Becoming an Expat in Spain: Volume 20

Pensions

If you of pensionable age and are going to become a resident of Spain, you should look into transferring your UK pension to a Qualifying Recognised Overseas Pension Scheme which is call QROPS

This will prevent double taxation and, in many cases, will also mean the total value of your transferred pension can be left to your beneficiaries that are outlined in a properly drafted Spanish Will.

Effectively then, if you transfer to QROPS and die before the age of 75, lump sums paid out within 2 years of death or monthly payments will be paid out free of UK tax.

If you die after the age 75 a small amount of UK tax may apply unless you had not been resident in the UK for over 10 years and had not transferred your pension to QROPS within the 5 years prior to your death.

Transferring to QROPS also removes any liability to the Lifetime Allowance that may exist if it is reintroduced by the new labour administration, however you should still take into consideration the Overseas Transfer Allowance which imposes a 25% fee on all transfers over £1.073 million to QROPs, whereas a transfer to SIPP or another UK based personal pension would be exempt.

It is therefore very important to take advice from a qualified professional before making any decisions and you should consider an English-speaking IFA based in Spain who is registered as a European Investment Practitioner.