Spain consistently ranks amongst the best places to live in Europe. The climate is mild, life is relaxed, and living costs, especially in Andalucía, are often lower than in much of the UK. Within a short drive, you can find mountains, beaches, vibrant cities, and quiet whitewashed pueblos.
Viewing posts from: November 2000
Lifestyle First, Tax Second: Why That Order Matters
By Jett Parker-Holland
This article is published on: 17th February 2026
17.02.26
It is no surprise that so many people, after spending decades holidaying here, decide to make it their home. However, when I speak to clients considering the move, even for those who have spent years visiting Spain, the conversation often stalls at tax.
They have sometimes heard that another country has a more attractive regime, with lower rates of income or wealth tax, or a different inheritance tax structure. The fear is that by choosing Spain, they may be sacrificing financial security for lifestyle. In practice, when we slow the conversation down and look properly at the numbers, that fear is usually misplaced. With the right planning, many clients are in a stronger financial position after moving to Spain than they were before.
Recently, I worked with a couple in their early sixties. They had adult children, a beautiful home in the British countryside and substantial pensions and cash savings. They had spent decades holidaying on the Costa del Sol and had always imagined retiring there, but they hesitated. They had read that other jurisdictions were more tax-friendly and felt they might be making an expensive mistake. Originally, they planned to keep their UK home and rent it out to generate retirement income. They also felt reliant on drawing pension income immediately to maintain their lifestyle. Thankfully, they contacted me for a consultation in which we stepped back and considered what the move would actually look like.
The timeline for our agreed plan began before they became Spanish tax residents. First, they were able to sell their UK home free of capital gains tax because it was their primary residence. Next, we withdrew the savings from their ISAs, which had served them well while they were UK residents but would not retain the same advantages once living in Spain.
Finally, we reviewed their pensions; both were able to withdraw their 25 per cent tax-free lump sums before establishing Spanish residency. The result was transformational.
The couple had sufficient free capital to purchase their dream home in Andalucía outright and make it their own. As they would be over 65 if they ever sold that Spanish home, they would be exempt from capital gains tax on its sale. We restructured their remaining cash in a Spanish-compliant investment designed to provide steady growth, avoiding the annual tax that bank interest or ISAs would trigger. Crucially, we could control how much income they drew each year, keeping their income tax exposure low while still giving them flexibility.
When we modelled their estate position, the outcome was reassuring as well. In Andalucía, children can inherit up to one million euros free of inheritance tax, with a 99 per cent reduction on amounts above that threshold. Compared with their expected UK inheritance tax exposure, their long-term position was markedly improved. In short, their finances were structured so that tax applied only where necessary and at the lowest reasonable level, while preserving full access to their wealth if they needed it. They were living where they had always wanted to live, without feeling financially penalised for doing so.
Many couples hold back from their ideal location because they fear that tax will punish them. Tax is important, but it is rarely the whole story. It is a technical problem that can usually be managed through careful asset structuring and an understanding of cross-border planning opportunities. What cannot be recreated later is time spent living in the place you truly want to be. The most effective planning happens when we look at both sides of the move. As part of our advice, we consider what should be done while still a UK resident and what should be delayed until Spanish residency begins. When handled properly, the combination of both systems can work in your favour rather than against you.
Spain offers a high standard of living, strong healthcare, cultural depth, and a climate that encourages an outdoor, social way of life. For many people, it is not just a tax decision. It is a life decision, which is why we always take the approach:
Lifestyle first. Tax second.
Prioritise your lifestyle, then structure your finances around it. When that order is respected, both tend to fall into place.
As a Chartered Wealth Manager based in Spain, I work with British expatriates who want clarity before making big decisions. Moving country affects your pensions, investments, tax position, and estate planning. Done casually, it can create unnecessary costs. Done properly, it can strengthen your long-term position while giving you the lifestyle you actually want.
If you are considering a move, or have already relocated and are unsure whether your arrangements are structured efficiently, I am always happy to have an initial conversation. A well-timed review can make a meaningful difference.
