Thinking of swapping dull northern winters for sun-filled Spanish skies?

Spain attracts over 100,000 British retirees eager for sunshine, culture, tasty food—and particularly lower living costs. Yet, without proper planning, tax surprises, pension complications, and visa limitations can easily derail your dream retirement.

Here’s a clear, friendly, and professional guide to what retiring here really costs—especially if you’re considering the charming Hondón Valley.

1. Visa and Minimum Income Requirements

• Non-Lucrative Visa: Ideal for pensioners. Requires €28,800 annual income + €7,200 per dependent (so a couple needs about €36,000).
• Fees (2025): Approximately £516 per person, plus a £9 fee.
• Remote Workers: A Digital Nomad Visa requires a stable income of €2,762/month and proof of health insurance.

2. Tax Residency and Costs

• Criteria: Living in Spain for over 183 days/year or having main financial links here.
• Worldwide Income Taxed: Rates from 19% to 47% (regional variations apply).
• Foreign Investments: ISAs, NS&I, dividends, and capital gains are taxable—starting at 19%, rising to 30% on gains over €300,000.
• Wealth Tax: Applies only if net assets exceed €4 million per person. Some regions, like Madrid and Andalusia, offer full exemptions.
• Inheritance Tax: Varies—some regions offer generous reliefs, while others charge up to 34%.

3. Tax-Free Allowance

• In the UK: A £12,570 tax-free personal allowance annually.
• In Spain:
  • Under 65: €5,550
  • Aged 65–74: €6,700
  • Over 75: €8,100
• Illustration: A 70-year-old with a €41,000 annual income could pay €8,500 in Spanish taxes, compared to £4,800 in the UK.

4. Pensions and How They’re Taxed

• State Pension: Taxed in Spain at standard income tax rates (19–47%), although UK State Pension keeps its UK "triple lock" increase.
• Private Pensions: Taxed in Spain once you prove residency—before you move, HMRC deducts UK tax until Spain issues your residency certificate.
• Tax-Free Lump Sum: UK allows 25% tax-free withdrawal if taken before moving; afterward, it’s fully taxable in Spain. Timing matters.

5. Cost of Living and Property Prices

• Everyday Costs: Generally cheaper than the UK—e.g., utilities, dining out, groceries, and clothing.
• Property Prices: About €2,237/m² on average. Compare this to £5,009/m² in UK cities or €3,783 in suburban Britain.
  • Coastal hotspots: €2,000–€3,500/m²
  • Major cities (Madrid): €3,500–€5,000/m²
  • Smaller towns (like Hondón Valley): €1,200–€2,000/m²

Final Takeaway

Retiring in the Hondón Valley offers excellent value—sunshine, community, and peace. But:

• Plan for visa and income criteria
• Understand Spanish tax rules—especially for pensions and investments
• Review property choices and living expenses carefully