Minimising the cost of departure

As more UK residents explore the prospect of relocating abroad, particularly to attractive European destinations such as Portugal, there is increasing awareness of the financial implications of expatriation.

While the UK does not impose a formal “exit tax” on individuals leaving or moving assets out (pensions being an exception), there are costs on departure  in the form of the loss of certain reliefs and exemptions. Understanding these nuances and early planning is critical to minimise any costs and maximise the planning opportunities.

This article focuses on British individuals relocating to Portugal under its standard tax residency rules as the new tax incentive IFICI regime offers separate incentives and planning complexities.

So what do you need to be aware of when leaving the UK?

Key reliefs and allowances lost on departure

Private Residence Relief (PRR)
UK residents can generally sell their main home without incurring capital gains tax due to PRR. However, once tax residency shifts to Portugal, this exemption no longer applies.

Portugal taxes gains on property sales regardless of whether the property is a main residence. Therefore, the timing of property disposals becomes crucial and could have a significant tax impact.

Business Asset Disposal Relief (BADR)
Formerly known as Entrepreneurs’ Relief, BADR allows UK residents to sell qualifying business assets at a reduced capital gains tax rate of 14%. However, this relief is not available once you become tax resident in Portugal as it is residence of the shareholder that determines the tax treatment, not the location of the business.

Under the UK-Portugal double taxation treaty, Portugal has taxing rights over such gains, where the rates start at 28%. Nevertheless, with appropriate structuring, these gains can be reduced—and in certain cases, eliminated entirely.

Pension Commencement Lump Sum
The so-called “25% tax-free cash” is a UK tax incentive and other countries, including Portugal, do not recognise the concept of this allowance. As a result, any amount withdrawn would be taxed as income in Portugal.

As a result of the erosion of the tax benefits of pensions, more and more are looking to deplete their pension schemes, particularly if they hold Non-Habitual Resident status in Portugal.

Overseas Pension Transfer Charge
This point is slightly different to the others discussed above, as it doesn’t apply when the individual leaves the UK, rather it is when the pension scheme leaves the UK.

Since October 2024, transferring a UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) may incur a 25% tax charge.

Whilst this will stop the majority of pension transfers taking place, some have decided to accept the 25% exit tax charge in order to save their beneficiaries from the 40% IHT charge to be implemented from April 2027, as discussed above.

Pension Contributions After Departure
UK tax relief on pension contributions is only available to UK residents. However, former residents may contribute up to £3,600 gross annually for up to five tax years post-departure.

EIS and SEIS Reliefs
Tax advantages associated with the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are similarly lost upon changing tax residence. Furthermore, if an EIS/SEIS holder ceases UK residency within the three-year qualifying period, gains previously deferred may trigger an immediate tax liability.

The Prospect of a UK Wealth Tax
Recent discussions have reignited debate over the potential introduction of a wealth tax in the UK. While no formal proposals have been tabled, policymakers and think tanks are increasingly considering wealth taxation as a mechanism to address fiscal imbalances and fund public services.

Should such a tax be introduced, it could significantly alter the financial planning calculus for high-net-worth individuals contemplating emigration. Although the UK has historically avoided a net wealth tax, a shift in political direction could see assets—particularly those held in the UK—subject to new assessments.
This development, coupled with changes to inheritance tax and pension treatment, is leading many to explore pre-emptive planning, including asset restructuring, offshore trusts, and in some cases, accelerated departures. For those considering relocation to jurisdictions like Portugal, which offers comparatively benign treatment of foreign income and gains, the window to act may narrow.

Final thoughts

In the current environment, tax-efficient emigration from the UK is not as simple as buying a one-way ticket. The erosion of traditional tax reliefs, the complexity of cross-border rules, and the looming spectre of wealth taxation, demand early and strategic planning. Whether mitigating capital gains, managing pensions, or avoiding permanent establishment risks, proactive advice is essential.

As always, individuals should seek bespoke advice based on their circumstances and monitor regulatory developments closely—both in the UK and Portugal.

Here is what you need to know
If you are approaching the end of your 10-year Non-Habitual Residence (NHR) status in Portugal, it is important to understand the financial transition ahead.

Without careful planning, you could face significantly higher tax liabilities but with careful planning and maybe some strategic financial adjustments, you can protect your wealth and future lifestyle.

