For Brits, retiring to a farmhouse in the Dordogne or a villa in the Costa del Sol used to be almost as easy as booking a flight and finding somewhere to stay. Not any more.
Following the UK’s withdrawal from the EU, UK citizens now have to navigate often time-consuming visa requirements simply to gain the right to reside abroad.
While obtaining a visa is perfectly achievable for most, refusals do happen, with insufficient proof of income or healthcare cover among the most frequent reasons why applications are denied.
Where I live in the south of France there are signs of renewed interest among Britons looking to move to the region, attracted by the lower cost of living and slower pace of life. The atmosphere is very different from the gloom that descended around the time of the Brexit referendum, when many feared a loss of rights — fears that proved largely unfounded for those who settled here before the Brexit rules took effect.
Elsewhere, wealthy Britons are looking at moving to low-tax European destinations such as Italy or Switzerland, following the removal of the UK’s non-dom status last year and changes to inheritance tax that will start to affect unspent pension pots from April 2027.
However, while interest may be rising, the ease of spending your retirement on the continent is diminishing: entry restrictions, which vary significantly from country to country, are becoming more stringent in some places. In the UK, rule changes may mean extra charges for those looking to transfer their pension to an overseas scheme. And there is the growing mass of tax, legal and healthcare considerations that need to be carefully considered, say experts.
“Retiring abroad sounds wonderfully romantic — sunshine, good food, better pace of life, but the admin behind the dream is where the real work happens,” says Mark Pollock, financial planning partner at Evelyn Partners. “The fundamentals never really change: you need clarity on your residency rights, your tax position, your healthcare access and how your accumulated finances, such as pensions and investments, will behave once you relocate.”
Simply gathering the relevant documents and seeing visa applications through to completion takes time, so it makes sense to plan well ahead. “When discussing this with clients, I typically advise to start on the tax analysis and building the pre-departure plan at least six months prior to the desired date of leaving,” he adds.
If you are planning to jet off into the sunset, here’s what else you need to know.
Tax rules aside, the first question to ask yourself is whether it really makes sense to relocate overseas permanently, says Robert Salter, a director at tax advisers Blick Rothenberg.
“One thing I see a lot is where people have definitely gone to France or to Spain or whatever and they’ve clearly been aiming to go there permanently. Then suddenly their children start having their children, for example, or something like that and they start spending lots of time back in the UK.”
If you are maintaining a home in the UK, the 90-day rule for visiting countries in the EU or Schengen area within a 180-day rolling period may give you enough time for a “part-time” retirement abroad.
If not, then your first step is obtaining the appropriate visa.
Popular destinations such as France, Spain, Italy or Portugal all offer a form of retirement visa, enabling UK citizens to move there provided they meet the required entrance criteria. These vary from country to country but they all demand minimum income checks and proof of cover for healthcare. In most cases, you also need to demonstrate that you have additional savings, show proof of local accommodation such as a tenancy agreement or property ownership documents and undergo a UK criminal record check.
Within the EU, Portugal has one of the least onerous entry requirements with its D7 visa requiring a passive income, such as from a pension, of just €920 (£800) a month (net of social charges) for a single person (double that for a couple). Unusually, this visa also allows you to work locally and remotely. Spain’s entry requirements, on the other hand, are among the toughest with the income requirement for its non-lucrative visa set at a passive income of €2,400 monthly for a single person or four times the Iprem, a benchmark figure in Spain used for calculating social benefits. For a couple, the minimum income is €3,000 monthly.
If you are in receipt of a UK state pension, you may be able to use an S1 form, a certificate of entitlement to state healthcare in another EU country, to support your visa application, although it’s wise to budget for a year’s worth of health insurance premiums before you become eligible for the local public health system. Bear in mind, though, that no rights are guaranteed as the political landscape keeps shifting: last year, French MP François Gernignon proposed a change to the social security budget that could see all non-EU nationals required to contribute to their healthcare costs in France.
One positive is that, for retirement visas, you will not be tested on your foreign language skills. However, if obtaining nationality is your eventual goal (this will lock in permanent residency entitlements across the EU and give you the right to vote in your host country) such tests are common. You are normally eligible for citizenship in an EU country once you have been resident there for five to 10 years, depending on the country.
If nationality is your eventual aim, be aware that in some countries the rules are slowly being tightened: at the beginning of the year France raised its language requirement for French nationality to B2, defined as “upper intermediate”. Further, following guidance from the interior ministry last year, some departments in France have refused citizenship to Britons who have insufficient income gained within France, arguing they have not integrated deeply enough into the local economy.
Portugal has one of the least onerous citizenship requirements, requiring just five years’ residence and an A2, or “elementary”, language proficiency.
