Moving to Portugal from the UK

Moving to Portugal from the UK can be an important personal and financial decision. Your UK tax position may change significantly once you relocate, but leaving the UK does not automatically end your UK tax obligations.

You must consider your UK residence status, UK-source income, property gains, pension arrangements and the UK-Portugal double taxation agreement. You may also need to file a UK self assessment tax return after your move.

This guide explains the key points for 2026. It is intended as general information rather than advice for a particular set of circumstances. If your affairs involve UK property, pensions, investments or remote working, professional advice can help you plan your departure correctly.

How you are taxed in the UK

The UK generally operates a residence-based tax system.

If you are UK resident, you are usually liable to UK tax on your worldwide income and gains, subject to the applicable rules and any reliefs. If you become non-resident, you are generally liable to UK tax only on UK-source income, and on gains arising from UK property or land.

Your UK residence status is therefore central to your tax position. Moving to Portugal, obtaining a Portuguese residence permit or renting out your UK home does not, by itself, make you non-resident for UK tax purposes.

You must assess your circumstances under the Statutory Residence Test for each relevant UK tax year.

Which UK-source income can HMRC continue to tax?

Once you are non-resident, HMRC may still tax certain UK-source income.

Employment income

If you perform employment duties physically in the UK, the related workdays may remain taxable here. This can apply even where your employer is based outside the UK or pays your salary into a Portuguese bank account.

If you work remotely from Portugal for a UK company, consider both your UK position and your Portuguese tax and social security obligations. Where you physically perform the duties is usually the deciding factor.

Self-employment income

Income from a trade or profession carried on in the UK can remain within the UK system. Consider where the business is operated, where the work is performed, and whether you retain a UK business presence.

Pension income

The pension position changed materially with the new treaty, and it is now one of the clearest reasons people choose Portugal over other destinations.

Image 1 — where each type of pension is taxed

Under the 2025 convention, UK private and workplace pensions paid to a Portuguese tax resident are generally taxable in Portugal rather than the UK. The UK state pension is treated the same way, because it does not qualify as a government service pension.

Government service pensions, covering the NHS, police, armed forces and local government, are dealt with under a separate article and usually remain taxable in the UK.

⚠️ WARNING  Relief is not automatic. Your pension provider will keep deducting UK tax until HMRC issues an NT code, which you apply for using form DT-Individual, certified by the Portuguese tax authority. Until that is in place you are paying UK tax on income Portugal is entitled to tax, and reclaiming it afterwards.

Investment income

Income from UK-situated assets and property can remain taxable in the UK. This may include:

●       UK rental income.

●       Interest from UK investments.

●       Dividends in certain circumstances.

●       Income connected with UK property or businesses.

British nationals are entitled to the UK personal allowance regardless of residence status, subject to the relevant rules and treaty position. If your UK-source income does not exceed your available allowance, no UK income tax may be payable. Your position should still be reviewed, particularly where you have more than one income source.

Selling your family home after moving to Portugal

What happens if you sell your former UK family home after relocating?

The UK may continue to charge capital gains tax on gains from UK residential property even after you become non-resident. That includes a former main residence you retain and sell later.

The amount payable depends on factors including:

●       The acquisition and disposal values.

●       Allowable costs.

●       The period you occupied the property.

●       The period it was not your main residence.

●       Your income and gains for the relevant tax year.

●       Whether private residence relief or another relief is available.

For 2026/27 the annual exempt amount is £3,000, and residential property gains are taxed at 18% within your remaining basic rate band and 24% above it.

Private residence relief may reduce or eliminate a taxable gain for the period during which the property qualified as your main residence. It is not automatic, particularly where you have lived overseas, rented the property out, or owned more than one home.

⚠️ WARNING  You must report the disposal to HMRC and pay any tax due within 60 days of completion, even where there is no tax to pay or the disposal produces a loss. The clock runs from completion rather than exchange, so have the valuation and figures ready before you exchange.

If both countries seek to tax the same gain, double tax relief may be available under domestic law or the treaty. The outcome depends on the asset, your residence status and the relevant provisions. Obtain advice before exchanging contracts if you are planning a sale.

How to become non-resident under the Statutory Residence Test

The Statutory Residence Test determines whether you are UK resident for a particular tax year. It considers your physical presence, work pattern and connections with the UK.

You may become non-resident if you satisfy an automatic overseas test, such as:

●       Physical presence.  No more than 15 UK midnights if you were UK resident in one or more of the previous three tax years, or no more than 45 if you were not resident in any of those years.

