5 important points to consider if you have assets in the UK and Spain

Managing assets across both the UK and Spain in 2026 requires careful planning to navigate differing legal and tax systems.

UK based residents with Spanish assets – or vice versa- should be focus on these five key considerations and suggested actions:

1. Complex Inheritance and Succession Tax Rules

  • Different Tax Systems: In the UK, the personal representatives are generally liable to pay any inheritance tax on a deceased’s estate, whereas in Spain it is the responsibility of the beneficiaries to pay the equivalent tax themselves from their own funds.
  • New UK Rules (2025/2027): From 6 April 2025, the UK shifted IHT from a domicile-based system to a residence-based system.
  • Spanish IHT: As a Spanish resident, your worldwide estate is subject to Spanish IHT.
  • Regional variations: Spanish inheritance tax varies significantly between autonomous communities (e.g.: Andalucia or Madrid may be have better tax rates than others)
  • Inheritance tax is not covered by the UK-Spain double taxation treaty, meaning you could potentially be taxed twice. So you may need to apply for unilateral relief.
  • ACTION: you should plan for both jurisdictions simultaneously to mitigate liabilities, particularly if you have family in both countries.

2. Mandatory Reporting of Foreign Assets (Modelo 720)

  • Disclosur of non-Spanish assets: if you are a tax resident in Spain and hold assets outside of Spain (in the UK or elsewhere) exceeding €50,000 per category, you must report them via the Modelo 720 form.
  • The three categories are (1) Bank accounts, (2) Investments/Pensions, and (3) Real Estate.
  • Deadline: This is an annual information return, not a tax payment, due by March 31st each year.
  • ACTION: while draconian fines no longer apply in Spain, failure to report still carries significant penalties. Therefore, it’s very important to ensure your UK assets are declared to the Spanish tax agency. (Hacienda).

3. Understanding Your Tax Residency Status

  • Your tax obligations depend on whether you are classified as a Spanish resident, UK resident, or a non-resident in either country.
  • The 183-Day Rule: If you spend more than 183 days in Spain within a calendar year, you are considered a tax resident, or also if your main centre of your interests are in Spain.
  • Worldwide Taxation: Spanish tax residents are taxed on their worldwide income and assets, not just those in Spain.
  • Double Taxation Agreement (DTA): While a UK-Spain Double Taxation Agreement avoids paying tax twice, it does not remove reporting obligations, and you must know which country has primary taxing rights for pensions, interest, and dividends.
  • ACTION: determine your residency status, as this dictates which country has the primary right to tax your income and wealth.

4. Taxation of UK Pensions and Investments

  • UK-based financial products are often not tax-efficient for Spanish residents, and they may be taxed differently in Spain than in the UK.
  • ISAs: UK ISAs (interest, dividends and capital gains from ISAs) are not tax-free in Spain; they are treated as taxable savings income.
  • Pensions: while the UK-Spain tax treaty applies, private UK pensions are generally taxed in Spain, whereas government service pensions are usually taxed in the UK. Please be aware from April 2027, pensions will fall within the scope of UK IHT, making it critical to review your pension arrangements.
  • ACTION: review your investment portfolio with a specialist to ensure it is compliant and efficient under UK & Spanish tax laws.

5. Spanish Wealth Tax and Property Taxation

  • Spain has a wealth tax (Impuesto sobre el Patrimonio) that applies to worldwide assets for residents, and to Spanish assets for non-residents.
  • Capital Gain Tax: selling a property in one country while resident in the other triggers complex, dual-country tax considerations.
  • Non-residents Tax: If you are a non-resident owning property in Spain, you still owe non-resident income tax (IRNR) on that property using Doble Taxation Agreement (DTA) to claim relief from tax paid in the UK.
  • ACTION: Track the valuation of your assets for potential wealth tax obligations, which have high exemptions but vary by region (e.g., Madrid vs. Andalusia).

Disclaimer: Tax laws in Spain and the UK are complex and they change frequently. The information above is for information purposes. Regulations are subject to ongoing updates, including regional variations within Spain. It is crucial to seek professional advice from a cross-border tax specialist.

Please contact Yolanda Perez Berges at yoland.perez@theburnsidepartnership.com for an initial chat.

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