Uk Budget 2025: What It Means For Brits Living In Spain

Chancellor Rachel Reeves has conscionable delivered Labour’s first fund successful 15 years, and while astir of nan symptom is felt backmost successful nan UK, thousands of British expats successful Spain will still consciousness nan pinch too, though not everyone is worse off.

The Good News (the bits you’ll like)

• The state pension jumps 4.8 per cent from April 2026 – that’s an other £400 to £575 a twelvemonth for astir retirees aft Spanish taxation and speech complaint fluctuations.
• Over-65s support nan afloat £20,000 ISA allowance successful rate pinch nary forced stock purchases.
• No emergence successful basal aliases higher-rate income taxation bands – your Spanish net enactment untouched.
• Triple Lock protected, truthful early pension rises stay linked to wages.

The Bad News (the achy bits)

• Capital Gains Tax allowance trim to conscionable £3,000 and rates up to 24 per cent – trading a UK buy-to-let aliases shares will costs more.
• Income Tax Thresholds Frozen: UK taxation thresholds are stiff until 2031. This “fiscal drag” will push much of your UK income (pensions, rentals) into nan higher 40 per cent UK income taxation band.
• New UK-Spain Data-Sharing Deal: Expanded information sharing intends UK authorities tin now much easy pursuit unpaid debts (tax, fines, etc.) and enforcement actions successful Spain. This besides increases nan chance of Spanish taxation authorities detecting undeclared UK income.
• Private Pension Rules: Pension transfers (QROPS) and withdrawals look tighter rules. While UK tax-free, nan 25 per cent lump sum is afloat taxable successful Spain, starring to a higher effective taxation complaint for Spanish residents.

Quick “At-a-Glance” Impact

Big winners – Full state-pension retirees pinch nary UK spot aliases investments
Moderate losers – expats pinch UK rentals aliases humble stock portfolios
Big losers – anyone trading UK spot soon aliases pinch estates complete £500k

What Should You Do Next? (5 elemental steps)

1. Check your UK taxation residency position coming – use nan HMRC Statutory Residence Test online (free).
2. Book a no-obligation reappraisal pinch a Spain-based, UK-qualified cross-border adviser earlier Christmas.
3. Run an inheritance taxation calculator including some your UK and Spanish assets – galore advisers connection this free.
4. If you still ain a UK spot you mightiness waste successful nan adjacent 5 years, get a CGT estimate now earlier nan April 2025 changes.
5. Make judge your UK pension supplier and slope person your correct Spanish reside – nan caller data-sharing starts successful weeks.

Most expats will beryllium only mildly affected, but a mini number could look five- aliases moreover six-figure surprises. The aureate rule: don’t hold for a brownish letter cover from HMRC aliases nan Spanish taxation agency – enactment successful nan adjacent 30–60 days and you tin still prevention thousands.

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