●       Full-time overseas work.  Working full-time overseas, averaging at least 35 hours a week, while minimising your UK workdays and other UK presence.

If you do not meet an automatic overseas test, the sufficient ties test may apply. This looks at connections such as family, accommodation, substantive UK work, time spent in the UK in previous years, and other relevant links.

Keep accurate records of UK midnights, workdays, accommodation and travel. If you leave during the tax year, split-year treatment may allow the year to be divided into a UK-resident period and an overseas period, provided you meet the conditions for one of the statutory cases.

The UK-Portugal double taxation agreement

The UK and Portugal have a double taxation agreement designed to prevent the same income being taxed twice. The 2025 convention entered into force on 29 December 2025, replacing the agreement that had governed the relationship since 1968.

Image 2 — when the new treaty takes effect

The treaty is effective in the UK from 1 January 2026 for tax withheld at source, 6 April 2026 for income tax and capital gains tax, and 1 April 2026 for corporation tax. It is effective in Portugal from 1 January 2026.

Depending on the income involved, the treaty may restrict the UK tax rate, remove HMRC’s right to tax particular income, allocate taxing rights to Portugal, require Portugal to give credit for UK tax paid, or require the UK to give relief for Portuguese tax paid.

For example, UK rental income will generally remain taxable in the UK. Portugal may also tax it because you are Portuguese tax resident, but the treaty requires double tax relief to be considered. In broad terms Portugal may give credit for the UK tax paid on the same rental income, subject to its domestic rules and limits.

⚖️ UK-Portugal double tax treaty

Portugal NHR and UK pension tax

Many British expats previously relied on Portugal’s non-habitual resident regime. Under the former rules some foreign pension income could qualify for a 10% flat rate.

Classic NHR was closed to most new applicants from 2024. If you move to Portugal in 2026 and have not already secured NHR status, do not assume your UK pension will qualify for the former 10% rate.

Replacement incentives, including the IFICI regime, are aimed primarily at specific qualifying activities and professionals. They do not operate as a general replacement for NHR pension treatment.

If you are searching for Portugal NHR pension advice, establish first:

●       Whether you already hold valid NHR status.

●       How many years remain under that status.

●       Whether your income is a private, occupational, state or government service pension.

●       Whether any current Portuguese incentive regime applies to you.

If you are Portuguese tax resident and do not qualify for a special regime, UK pension income may be taxed in Portugal under the standard Portuguese rules.

Temporary non-resident rules

Are you planning to move to Portugal for only a short period before returning to the UK?

The temporary non-resident rules are anti-avoidance provisions. They are designed to prevent you leaving the UK temporarily, receiving income or disposing of assets while non-resident, and returning without the income or gains being taxed in the UK.

The rules can apply where you were UK resident before departure, become non-resident, receive certain income or dispose of certain assets while overseas, and return to UK residence within the relevant period.

Income and assets that may be affected include:

●       Dividend income from profits generated before departure.

●       Pension income excluded from UK tax under a treaty.

●       Share gains relating to shares acquired before departure.

●       Property gains relating to gains arising before 6 April 2015.

Broadly, the rules apply where you return within five years. Where they do, the relevant income or gains may be brought into charge in the tax year in which you return.

⚠️ WARNING  The second item on that list matters more in Portugal than in most destinations. Under the new treaty your UK pension income can be taken outside UK tax entirely, but if you return to the UK within five years that relieved income comes back into charge all at once in the year you come home.

Your UK compliance obligations

The UK tax year runs from 6 April to 5 April. The normal deadline for filing an online tax return and paying the resulting liability is 31 January following the end of the tax year.

You may still need to file a UK tax return after becoming non-resident if you receive UK rental income, perform UK workdays, dispose of UK property, or need to claim split-year treatment or treaty relief.

Note that HMRC’s own free filing service cannot submit the residence pages that every non-resident needs, so you will require commercial software or an adviser.

➡️ Check if you need to file self assessment

Simple steps before moving to Portugal

Before you leave the UK, we recommend that you:

●       Count your expected UK midnights and workdays.

●       Review your UK accommodation, family and other UK ties.

●       Establish whether split-year treatment may apply.

●       List your UK pensions, investments, property and other income.

●       Review the treaty treatment for each income stream under the 2025 convention rather than the 1968 one.

●       Apply for the DT-Individual early if you will be drawing a pension, so the NT code is in place before the payments start.

●       Consider whether the temporary non-resident rules could affect your plans.

●       Confirm whether you need to file a UK tax return or a P85.

●       Take Portugal-qualified advice on Portuguese residence, pension taxation and current incentive regimes.