Tax planning before you go

It's of paramount importance that you are aware of all the necessary formalities for your departure from the UK and your arrival in Portugal.

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When you are moving to Portugal, you will need to consider how this will affect your worldwide estate – will you continue to earn the maximum amount of income and interest from your pension/s and other assets, even after you leave the UK?
 

The best thing to do here is careful financial planning, and we recommend seeking professional advice before you leave the UK. This will be invaluable to ensure you are on the ball with every issue that could affect you, including:

  • How and when to notify HMRC about your departure from the UK - not only as a formality but because it could result in a tax rebate
  • Any HMRC tax implications from leaving behind a let property in the UK when you move to Portugal
  • The UK state pension benefits to continuing National Insurance contributions when you move abroad 
  • UK life insurance or savings policies, and how they should be reviewed to determine their relevance when you are moving outside of the UK
  • The fact that non-residents of the UK can (normally) no longer contribute to ISAs 
  • Whether you can continue to pay into your existing UK pension and get tax relief 
  • Accumulated pension rights in the UK 
  • Large cash balances held in the UK, and what you should do with them
  • The implications of the Statutory Residence Test and your residence status
  • UK tax returns – and what you need to do after leaving the UK. Please note: there are significant penalties for late submission
  • Inheritance laws and taxation - these differ in Portugal to in the UK, so you will need professional advice to ensure your assets are protected for future generations.

If you will be relying on a UK-based pension and/or income from investments, it’s really important to understand that currency exchange can cause issues. As the market rates fluctuate, so too will your monthly income in line with the  exchange rate; a currency exchange specialist like Smart Currency Exchange can offer you assistance and the necessary tools to set the exchange rate for up to a year on regular payments from the UK.

You will also need to make sure that your paperwork is in order – we recommend filling in HMRC’s P85 ‘Leaving the UK’ form, preferably before you leave the UK although it can be done retrospectively if necessary. This informs the UK Government that you are becoming a resident of another country. If you are continuing to work for a UK company, you may be granted an “NT” (no tax) code, allowing your employer to pay you gross of tax. You will, of course, become liable to pay tax in Portugal instead!


Further reading for Buying In Portugal

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Viewing Guide

Finding the right property can be a challenge. What do you need to think about early on?
Read more...

 

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Hidden Costs

The price of the property as listed is never the price that you will end up paying. There are a host of other costs.
Read more...

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Legal Matters

Buying a property in Portugal has very different legal requirements to the UK.
Read more...
 

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Currency Zone

Did you know that you could save thousands of pounds when emigrating by using a currency specialist?
Read more...