Every Sunday, Lynne Eyre-Bower heads to a pub in her Valencian town for lunch with friends. She moved to a working town rather than a beach resort to experience an authentic Spanish lifestyle, but likes to catch up once a week with a British-style Sunday roast for the princely sum of €13.
After living in Catral for two years, after being paid out of Cornwall, she speaks fluent Spanish, has Spanish neighbors and feels settled, says the 65-year-old, who shares her home with her cocker spaniel, Lily, and two cats.
In Cornwall, the average house price is £296,000 and the average council tax (Band D) is £2,221 a year. Lynne above bought her Spanish three-bed house for €75,000 (£64,000) and her SUMA (local tax) is just €82 a year.
Lynne Eyre-Bower, left, enjoying her Spanish retirement with three of her friends: Jan, Lesley and Marion
Spain is our top choice for cheap living in the sun. About 130,000 Britons over 60 live there
Turia Fountain in Valencia. According to Numbeo, the cost of living in Spain is 23 percent lower than in the UK
She is far from alone in moving to Spain for the lower cost of living, plus the bonus of 300 days of sunshine a year. Its province of Alicante, which is more affordable than the Costa del Sol, is the most popular for Britons, with a population of 76,739 in 2023, according to the local census. Alicante, like most of mainland Spain, has not experienced any of the recent “anti-tourism” demonstrations seen in the Balearic and Canary Islands, where the availability of housing for local residents is a source of tension. “It’s great to be able to sit outside for a coffee or in friends’ gardens,” says Lynne, who opted not to have her own pool to keep energy costs down. “Life here is more relaxed and I can live well within my means.”
According to website Numbeo, the cost of living in Spain is 23 per cent lower than in the UK, with one person living on £600 a month, bar rent or a mortgage.
Spain is our top choice for cheap living in the sun. About 130,000 Britons over 60 live there and the UK’s cost of living crisis remains a big driver, despite price increases for some Spanish goods. Lynne’s weekly supermarket costs around €100 – up from €80 two years ago – and the price of a liter of olive oil at €8.50 in Spain is similar to UK supermarkets, but the €2.50 Lynne pays for a glass of wine to take away. A Sunday lunch that would cost £5-7 in a Cornish pub has changed little.
In local restaurants, the menu del dia (menu of the day) – with a cheese and cured meat starter, then grilled hake or paella and dessert with half a bottle of wine and coffee – has risen in price from €10 to €12. last two years.
When Lynne turns 66, she will receive her UK state pension, although after working for 23 years she will not receive the full £221 a week, but around £130-140. However, the British Telecom pension he already draws is three times what Numbeo suggests is needed in Spain – although nowhere near the £43,100 a pensioner requires to enjoy a comfortable retirement in the UK, according to The Pensions and Lifetime Savings Association, or even £. 31,300 per year for a “moderate” lifestyle.
Benefits for later life
Lynne, pictured left with her friends Nicki and Jan, will receive her UK state pension when she turns 66. The Spanish government also offers benefits to pensioners – both Spanish-born and British permanent residents
The Spanish government offers benefits such as discounted holidays to pensioners – both Spanish-born and British residents – through its town hall or government website. “Friends in my lunch group regularly enjoy all-inclusive holidays to Tenerife, Mallorca and Almeria for €200-€300 per trip,” says Lynne.
Pensioners in the Canary Islands can also take advantage of cheaper inter-island ferry services as well as resident discounts of up to 75 per cent on domestic flights.
In Andalusia, people over 65 can get a “65 Card” which gives them discounts on buses, glasses, hearing aids and hotels.
40 percent lower bills
Lynn’s monthly electricity bill is €64-65, slightly less than the UK average of £80. That leaves more to spend on treats like eating out
After three years of government energy subsidies, inflation in Spain was actually higher this April than a year ago. But while energy costs are rising across Europe, the combined cost of utilities in Spain – electricity, heating, cooling, water and waste disposal – is 40 per cent cheaper than in the UK.