Why NHR has been so attractive?
Portugal’s NHR regime offers a valuable 10-year window of tax advantages. Under this status:

• Most foreign income, including interest and dividends, is tax-free in Portugal, provided it does not originate from “blacklisted jurisdictions” like Jersey, Guernsey or the Isle of Man.
• Gains on foreign real estate are exempt from Portuguese tax.
• Overseas pension income is taxed at a flat 10% or even exempt, depending on when your NHR began.

It is a powerful incentive for expatriates relocating to Portugal but one with a clear expiry date.

What NHR does not cover
NHR is not a blanket exemption for everything:

• Gains from investments such as UK ISAs, overseas portfolios, and directly held shares are taxable when realised i.e. when sold or switched, at 28% or 35% if arising from a blacklisted jurisdiction.
• Short-term capital gains (on assets held for less than 365 days) are taxable at Portugal’s progressive income tax rates if your income exceeds a set threshold — a costly surprise for active investors or fund managers unfamiliar with Portuguese rules.
• Portuguese-sourced income and gains e.g. from property, interest on local bank deposits or Portuguese company dividends are taxable throughout your NHR period.

The cost of doing nothing
Once your NHR period ends, you will be subject to Portugal’s standard tax rules:

• Interest, dividends and capital gains from whitelisted jurisdictions are taxed at 28% or 35% if arising from blacklisted jurisdictions. Again, this is on an arising basis, which means it is taxable when it occurs, not necessarily only when you make a withdrawal, unless held within a Portuguese-approved tax wrapper.
• Pension income is generally taxed at progressive rates up to 48% (plus solidarity tax), unless it meets the criteria for the 85/15 taxation. In this case, only 15% of the income is taxed and the remaining 85% is deemed return of capital and not taxed.
• Overseas real estate income becomes taxable. Capital gains on sale also become taxable, with 50% of any gain added to your other income and taxed at scale rates.

Without pre-emptive action, these changes could substantially erode your investment returns and retirement income.

Even if your NHR has already expired, or if you are a standard resident, planning is key to improving your tax position and ultimately, the money in your pocket. The first step is to look at what you have and where it is based. Can you change how you hold your assets or move them into another jurisdiction?

Structuring for tax efficiency
Whilst the prospect of paying up to 48% on income (excluding solidarity taxes) and 28% capital gains tax is unpleasant, it is possible to rearrange your finances over time to reduce this tax burden.

• International investment bonds remain one of the most effective tools. Widely used across Europe and the UK, these allow for tax-free growth and defer tax on withdrawals. When income is taken, it’s often subject to low, single-digit effective tax rates.
• A Qualifying Non-UK Pension Scheme (QNUPS) can also provide tax-deferred growth but income from pensions is generally taxed at scale rates in Portugal post-NHR, and such arrangements carry higher costs due to trustee requirements. Additionally, even if a pension fund makes a loss, income drawn is still fully taxable — so this route needs careful evaluation.

Final Thoughts
Effective, early planning makes all the difference. Whether your NHR is nearing expiry, or you have already transitioned to standard residency, reviewing your assets, their location and tax treatment is crucial — and the sooner you act, the more options you will have.

We are often asked how to become a Portuguese tax resident, but of equal importance is understanding how to exit the UK tax system cleanly and efficiently, and this is governed by the UK Statutory Residence Test (SRT).

Introduced in 2013, the legislation sets limits on how much time you can spend in the UK without triggering UK tax obligations and it is relevant in two main ways:

1. Capping time in the UK to avoid falling into the UK tax net for income and capital gains tax.
2. Determining UK Inheritance Tax (IHT) liability, especially following changes announced in the October 2024 UK Budget i.e. a move away from domicile to a residency based test.

Interaction with NHR / IFICI
Limiting your time in the UK is particularly important if you wish to take advantage of the reduced tax regimes such as Non-Habitual Residence (NHR) or the new IFICI regime in Portugal, as you must be tax resident in Portugal to benefit.

For example, if you are taking large lump sums from a pension under NHR, you want to ensure you are tax resident in Portugal to benefit from the 0% or 10% rate. If you trigger UK residency rules, then you could discover that your pension income is instead taxable in the UK at 20%, 40% or 45% in the UK.

The complexity of tax residency
Becoming a tax resident in Portugal whilst simultaneously leaving the UK tax net behind can be complex due to several factors:

• The UK tax year runs from 6 April to 5 April, whereas Portugal’s tax year aligns with the calendar year (1 January to 31 December).
• UK tax residency can be triggered by spending as few as 16 days in the UK, depending on your ties, while Portugal generally applies a 183-day rule.
• UK tax residency is assessed on a fiscal year basis, whereas Portugal assesses tax residency over a rolling 12-month period.

