirement plan and, fortunately, the news is good.
Can You Claim it?
Yes. You can claim your UK State Pension while living in Spain. You can have it paid into a UK or a Spanish bank account.
Will it Increase?
Yes. Because Spain is in the European Economic Area (EEA), your UK State Pension will be “uprated” each year. This means it benefits from the “triple lock” (or whichever annual increase is currently in place), just as if you were living in the UK.
How is it Taxed?
Under the UK-Spain Double Taxation Treaty, your UK State Pension is taxed only in Spain. It is paid to you gross (without UK tax) and must be declared on your annual Spanish tax return (declaración de la renta).
A regulated UK pension transfer to Spain (via a QROPS or International SIPP) is a formal process:
Jane, 60, relocated to Valencia with a £300,000 pension.
Leaving it in the UK meant fluctuating income due to GBP/EUR swings and limited withdrawal options.
Working with PCC Wealth, she transferred to a Malta-based QROPS, denominated in euros.
Now, her income is stable, taxed efficiently under Spain–Malta agreements, and her beneficiaries will inherit the full value without UK inheritance tax exposure.
Under the UK-Spain Double Taxation Treaty, private and workplace pensions are taxable only in Spain for Spanish residents.
Your income is paid gross from the QROPS or SIPP and declared as ‘general income’ on your Spanish tax return.
You can avoid the 25% OTC if both you and your chosen QROPS are resident in the same country.
This depends on your pension structure.
If left in a UK scheme, it is subject to UK inheritance rules.
If moved to a well-structured vehicle, the full value of the fund can typically be passed to your heirs free of UK IHT or
It is sometimes possible, but it is highly complex and regulated.
A transfer value over £30,000 requires independent, specialist advice from a UK-regulated adviser.
This is a high-risk decision, and in many cases, it is better to leave a Defined Benefit pension where it is.
Your pension was built to serve your lifestyle, it should not limit it. As a resident of Spain, leaving your pension in a UK-centric scheme often creates unnecessary risk and tax burdens.
A well-planned UK pension transfer can unlock greater flexibility, currency stability, and long-term tax efficiency.
At PCC Wealth, our advisers guide you through every stage, ensuring your retirement funds are structured to thrive in Spain.
Ready to Explore Your Pension Options?
Your financial future in Spain is too important for guesswork. Book a complimentary, no-obligation consultation with PCC Wealth today and discover the most efficient way to manage your UK pension.
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