Tax Rebates When Moving From The UK To Spain

Am I Entitled to a UK Tax Rebate When Moving to Spain?

When you leave the UK to live in Spain, HM Revenue & Customs (HMRC) needs to calculate how much tax you owe — or whether you are due a refund. If you move part-way through a tax year and stop working in the UK, you may be entitled to reclaim some of the income tax you’ve already paid.

To do this, you must inform HMRC that you’re leaving by completing form P85. This form allows HMRC to close your UK tax record for the year, determine your final tax position, and refund any overpaid tax directly to your nominated bank account.

In 2025, the simplest way to submit your P85 is online through your Government Gateway account. You can also post a paper version if you prefer.

How UK Tax Residency Is Determined

Whether you pay tax in the UK after moving to Spain depends on your residency status. Under the UK’s Statutory Residence Test, you are usually considered a non-resident if you spend fewer than 16 days in the UK during a tax year (6 April to 5 April). If you spend 183 days or more, you’re automatically considered a UK tax resident.

If you fall between those thresholds, additional factors — such as where your home, work, and family are based — will determine your status. Non-residents generally don’t pay UK tax on overseas income, but they must still declare and pay tax on UK-sourced income such as rental income, pensions, and savings interest.

Avoiding Double Taxation Between the UK and Spain

One major concern for British expats is being taxed twice — once in the UK and again in Spain. Fortunately, the UK and Spain have a Double Taxation Agreement (DTA) that prevents this. In practice, this means that if you have already paid tax on income in one country, you can usually offset that payment against your liability in the other.

However, you may still end up paying the higher of the two tax rates. It’s also worth remembering that Spain’s tax year runs from 1 January to 31 December — not April to April as in the UK — so plan your reporting and document collection carefully to align with both systems.

Tax Rebates for UK Employment Income

If you leave the UK after working part of a tax year, your employer should issue a P45 showing how much tax you have paid to date. You’ll use this information to complete your P85 form and request any rebate due. Refunds are typically processed within six to eight weeks, though delays can occur if HMRC needs to verify your residency or employment details.

If you continue working remotely for a UK employer while living in Spain, your situation becomes more complex. You may be liable for Spanish income tax and social security contributions, even if you remain on a UK payroll. Professional advice is strongly recommended in such cases to ensure compliance with both tax systems.

Pension Income and UK Rebates

For retirees, pensions are often the biggest area of confusion. UK state pensions are usually taxable only in the country where you reside, meaning Spanish residents declare and pay tax on these pensions in Spain. Private and workplace pensions may still be taxed in the UK, depending on the specific agreement and payment source.

Most UK pension lump sums include a 25% tax-free portion when taken in the UK — but this exemption does not always apply in Spain. You can usually claim back UK tax deducted from your pension by providing HMRC with evidence that you are now tax-resident in Spain and have declared the income there.

What About ISAs, Savings, and Investments?

ISAs are tax-free in the UK but not in Spain. Once you become a Spanish resident, interest and gains from UK ISAs, investment accounts, or savings will be taxable in Spain and must be declared on your annual return (Declaración de la Renta). If you hold significant overseas assets, you may also have to file a Modelo 720 or its replacement form to report them.

Steps to Take Before and After Moving

1. Complete the P85 form before you leave or shortly after.

2. Keep copies of your P45, payslips, and pension statements.

3. Register as a tax resident in Spain once you’ve spent more than 183 days there.

4. Ensure your accountant in Spain understands the UK–Spain DTA rules.

5. Check whether your UK bank or pension provider is still deducting UK tax and request updates as needed.

Seek Professional Advice

Cross-border taxation is one of the most complicated areas for expats. Working with a bilingual tax adviser experienced in both UK and Spanish systems will help ensure you stay compliant and avoid unexpected liabilities. They can also help you recover any overpaid UK tax and correctly report income in Spain.

Need Health Cover When You Move?

Before you register as a resident in Spain, you’ll also need comprehensive private health insurance that meets visa and residency requirements. You can compare approved policies and read our quick guide to Sanitas health insurance here:

Read our Quick Guide to Sanitas Health Insurance

Sources:
HMRC - Tax on Foreign Income
HMRC - P85 Form
UK–Spain Double Taxation Treaty
Agencia Tributaria (Spain)