Lynne’s monthly electricity bill is €64-65 – slightly less than the UK average of £80, according to Ofgem.
One of the government deductions was for petrol and Lynne says she pays €1.54-€1.96 per liter for unleaded petrol. Here it’s £1.45 a litre, according to the AA.
To keep car costs low, Lynne has a ‘cheap’ Suzuki Alto car for which car tax is €100 per year and insurance is €308, including compulsory breakdown/retrieval cover. They pay €289 a year for home insurance, but together with the hefty council tax savings (€82 a year) their water bills are only €40 a year. The average UK water bill in 2023/24 was £448, regulator Ofwat says. Pay just €48 a month for your landline/broadband/mobile package.
Reasonable vet bills
Holding her dog Lily is not exaggerated either. “I only pay €12 a night to put Lily in a kennel. In Cornwall it’s around £20 a night, in other parts of the UK it can be up to £45,” explains Lynne.
“When Lily ate the coffee capsule she needed injections, an X-ray plus pills for five days and it came to €110,” she added.
Ready to reach UK pension age, Lynne has applied for an S1 certificate (from NHS Business Services) which will allow her to pay less for prescriptions and benefit from free primary healthcare. Until then, she pays €1,500 a year for private healthcare – a necessary condition for her stay – through a non-lucrative visa.
Tax considerations
If you keep your assets in the UK, you could be hit with Spanish capital gains tax after you emigrate, says Kelman Chambers of Blevins Franks
Advisers encourage people to start financial planning 18 months before becoming tax residents in Spain. If you keep your assets in the UK, you could be hit with Spanish capital gains tax after you emigrate, says Kelman Chambers of Blevins Franks, a specialist cross-border financial adviser.
“You will pay 20-25% tax on the profit if you are not over 65 and you do not sell it within two years of it ceasing to be your main residence; or if you invest all the proceeds in a new principal residence [in Spain].’
So the CGT on a £500,000 gain on a house (bought for £100,000 but sold for £600,000) would be €127,880 at the exchange rate of €1.17 at the time of writing.
According to Mr Chambers, income from a UK buy-to-let property would first be taxed (or taxed) in the UK and then assessed in Spain.
“Even if there is a double taxation agreement, it means that you will not pay tax twice on the same income, but you will pay the equivalent of the higher of the two accounts.”
State pensions and private pensions fall under ‘general income’ and are taxed at standard income tax rates of 19-47 per cent. The Double Taxation Treaty with Spain means you won’t be taxed in the UK either – but you’ll need to inform HMRC and get an NT tax code so your pension providers can pay your pension in gross.
There is no “tax-free lump sum” in Spain. If you haven’t moved yet and want a lump sum, taking it while you’re still a UK resident will save you tax. If you have a Crown Pension (Civil Service), these remain taxable in the UK but are not taxed in Spain.
Investment problems
Red tape aside, Lynne has no plans to return to her old village near Looe. He says of Spain: “It is a warmer and more welcoming place where children respect their parents and the elderly are well taken care of”
In addition to income tax, Spain imposes a wealth tax on residents’ worldwide assets, including investments, income from buying and renting, pensions, dividends and gambling winnings.
Retirees with significant assets outside of Spain should seek advice on how to manage their tax exposure, advises Mark Routen, head of tax at Hoxton Capital Management, who warns: “Expats may remain liable for UK inheritance tax on worldwide assets even if they are tax residents in Spain. .’
The most common mistake you can make is to think that your UK tax-efficient planning will work in Spain, such as holding ISAs and premium bonds, as they are taxable in Spain regardless of where they are held/invested, warns Mr Chambers.
“Don’t become a tax resident with a portfolio of ISAs and other investments,” he warned.
Red tape aside, Lynne has no plans to return to her old village near Looe. He says of Spain: “It’s a warmer and more welcoming place, where children respect their parents and the elderly are well taken care of.
“I miss my Cornish friends and how green it is, plus you can go for long walks in the summer – but I just can’t afford to move back to the UK.”
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