Editorial transparency and use of artificial intelligence
This article forms part of the CostaLuz Lawyers blog and is published for general informational and educational purposes only. It was prepared with the assistance of artificial intelligence tools and, before publication, was substantively reviewed and editorially approved by Maria de Castro, a Spanish-qualified lawyer registered with the Cádiz Bar Association under number 2745, founder of CostaLuz Lawyers and the person responsible for the editorial review of the published content.
This article does not constitute legal, tax, immigration, employment, estate-planning or investment advice and does not replace an individual assessment and the professional work of the appropriate CostaLuz Lawyers specialist. No action or omission should be based solely on this information.
The planning error British families make is assuming a UK will controls Spanish assets cleanly — without cross-border succession planning, the same estate can face tax exposure in both countries.
Quick Answer: Moving between the UK and Spain means two different tax systems, and Spain adds a wealth tax the UK does not have. A UK will does not control Spanish assets cleanly, so cross-border planning is usually what avoids double exposure on income and inheritance.
Inheritance Tax Spanish Property UK
Related: Where heirs disagree across borders, see how to resolve a Spanish inheritance dispute.
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Owning property in Spain may create inheritance tax exposure both in Spain and potentially in the UK depending on domicile, residency status, and the structure of ownership.
Spanish inheritance tax rules vary considerably between autonomous communities, and reductions available to close relatives differ significantly from UK inheritance tax planning systems.
Many British families incorrectly assume that a UK will automatically controls Spanish assets efficiently. In practice, cross-border succession planning is usually essential for avoiding delays and unnecessary tax exposure.
This is general information, not definitive legal advice — every case requires individual analysis.
Moving from the UK to Spain — or managing finances in both countries — means navigating two very different tax systems. This comprehensive 2026 comparison breaks down every major tax category side by side, so you can plan your move with confidence.
Whether you’re a British expat already living on the Costa del Sol, a retiree considering a permanent move, or a property investor with assets in both countries, understanding these differences is essential for protecting your wealth.
Income Tax: UK PAYE vs Spanish IRPF
Both countries operate a progressive income tax system, but Spain’s rates are generally higher — especially for middle earners. Spain’s income tax (IRPF) is split between state and regional rates, and Andalucía’s regional rates apply to most Costa del Sol residents.
| Tax Band | UK 2025/26 Rate | Spain 2026 Rate (incl. Andalucía) |
|---|---|---|
| Personal allowance | £12,570 at 0% | €5,550 minimum personal allowance (varies by age) |
| First bracket | £12,571–£50,270 at 20% | €0–€12,450 at 19% |
| Second bracket | £50,271–£125,140 at 40% | €12,451–€20,200 at 24% |
| Third bracket | Over £125,140 at 45% | €20,201–€35,200 at 30% |
| Fourth bracket | — | €35,201–€60,000 at 37% |
| Fifth bracket | — | €60,001–€300,000 at 45% |
| Top rate | 45% (above £125,140) | 47% (above €300,000) |
Capital Gains Tax (CGT)
Capital gains tax applies when you sell assets at a profit — shares, property, or business interests. The UK and Spain take quite different approaches.
| Detail | UK 2025/26 | Spain 2026 |
|---|---|---|
| Annual exempt amount | £3,000 | No exemption |
| Basic rate | 10% (18% on property) | 19% (first €6,000) |
| Higher rate | 20% (24% on property) | 21% (€6,001–€50,000) |
| Additional rates | — | 23% (€50,001–€200,000) |
| Top rate | 24% on property gains | 28% (above €300,000) |
| Primary residence | Fully exempt (PPR relief) | Exempt if reinvested in new primary residence within 2 years (for residents under 65) |
| Over-65s relief | No special relief | Full exemption on primary residence sale for over-65s |
Inheritance Tax (IHT) vs Spanish Succession Tax
Inheritance tax is one of the most significant differences between the UK and Spain — and one of the most misunderstood. The UK taxes the estate; Spain taxes the recipient.
| Detail | UK (IHT) | Spain (Succession Tax) |
|---|---|---|
| Who pays? | The estate (before distribution) | The individual recipient |
| Nil-rate band | £325,000 (+ £175,000 residence nil-rate band) | Varies by region; Andalucía: €1,000,000 per inheritor (close relatives) |
| Spouse exemption | Unlimited between spouses | Spouse receives €1,000,000 allowance in Andalucía |
| Standard rate | 40% flat rate above threshold | 7.65%–36.5% progressive (before regional reductions) |
| Regional relief | None (national tax) | Andalucía: 99% reduction for Group I & II inheritors (spouse, children, parents) on first €1,000,000 |
| Non-resident inheritors | Worldwide estate taxed if deceased was UK-domiciled | Only Spanish assets taxed; can choose most favourable regional rules |
| Life insurance | Included in estate (unless in trust) | Taxed as succession tax to beneficiary |
Property Taxes: Council Tax & SDLT vs IBI & ITP
Property taxation works completely differently in each country. Here’s how the ongoing and transactional taxes compare.