Cash Is Comfortable. But Is It Quietly Costing You?
By Jett Parker-Holland
This article is published on: 16th February 2026
16.02.26
For many people who relocate to Spain, cash becomes the default position. When there are so many moving parts, “I’ll decide later” feels sensible, and in the short term, it often is. The issue is not holding cash, but holding too much of it for too long.
What tends to go unnoticed is that cash rarely keeps pace with inflation. Even when deposit rates look appealing, inflation and tax steadily reduce the real value of your money. In Spain, interest on bank deposits is taxed as savings income, at rates of up to 30 percent. Once tax is deducted and inflation is accounted for, the true return can be negligible or even negative. Five or ten years later, the same capital simply buys less. This is the silent cost of excessive caution and is particularly relevant for expatriates.
Many of the people I work with have built capital through years of disciplined saving in the UK. They may have sold a home or business, drawn a pension lump sum, or received an inheritance. The proceeds arrive in Spain and sit in a current account while life settles.
Recently, I spoke with a couple in their late fifties who had relocated to Andalucía following the sale of their UK property. After setting aside a sensible emergency reserve, they had roughly €500,000 in cash. For the first year it remained in a Spanish bank account earning modest interest. A 2% interest rate before tax wasn’t beating the 2.7% inflation we saw in 2025. When we reviewed their position, the conversation was not about chasing high returns, but creating stability, flexibility, and the reassurance that their capital would support their lifestyle and pass, in time, efficiently to their family.
We kept an appropriate cash reserve in place. The remainder was structured into a Spanish-compliant investment designed to grow steadily ahead of inflation, without triggering annual tax on internal growth.
When we modelled the expected outcomes, the difference over time was meaningful. More importantly, they felt confident that their money was finally aligned with their new life in Spain.
This is one of the most common conversations I have. Cash feels safe because it is seen as risk-free, but real safety is about making sure that your money is working for you over the long term. If you have significant savings sitting in a bank account and you are unsure whether they are working as effectively as they could be, it may be time to take a fresh look. If you have cash sitting idle and want to understand what it could be doing instead, get in touch and let’s talk through a plan that supports your aspirations in Spain.
Modelo 720 Spanish Tax Form
By Jett Parker-Holland
This article is published on: 13th October 2025
13.10.25
When people move to Spain, they often expect challenges around property or residency, but one of the biggest surprises comes from the tax office. After settling in, most people become accustomed to the Spanish tax system; however, one common pitfall that British expats encounter is the requirement for a single tax reporting form, known as Modelo 720.
Importantly, this is not a tax bill; it is a declaration, but failing to address it correctly can still result in hefty penalties and unnecessary stress.
The Modelo 720 is an annual information return that Spanish tax residents must file if they hold certain assets abroad worth more than €50,000 in any of three categories: bank accounts, investments, and property. Once filed, it does not need to be submitted again unless your foreign-held assets increase by more than €20,000, or your wealth in another category exceeds the €50,000 threshold. It aims to give the Spanish tax authorities a clear picture of your worldwide wealth.
Importantly, the form itself does not create a tax liability, but it can leave you open to scrutiny, which is where the risk lies. Failure to declare or even minor errors can lead to fines, backdated tax assessments, and interest charges. Once you’re on Hacienda’s radar, future scrutiny tends to increase, which is a headache nobody wants when settling into life in Spain.
Many expats worry that the cash and investments they have held in the UK may pose a potential issue with the Modelo 720, and that failing to declare in previous years may prevent them from doing so now. The good news is that by structuring your finances in advance, you can avoid this problem altogether. Certain Spanish-compliant investment bonds are not classed as foreign assets for Modelo 720 purposes, meaning you don’t need to declare them. For those anxious about declaring, this can be a great opportunity to structure your wealth so that it does not need to be declared, thereby avoiding ongoing scrutiny.
Beyond avoiding declaration, a bond allows for tax-deferred growth within the bond, meaning that your wealth can continue to collect interest and benefit from favourable tax treatment on withdrawals. Spanish-compliant bonds are not just about avoiding taxes or declarations; they are about ensuring compliance with Spanish regulations. For many of my clients, transferring assets into a compliant bond is the single most significant step they take to streamline their financial life in Spain.
