UK Pension in Spain: How Much Tax Will You Pay in 2026?

Tax on your UK pension is one of the first things that needs sorting when you move to Spain. Get it wrong and you risk paying tax in both countries, or underpaying in Spain and facing a bill later. Get it right and your effective tax rate on pension income in Spain is often lower than it was in the UK.

This guide explains exactly how each type of UK pension is taxed once you become a Spanish resident, and what steps you need to take.

The Golden Rule: Tax Residency Determines Everything

Once you spend more than 183 days per year in Spain, or once Spain becomes your primary residence, you become a Spanish tax resident. From that point, Spain has the right to tax your worldwide income, including UK pension income.

This does not mean you pay tax twice. The UK-Spain Double Taxation Treaty (DTT) prevents double taxation. But it does mean your tax obligations shift from the UK to Spain for most pension types, and you need to manage that transition actively.

How Each Pension Type Is Taxed

UK State Pension

Under the UK-Spain Double Taxation Treaty, the UK state pension is taxable in Spain, not the UK.

In practice this means:

• The UK pays your state pension gross (without deducting UK income tax)
• You declare it on your Spanish Modelo 100 tax return
• You pay Spanish income tax on it at Spanish rates
• You do not pay UK income tax on it as a Spanish resident

To arrange for the state pension to be paid gross, inform the DWP of your Spanish residence and complete the relevant forms. They will notify HMRC to cease the UK tax deduction.

The current UK state pension is approximately £11,500 per year (2026 full new state pension). At current exchange rates, this is roughly €13,500 per year or €1,125 per month. This falls within the lower Spanish income tax bands.

UK Private and Occupational Pensions

Private pensions (including workplace pensions from private sector employment) are also taxable in Spain under the DTT, not the UK.

The same principle applies: you notify your pension provider and HMRC of your Spanish residence, arrange for pension payments to be made gross, and declare and pay tax in Spain.

For occupational pensions from private employers (not government service), the Spanish tax treatment is the same as for the state pension. The income is added to your total Spanish taxable income and taxed at the applicable Spanish rates.

UK Government Service Pensions

This is the exception that catches many expats out.

Pensions paid by the UK government in respect of public service employment are taxable only in the UK under the treaty. This covers:

• Civil Service pension
• NHS pension
• Military pension (armed forces)
• Teaching pension (state schools and universities)
• Police pension
• Fire service pension
• Local government pension (in most cases)

If your pension comes from UK public service employment, you continue to pay UK income tax on it even after becoming a Spanish resident. You do not pay Spanish income tax on it, but you must still declare it on your Spanish tax return as exempt income (ingresos exentos).

Many British retirees in Spain have a mix of public service pension and state pension. The state pension moves to Spanish taxation; the public service pension stays in UK taxation. Both must be declared in Spain, but only the state pension is included in your Spanish tax calculation.

SIPP and Self-Invested Pensions

Self-invested personal pensions (SIPPs) are private pensions for Spanish tax purposes. Withdrawals are taxable in Spain, not the UK.

If you are drawing down flexibly from a SIPP, the amounts you take each year are added to your Spanish taxable income. The original contributions (which may have received UK tax relief) are not the relevant figure; what matters is the amount withdrawn each year.

For large SIPP pots, the timing and amount of drawdown can significantly affect your Spanish tax bill. Planning this before you move or in your early years of Spanish residency, when you can still restructure, is worthwhile.

Spanish Income Tax Rates: What You Actually Pay

Spain uses a progressive income tax system. The national rates (there are also regional rates that vary by autonomous community) for 2026 are approximately:

• Up to €12,450: 19%
• €12,450 to €20,200: 24%
• €20,200 to €35,200: 30%
• €35,200 to €60,000: 37%
• Above €60,000: 45% to 47%

Personal allowances reduce your taxable income before these rates apply. The general personal allowance is €5,550 per year. There is an additional allowance for taxpayers over 65 (€6,700 per year) and a further allowance for those over 75 (€8,100 per year).