| Tax Type | UK | Spain |
|---|---|---|
| Annual property tax | Council Tax: £1,200–£4,500/year (depends on band & council) | IBI (Impuesto sobre Bienes Inmuebles): typically €300–€1,500/year on Costa del Sol |
| Purchase tax (new build) | SDLT: 0%–12% (residential); 3% surcharge for additional properties | IVA (VAT): 10% on new builds + 1.2% AJD (stamp duty) |
| Purchase tax (resale) | SDLT: 0%–12% | ITP (Transfer Tax): 7% in Andalucía |
| Non-resident surcharge | 2% surcharge for non-UK residents | No surcharge, but non-residents must appoint a fiscal representative |
| Wealth-based property tax | None | Included in Wealth Tax calculation (see below) |
| Plusvalía (municipal gains tax) | Does not exist | Paid by seller on urban land value increase; typically €200–€3,000 |
| Rental income tax | 20%–45% (added to income) | Residents: 19%–47% (with 60% reduction for long-term lets); Non-residents: 19% (EU) or 19% |
Pension Taxation Under the Double Taxation Treaty
Pensions are a critical area for British expats in Spain. The UK-Spain DTA determines which country can tax your pension income.
| Pension Type | Taxed in UK? | Taxed in Spain? |
|---|---|---|
| UK State Pension | No (if Spanish tax resident) | Yes — taxed as general income under IRPF |
| Private/occupational pension | No (if Spanish tax resident) | Yes — taxed as general income under IRPF |
| Government pension (civil service, NHS, teachers, police, military) | Yes — taxed only in the UK | No (but counts for calculating your Spanish tax rate) |
| Lump sum (25% tax-free in UK) | Tax-free in UK | Fully taxable in Spain — the 25% tax-free rule does NOT apply |
| QROPS transfers | May trigger UK tax charges | Must be declared; Spain taxes withdrawals as income |
Wealth Tax (Impuesto sobre el Patrimonio)
The UK has no wealth tax. Spain does — and it catches many British expats by surprise. See what changed in our guide to Spanish wealth tax.
| Detail | UK | Spain (Andalucía) |
|---|---|---|
| Exists? | No | Yes |
| Threshold | N/A | €700,000 per person (after €300,000 primary residence exemption) |
| Rates | N/A | 0.2%–3.5% progressive |
| Primary residence exemption | N/A | €300,000 |
| Scope | N/A | Residents: worldwide assets; Non-residents: Spanish assets only |
| Temporary Solidarity Tax | N/A | Additional 1.7%–3.5% on net wealth above €3,000,000 (national level) |
Key Planning Considerations for British Expats
- Become tax resident strategically. The 183-day rule determines Spanish tax residency. Once resident, Spain taxes your worldwide income.
- Claim DTA relief proactively. The UK-Spain Double Taxation Agreement prevents double taxation — but you must file correctly in both countries to benefit.
- Plan pension withdrawals carefully. Taking your 25% lump sum before becoming Spanish tax resident can save significant tax.
- Structure assets before the move. Wealth Tax planning, property ownership structures, and pension arrangements should all be reviewed before you establish Spanish residency.
- Don’t forget the Modelo 720. Spanish tax residents must declare overseas assets exceeding €50,000 per category (bank accounts, investments, property). Failure to declare carries severe penalties.
- Review your will. Cross-border inheritance rules are complex. A Spanish will covering your Spanish assets, coordinated with your UK will, is essential.
Need Expert Advice on UK–Spain Tax Planning?
Navigating two tax systems is complicated — and getting it wrong can be extremely costly. At Costa Luz Lawyers, we work with specialist cross-border tax advisers to ensure British expats in Spain are fully compliant whilst minimising their overall tax burden.
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Related: Is a Spanish Will Valid in the UK? Cross-Border Estate Planning Explained
For a complete overview of property law and conveyancing in Spain, see our Buying Property in Spain Complete Legal Guide 2026.
Aviso legal: Esta informacion se proporciona unicamente a titulo orientativo y no constituye asesoramiento fiscal o legal personalizado. Cada caso debe evaluarse de forma individual segun las circunstancias especificas del cliente. Es imprescindible consultar a un especialista cualificado antes de tomar cualquier decision.
Legal Notice: The content on this page is provided for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. No action should be taken based solely on this content without first seeking independent professional legal counsel. Each case requires individual assessment based on its specific circumstances. CostaLuz Lawyers accepts no liability for actions taken or not taken based on this content.
Reviewed by María Luisa de Castro, CEO at CostaLuz Lawyers — specialist in Spanish cross-border tax & estate planning for expats — Updated 2026
This is general information, not definitive legal advice — every case requires individual analysis.
Moving between the UK and Spain? Book a call and we will map what you will actually pay — income, capital gains, inheritance — and plan your cross-border position before you move. No obligation.
Prefer to write first? Send a message → — María replies within one business day.
Need to speak now? +34 919 499 342 (EN/ES, 24h). Office: +34 956 092 687. Costaluz Lawyers — María Luisa de Castro, ICA Cádiz nº 2745.
Frequently Asked Questions
Does a UK will control my Spanish assets cleanly?
Not reliably. Without cross-border succession planning the same estate can face tax exposure in both countries and a slower process. A Spanish will covering Spanish assets, coordinated with the UK will, usually avoids that.