Modelo 720 may seem like a minor formality, but mishandling it can turn into an expensive problem. By structuring your wealth effectively, you can reduce the risk of fines while also gaining ongoing tax efficiency and estate planning benefits. If you are already living in Spain or planning a move, now is a good time to review your arrangements.
A Spanish-compliant product is (almost) a prerequisite for an expat investor in Spain; it is the cleanest way to stay on the right side of Hacienda while keeping your money working hard for you.
As a Chartered Wealth Manager with a master’s degree in Investment Management, I specialise in helping British expats in Spain manage pensions, investments, and tax-efficient structures. With years of experience advising across both the UK and Spain, I focus on making cross-border finances simple, compliant, and effective for the long term.
If you would like a confidential review of your situation or would like to explore your options, please don’t hesitate to contact me. Proper planning today can save you a great deal of time, money, and stress tomorrow.
Webinar – Moving to Malaga, Spain
By Jett Parker-Holland
This article is published on: 5th September 2025
05.09.25
Join the Webinar
Moving to Malaga
23rd September 5pm UK | 18.00 CET
Dreaming of a new life in the sun?
Whether you’re just starting to explore or actively planning your move, join The Spectrum IFA Group and the expert partners for a free, live webinar designed to guide you every step of the way.
- Property insights from BluCee Real Estate
- Visa & residency guidance from Help at Hand Spain
- Currency exchange tips from Lumon
- The financial and tax planning for your move – Jett Parker-Holland, Spectrum IFA Malaga office
- How to choose the right health insurance with Sam Campbell Insurance
Real-life expat stories + Live Q&A with all our experts
Are You Leaving 40% of Your Assets to the Taxman?
By Jett Parker-Holland
This article is published on: 22nd April 2025
22.04.25
Most people try to do the right thing. They work hard, save diligently, contribute to their pensions, and even invest in property to secure a comfortable retirement and leave something behind for their loved ones. It’s the responsible thing to do, but recent changes to the UK tax system have turned that logic on its head, especially for British expats living abroad or planning to retire in Spain.
As of April 2025, a new inheritance tax test will be introduced, replacing the ambiguous concept of domicile with a more definitive measure: residency. If you are living—or planning to live—in Spain for the long term, this change affects you directly. Under the new rules, if you have lived outside the UK for at least 10 of the last 20 years, you’ll be classified as a non-UK Long-Term Resident. This is important because it means your overseas assets will no longer be subject to UK Inheritance Tax (IHT); however, UK-based assets such as pensions, property, and bank accounts will still be taxed at 40%.
For many clients, much of their estate remains tied up in the UK. This includes UK property, bank accounts, and—most notably—UK pensions. Although yields on UK assets like rental property or fixed-term bank deposits can appear attractive, the long-term benefit may be diminished if 40% of the value is lost to IHT on death. Because of this, those planning to live in Spain for the long term may want to consider moving certain assets out of the UK tax system. It’s an area where careful financial planning can make a real difference.
The same applies to pensions. Under the old regime, UK pensions were exempt from IHT. Now, pensions are included as part of your estate. If you pass away after age 75, your beneficiaries could face a 40% IHT charge, and potentially up to another 45% in income tax when they take money out of the pension. It’s a harsh reality and fundamentally changes how we should value UK pensions. If your beneficiaries can’t access the full pot, it’s simply not as valuable as it once was. Under these conditions, a £400,000 pension could lose £160,000 to IHT alone.
At Spectrum, we specialise in cross-border financial planning. We can help you review your UK assets and explore options to reduce your exposure to unnecessary taxes, ensuring more of your hard-earned wealth stays with your family, not the taxman.
If you’re living in Spain, or planning to, and you’re unsure how these changes affect you, this may be a good time to review your plans. A short conversation could help secure your legacy.
If you would like to discuss your situation in more detail and explore your options, please feel free to contact me directly for a no-obligation consultation.