A short guide to regular savings for expats

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, it is subject to change and we are not responsible for any errors or omissions.

How do you best save money when moving to Spain? British expats have a range of options when it comes to building up an emergency fund and saving for a short-term financial goal (e.g. a mortgage deposit).

In this article, our Murcia financial advisers explain some of the main options available to British citizens living in Spain – listing some of the main opportunities and risks to be aware of. We hope these insights are useful to you.

If you want to discuss your financial plan with us, please get in touch to arrange a no-obligation financial consultation, at our expense:

+34 966 460 407

UK accounts

Moving to Spain as a British expat does not mean you necessarily need to close your UK bank accounts and move your savings abroad. Indeed, it typically makes sense for expats to retain at least one UK bank account for specific purposes (e.g. trips home over the holidays). This can help to minimise your cross-border money transfers and their associated costs, such as currency conversion fees.

You never know when you may need to return to the UK. If you close your account(s), it may be difficult to re-open them as a Spanish resident. Also, you will need easy access to funds when moving to Spain as you set up your new life.

For instance, if you are starting a new job in Spain then it may be over a month before you receive your first Spanish paycheque. In that time, you will need to pay for food, utilities, travel and other expenses (e.g. furniture). This is where UK-based savings can be very helpful.

Opening a Spanish account

Once you start establishing yourself in Spain you will find it very helpful to have a local bank account. If you are paid into a Spanish bank account and make an ATM withdrawal, for example, then you keep your charges down to a minimum. It can also be a hassle to pay for things without a Spanish account. Indeed, some companies will only accept payment from a local bank (e.g. water suppliers).

A key consideration, of course, is exchange rates and fees. Moving money from the UK to a Spanish account can rack up expensive costs over time. If you plan on making regular cross-border transfers (e.g. moving money from UK-based clients paying in GBP to your Spanish account), then you could explore an online banking service. These apps can offer very low fees compared to traditional banks, ensuring you receive a more competitive exchange rate.

Saving in the UK versus Spain

Here, expats may be wondering which country offers better interest rates and terms to customers via savings accounts. There is no clear-cut answer, unfortunately. The banking landscape of the two countries can shift significantly over time as economic conditions, banking services and government policies change.

The latest “base interest rate” in Spain was recorded at 4.5%. In the UK, it is 5.25% at the time of writing. At the moment, it is probably fair to say that the UK is offering higher savings rates than Spanish banks. However, this could change in 2024 if the Bank of England (BoE) lowers the base rate due to a cooling of inflation – as many analysts expect.

This shifting landscape in the UK and Spain is another good reason to consider having at least one bank account in each country. If rates in one country rise compared to the other in a given period, you may choose to increase your savings there until the situation changes.

Saving and tax planning

UK residents arguably have a strong advantage over Spanish residents when it comes to tax-efficient savings. In 2023-24, a UK resident who is a Basic Rate taxpayer can earn up to £1,000 from interest each year, tax-free, outside of an ISA (via the Personal Savings Allowance). An individual can also put up to £20,000 into their ISAs each tax year and receive tax-free interest.

Some British expats may still benefit from these tax rules whilst living in Spain, provided they are not classed as resident in Spain for tax purposes. In this case, a Savings Tax will apply to interest earned from cash savings. For instance, savings of 0 – 6,000 euros are taxed at 19%. Savings over 50,000 euros are taxed at 23%.

Speak with a financial adviser if you are looking to explore the best ways to minimise needless tax liability on your savings and investments.


If you are interested in discussing your own financial plan or inheritance tax strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:

+34 966 460 407

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