How Spain taxes your UK pension in 2026

The UK-Spain DTT (2014, in force since 2014) handles pensions across three articles:

• Article 17 - Pensions and similar payments. Covers UK State Pension and private/occupational pensions. Taxed ONLY in the resident country. For Spanish residents: only Spain taxes; UK has no taxing right.
• Article 18 - Government service. Covers pensions paid by reason of past government service: Civil Service, NHS, teachers, armed forces, police, fire service, local government. Taxed ONLY in the UK, regardless of where you live.
• Article 21 - Other income. Catches certain annuities and miscellaneous pension-like payments. Generally taxed in the resident country.

The Article 18 rule for government pensions is the major gotcha for ex-NHS, ex-Civil Service and ex-armed-forces movers. Your government pension stays UK-taxed, and you should NOT include it in your Spanish tax return as Spanish-taxable income.

Once you become Spanish tax resident, the UK no longer taxes your State Pension. You report the gross UK State Pension as Spanish-taxable income on your Spanish IRPF return.

In practical terms, you file Form Spain-Individual with HMRC to confirm Spanish residency under the treaty. HMRC then stops applying any UK withholding to your State Pension. You receive the gross amount and pay Spanish progressive tax on it.

For a Brit on full new State Pension (~£11,500/year in 2026), this typically produces a Spanish tax liability of around €1,200-€2,500 depending on other income and region.

Once Spanish resident, all your UK private/occupational pension drawdown is Spanish-taxable as employment-like income at progressive rates (up to ~50% regional max).

The 25% tax-free lump sum quirk:

• UK rule: 25% of your pension pot can be taken as a tax-free lump sum under UK law (PCLS).
• Spanish rule: Spain does NOT recognise the 25% PCLS as tax-free. Spain taxes the full amount as pension income.
• Planning consequence: Take the 25% PCLS BEFORE becoming Spanish resident. If you take it after, Spain taxes a chunk of money the UK gave you tax-free.

This is one of the most expensive year-one mistakes. A typical Brit moving with a £400k pension pot stands to lose €15,000-€25,000 by taking the PCLS in the wrong tax year.

A UK SIPP remains accessible from Spain. You don't need to move it. Drawdown is Spanish-taxable under Article 17 once you're Spanish resident.

QROPS (Qualifying Recognised Overseas Pension Schemes) used to be popular for Brits moving abroad as a way to crystallise out of the UK system. Post-Brexit and post the 2017 25% transfer charge regime, most cross-border QROPS transfers from the UK to Spain are subject to that charge (subject to certain exclusions). For most movers, keeping the SIPP in the UK is now the cleaner path.

The QROPS conversation is worth having with a UK-Spain pensions specialist if your pot is over £750k or you have specific reasons to want the pension outside the UK system. For most movers under that threshold, SIPP-in-UK is fine.

The clean planning sequence for a typical UK-Spain mover:

1. Take 25% PCLS BEFORE Spanish residency triggers
2. Crystallise any DC pension drawdown into a flexi-access drawdown account while still UK resident
3. Move to Spain late in calendar year to avoid full Spanish residency year
4. File Form Spain-Individual with HMRC once you have your TIE
5. From Spanish residency year 1, drawdown is Spanish-taxed at progressive rates
6. Consider Beckham Law if you also have qualifying employment income — pension flow remains foreign-source and largely Spain-exempt during regime