Citizenship by investment programmes, such as the one offered by Malta granting nationality to non-EU residents and with it the right to reside across the bloc, no longer exist following a successful legal challenge by the EU.
Regardless of your approach, you need to consider the tax implications of any move. And, in some cases, take action well before you leave the UK.
“If retiring to the EU, in most countries it makes sense to take your tax-free lump sum [from your pension] before you move, as it can be taxed,” says Harri Matikainen of tax and wealth advisers Blevins Franks.
In Spain, for example, if you are already a Spanish tax resident and you take the 25 per cent tax-free cash from your UK pension it can be taxable as income — likewise in Portugal, where the tax-free lump sum is taxed as pension income for Portuguese tax residents. So check the tax rules in your destination country before leaving UK soil.
The same is true of selling property, Matikainen says, as if you sell your home while still living in the UK you get private residence relief, meaning you shouldn’t have to pay capital gains tax on any gains above the original purchase price. If you sell a UK property while living abroad, however, you must file a non-resident CGT return within 60 days of sale that could land you with a CGT bill.
There could be another advantage to selling your UK home if you plan to move to France, as the country levies a wealth tax on your worldwide real estate assets.
Maintaining ownership of a UK property could tip you into paying the French wealth tax. The tax is payable where your total worldwide property assets (less any mortgages and with a 30 per cent reduction on the value of your French home) exceed €1.3mn, although new residents in France normally get a five-year reprieve during which only French property assets count towards the tax. Spain also operates a wealth tax, though it varies significantly from region to region so check the rules for your intended destination.
Despite this, the tax burden in more popular European destinations can often be lower than people think, says Salter. A number of European countries have generous allowances for married couples, he says, meaning they could pay less income tax than in the UK.
And in some countries, retirees can be treated more favourably than in the UK.
“Everybody thinks of France as a high-tax country, and it is,” Salter says. “But a lot of its tax is technically social security [taxed on earnings], not necessarily income tax, and this is where sometimes pensioners might win.”
There can be additional attractions when it comes to inheritance tax, with Portugal and Italy having among the more favourable regimes. Portugal does not levy inheritance tax per se but, upon death, it charges stamp duty of 10 per cent on assets based in the country, while Italy has generous personal allowances of €1mn each for spouses, children and grandparents. No inheritance tax is levied up to these limits. with rates starting at 4 per cent above these amounts.
These benefits are attractive for many retirees as, under UK rules, if you have lived abroad for more than 10 years, your worldwide assets, such as property owned in Portugal or Italy, escape the UK inheritance tax net (although UK assets will still be subject to UK IHT).
However, it is vital to ensure that you comply with the tax residence rules as UK citizens can — and do — get caught out by the UK’s Statutory Residence Test, introduced in 2013. “Many clients looking to spend more time abroad in retirement don’t appreciate that their intended plans could still mean that they remain a UK tax resident owing to their ‘ties’ to the UK,” says Pollock.
Working just a small number of days annually in the UK, having a spouse who lives there or merely having a place where you occasionally stay in the UK can all act as triggers, so it is crucial to ensure that you comply with any tax residence rules even if you do satisfy the 183-day tax residence rule in your new destination country.
This is particularly important if you intend to transfer your pension overseas into a qualifying recognised overseas pension scheme (Qrop) in a bid to circumvent impending changes to UK inheritance tax.
The Qrops market has taken a hit recently as, since October 2024, these plans can face a 25 per cent transfer charge in the UK. But with unused pension funds and many death benefits being brought into the UK inheritance tax net come April 2027, the market could be coming back to life.
“For retirees moving abroad, this matters hugely,” Pollock says. “Suddenly, pensions will not be the safe ‘IHT‑free’ wrapper they once were. Anyone planning to retire in Europe should revisit their estate planning — with urgency — because these rules could reshape how much their family actually inherits.”
Given these impending changes, Qrops can still be a viable option, he says, but they “will only be efficient for UK inheritance tax purposes once the pensioner is no longer a ‘Long-Term UK Resident’ which is typically once [they have been] non-UK tax resident for more than 10 years”.
You need to tread carefully however, as not all European countries offer Qrops arrangements and if you do not transfer your UK pension to a scheme in your new country of residence you can be hit with the transfer charge. Specialist advice is therefore highly recommended.
When it comes to taking your pension, if you move to the EU your UK state pension will continue to be uprated annually in line with the current triple lock (the higher of inflation, earnings or 2.5 per cent), unlike in Canada or New Zealand, for example. In terms of private pensions, if you keep your plan in the UK, you will normally pay tax in your new country of residence.
With careful planning, a retirement in the sun remains an achievable dream for many. It is easy to see the attractions. Where I live, as I greet locals on a sunny Sunday morning strolling round the outdoor market and sipping coffee at streetside cafés, I know I’ve made the right decision.