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Date Published: 04/06/2024

Navigating UK pension transfers to Spain: A strategic approach

Blacktower Financial Management can help transfer a UK pension to Spain for expats

by Keith Littlewood, Blacktower Financial Management

The landscape of transferring UK pensions to Spain has continued to evolve, reflecting changes in regulations and the implications of Brexit. For British expatriates, understanding these updates is crucial to ensure tax-efficient and compliant pension management.

Understanding ROPS and overseas transfer charges

Recognised Overseas Pension Schemes (ROPS), formerly known as QROPS, remain a popular choice for expatriates transferring their pensions outside the UK. These schemes comply with HMRC rules and offer potential tax benefits and flexibility. However, the overseas transfer charge, a 25% tax on transferred pension savings, underscores the importance of meeting specific conditions to avoid unnecessary penalties.

Transfers to ROPS are subject to scrutiny, especially to ensure they don't aim to sidestep UK tax obligations. Exemptions from the overseas transfer charge are available, notably for transfers within the EEA or when the pension holder is a resident in the ROPS' country. Nonetheless, this charge may apply if the pension holder's circumstances change adversely within five years of the transfer.

Keeping up with ROPS notifications

The HMRC's ROPS notification list is vital for anyone considering a pension transfer. Regular updates, including additions, removals, and amendments, highlight the need for diligence in selecting a compliant scheme.

Strategic considerations for expatriates

Tax Residency and Compliance: Understanding your tax obligations in both the UK and Spain is paramount. The interaction between the two countries' tax systems can significantly impact the tax efficiency of your pension transfer.
Advisory Support: The complexities of the UK and Spanish tax laws, coupled with the evolving nature of the impact of Brexit, make consulting with financial advisors experienced in cross-border pensions essential. These professionals can provide guidance tailored to your specific situation, helping navigate the changing regulatory landscape.
Planning for the Future: Considering the potential for changes in circumstances and the consequent impact on the tax status of a pension transfer, forward-thinking and flexible planning are advisable. Regular reviews with your financial advisor can help adjust your strategy as needed.

With careful planning and professional guidance, expatriates can navigate the complexities of pension transfers, ensuring financial security in their new home country. For Britons living in or planning to move to Spain, staying informed and consulting with experts can ensure your retirement savings are optimised for your life abroad, balancing the benefits of ROPS and SIPPs against Spain's tax landscape.

The local Blacktower address is:

120 Avenida Dr. Artero Guirao 2C. San Pedro Del Pinatar, 30740, Murcia, Spain.

If you want more information or wish to make an appointment to discuss your own situation then call 0034 657 684 094 or email keith.littlewood@blacktowerfm.com

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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Financial Advice Issues for Expats in Spain

I have been a Qualified Financial Adviser for almost 35 years now. 25 years in the UK for major institutions such as Natwest, RBS and Royal London. I have been in Spain giving expats financial advice now for 10 years and it is quite remarkable the different approaches as well as advice that are required for an expat now living in Spain. Blacktower is a company that has specialised in providing the best solutions for its clients living outside the UK for 30 years also.

The currency issue is always high on the agenda and a discussion for the long-term future has to be taken onto account. Questions like What will happen if one partner dies? Will the other remain in Spain? What about other family members? What Inheritance tax provisions do you have in place? The list goes on and on.

BLACKTOWER Financial Management Existing portfolios and investments that were the mainstay of portfolios in the UK may now be obsolete. An example of this is quite often tax efficient products in the UK like ISA’s and previously held TESSA’s: PEP’s actually have low growth rates and provide no tax advantage to a Spanish fiscal resident.

Existing pension holdings either paid by the state or private pensions built up through working lifetimes are topics that have to be covered. Many expats have lots of small pensions from many ex employers and can be confused by the communications and administration in dealing with them. At Blacktower we specialise in advising on how to consolidate and bring all these pensions together in one place.

BLACKTOWER Financial Management Bank accounts and investments in Spain always bring up lots of questions too. Quite often the small print associated with financial products in Spain is in Spanish this can make it very difficult even if you have a good grasp of the language. Understanding Jargon in English is sometime difficult enough. I provide clear easy to understand letters and documents in English so that you fully understand any terms and conditions before making a decision.

Advice on tax efficiency is just as important and offering good returns. There are products available exclusively for Spanish expats that can provide invaluable benefits. Having a good base knowledge of the tax implications both now and in the future is an essential ingredient to making a sound decision.

BLACKTOWER Financial Management I will complete a thorough factfind, ask you the right questions, establish your individual needs, attitude to risk and capacity for loss and desired returns before providing you with a full written report of advice and my recommendations in plain English. You will then have time to read and consider all the information before contacting me with how you wish to proceed.

Click for more information about Keith Littlewood.

The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.

This communication is for information purposes only and it does not constitute advice or a recommendation. The value of investments can go up as well as down, and investors may not get back the full amount invested. The Blacktower group of companies operates across multiple jurisdictions, each authorized under its respective regulatory license. For further information, please refer to the relevant regulatory page.