1. Consider your cashflow
It is cheaper to live in Spain than in many other European countries, including the United Kingdom. For example, if you spend around £150 a month on utility bills in the UK, you will likely spend only £100 in Spain for the same services.*
The same is true of food costs, rental costs, house purchase costs and so much more, including beer and wine. And if you have children or grandchildren who are moving with you, you can rest assured that education costs are lower, with private nursery costs in Spain averaging around £316 per month, compared to a baseline of approximately £900 in the UK.
Unless you are working in Spain on a typical Spanish salary (which is low relative to UK equivalents), this lower cost of living is good news when it comes to considering your cashflow. Quite simply, your pension and other income-generating assets are likely to stretch further in Spain than they do back in Blighty. This can be good news from a financial planning perspective as it may mean you have increased cashflow to redirect into your investments and retirement portfolio.
2. Are your UK investments suitable for Spanish life?
Not all the investments that worked well for you while you lived in the UK are likely to be efficient once you move to Spain. For example, ISA allowances or other aspects of your portfolio may be tax efficient in the UK but not in Spain. The Spanish approach to taxation means that you will have to ensure that your investments are re-optimised to align with your new life as an expat; income, capital gains, savings and inheritance are all taxed differently to the way they are in the UK. Speak with your expat financial adviser so that you can develop a plan that works for you.
Furthermore, it is important to remember that although Spain and the UK do have a double tax agreement, a good tax adviser can simplify the process so that you do not suffer as a result of any nasty reporting surprises.
3. Review your pensions
For many British expats, a pension is the single most important asset and cashflow generator. Whether you have a personal or employer pension, you will need to consider whether you should transfer your UK pension to an EU-based Qualifying Recognised Overseas Pension Scheme (QROPS) tax-free or a Self Invested Personal Pension (SIPP). UK-based pension income can attract a tax of anywhere between 19.5% and 48% in Spain**, depending on the region in which you live.
The best way to plan in this regard is to ensure you receive advice from a fully regulated and bilingual international expat pensions specialist.
4. Seek expert, expat financial advice
No matter how long your relationship with your UK-based financial adviser has been in place and no matter how comfortable you might feel with the arrangement, if you become a cross-border individual who is resident in Spain, you will need financial advice that is specific to your situation.
A bilingual, cross-border, properly regulated specialist can help you decode your options and obligations so that you can make the most of your opportunities while avoiding the pitfalls that inevitably affect those who are less well-prepared.
If possible, you should begin this process well in advance of your move – six months should be sufficient – so that your money can be efficient and you can be relaxed from day one in your new life as a British expat in Spain.
Our financial advisers in Spain can help you whatever stage you are at in your plans. You can contact us today and we will be happy to discuss your individual financial planning requirements.
Disclaimer: Blacktower Financial Management is not a tax adviser and independent tax advice should be sought. The above does not constitute advice and Blacktower makes no recommendation as to the suitability of any products or transactions mentioned..
* https://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=Spain&country2=United+Kingdom Accessed 04-10-19
** SPAIN TAX GUIDE https://www.blacktowerfm.com/free-guides Accessed 04-10-19