Example: A single retiree over 65 with the full UK state pension (approximately €13,500 per year) and a private pension of €18,000 per year has total Spanish-taxable income of €31,500. After the over-65 personal allowance of €6,700, taxable income is €24,800. The effective Spanish income tax rate in this scenario is approximately 16 to 18%.

Compare this to the equivalent UK calculation, where the same individual would pay UK income tax on pension income above the personal allowance of £12,570, at 20%. The Spanish effective rate is often lower, particularly for incomes in the €25,000 to €45,000 range.

Notifying HMRC When You Leave

When you move to Spain, you must notify HMRC of your change of tax residency. This involves:

1. Completing form P85 (leaving the UK to live abroad), available on the HMRC website
2. Notifying the DWP of your Spanish address to continue receiving your state pension
3. Notifying private pension providers of your Spanish address and requesting gross payment
4. Completing form Spain-Individual if applicable under the DTT provisions

HMRC will then issue a No Tax code for pension income sources that move to Spanish taxation, so future payments are made without UK tax deduction.

Do not simply stop filing UK tax returns without formally notifying HMRC and confirming your position. Continuing to receive UK state pension or other pension payments with UK tax deducted while also paying Spanish tax on them creates a messy refund situation.

Modelo 720: Declaring UK Assets

Separately from your income tax return, Spanish residents with overseas assets above €50,000 in any category must file Modelo 720 each year by 31 March.

If you retain a UK bank account, UK pension pot, or UK property, these almost certainly trigger the Modelo 720 requirement. A pension fund in accumulation (not yet being drawn down) counts as an overseas asset for Modelo 720 purposes.

See our dedicated Modelo 720 guide for the full declaration requirements.

Do You Need a Tax Advisor?

For straightforward situations (state pension and one private pension, no property income, no investments), an experienced gestor can handle your Modelo 100 filing competently. Costs are typically €100 to €200 per year.

For more complex situations, particularly those involving:

• Government service pensions alongside other pension income
• Large SIPP or defined benefit pension drawdown decisions
• UK rental property income
• Investments and savings above €50,000

A specialist UK-Spain tax advisor is worth the higher cost to set up the arrangements correctly in your first year. The decisions you make at this stage (particularly around pension drawdown timing and structuring) can have long-term consequences that are expensive to undo.

Blevins Franks: UK-Spain pension and retirement tax planning

Currency: Receiving Your Pension in Spain

Your UK pension is paid in pounds sterling. If you are living in Spain and spending in euros, you need to convert it.

Using your UK bank’s international transfer service for this is expensive. Using Wise or a similar money transfer service saves you the bank’s exchange rate margin on every monthly payment, which adds up significantly over years of retirement.

Wise: receive and convert your UK pension cost-effectively

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Use our free Spain expat calculators to compare your UK costs with Spanish regional costs by region, build a monthly budget, and check your NLV income eligibility.

Frequently Asked Questions

Do I still pay UK tax on my pension if I live in Spain?
Most UK pension types (state pension, private pension, occupational pension from private employment) become taxable in Spain once you are a Spanish resident. UK government service pensions (civil service, NHS, military, teaching, police) remain taxable only in the UK.

How do I stop HMRC taking tax from my pension in Spain?
Notify HMRC by completing form P85 and notifying the relevant pension payers of your Spanish address and residency status. HMRC will issue a No Tax code for pensions that move to Spanish taxation.

Is it cheaper to pay pension tax in Spain or the UK?
For most retirees on moderate pension income, the effective Spanish tax rate is similar to or lower than the UK rate, particularly given the more generous personal allowances for older residents. For high pension income, the rates converge.

Does Spain tax the UK state pension?
Yes. The UK state pension is taxable in Spain (not the UK) for Spanish residents under the Double Taxation Treaty.

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*See also: Retiring to Spain Guide | Modelo 100 Tax Return Guide | Modelo 720 Overseas Assets*

*Affiliate disclosure: The Blevins Franks and Wise links in this article are affiliate links.*