It is important to review your tax residency every year as it can change from year to year depending on where you have spent your time.

The rules and definitions around these tests are detailed in hundreds of pages of UK legislation and are beyond the scope of an article, but we find most individuals do not meet the criteria for the first two tests and therefore fall into the Sufficient Ties Test.

The Sufficient Ties test means that the more ties and connections you have to the UK, the less time you can spend there before triggering UK tax residency. Ties in this context include (but are not limited to) available accommodation, work, minor children or a spouse/civil partner in the UK.

The result is that everyone is given a day allowance which can be between 16 and 182 days – this is contrary to the popular belief that there is a standard 90-day allowance. Each person is assessed individually under the test meaning married couples can have different day account allowances.

0% Inheritance Tax and the SRT?
From 6 April 2025, the UK will replace the concept of domicile with a residence-based system for inheritance tax purposes, and this is assessed using the SRT.

Individuals who have been non-UK resident for at least 10 out of the last 20 years at the time of death, will only be subject to UK IHT on their UK situ assets e.g. property, investments, pensions (from 2027) and cash left with institutions in the UK. Any assets held overseas will be IHT exempt exposing a very advantageous opportunity to mitigate or remove a UK IHT liability by moving assets outside of the UK.

The advice is therefore to keep an accurate record of times spent in each jurisdiction to which you are linked, ensuring you are limiting your time to the appropriate day allowance.

Additional points to consider

UK source income
Certain UK-derived income, such as rental income and civil service pensions, remain taxable in the UK regardless of your residency status.

Five-year anti-avoidance rule
If you leave the UK and become non-resident, you must remain non-resident for more than five full tax years to avoid UK tax on certain income or gains realised during your absence. Otherwise, these may be taxed upon your return to the UK.

Clarifying definitions
Be aware that terms like “accommodation” and “home,” or “work” and “employment,” have different definitions in UK and Portuguese tax contexts. If you are considered resident in both countries, tie-breaker clauses in the UK-Portugal Double Taxation Agreement will determine your tax residency, and these clauses differ from the Sufficient Ties Test used in the SRT.

In conclusion, navigating UK departure and Portuguese entry correctly is essential to avoid unnecessary taxation and compliance issues. While the SRT may appear straightforward, the details are intricate—particularly under the new IHT rules, so professional and personalised advice should always be sought.

Portugal’s New Tax-Free Scheme:

Do You Qualify?

Offering generous tax incentives, including tax-free pension income (later taxed at 10% from April 2020), tax-free interest and dividends, and the ability to generate certain capital gains free of tax, Portugal´s popular Non-Habitual Residence

In its place, a new initiative has been introduced: the Incentive for Scientific Research and Innovation (IFICI), informally known as “NHR 2.0.”

NHR 2.0: Now Open for Applications

While the new IFICI scheme was legislated to take effect from January 2024, practical implementation was delayed until February 2025, when the necessary forms and procedures were made available. With applications now open, many are wondering: What are the benefits and who is eligible?

Tax Benefits Under NHR 2.0

In many ways, NHR 2.0 is even more attractive than its predecessor. Under the previous scheme, specific conditions applied for foreign income and gains to be tax-free. However, under NHR 2.0, all foreign-sourced income and gains are exempt from Portuguese tax, with the exceptions of pension income and income from blacklisted jurisdictions.

Additionally, similar to the old regime, NHR 2.0 introduces a 20% flat tax rate on employment and self-employment income derived from qualifying industries and activities.

Eligibility Criteria: A Boom for Business Owners

To qualify for the new scheme, individuals must be tax residents of Portugal from January 1 2025 and must not have been tax residents in Portugal for any of the previous five years. Those who have previously benefited from NHR 1.0 or Portugal’s tax regime for former residents are not eligible to apply.

Although the tax benefits are generous, the eligibility criteria has been tightened, making the scheme more industry-focused. However, recent expansions to the list of qualifying activities have widened access, particularly benefiting business owners. Notably, UK business owners could find this scheme attractive, as it may allow them to receive tax-free dividends and potentially sell their businesses without incurring tax liabilities in either the UK or Portugal.

1. Limiting Time Spent in the UK
To take full advantage of the tax benefits of NHR 2.0, individuals must carefully manage their time in the UK. Many assume a 90-day limit applies, but the actual threshold varies depending on personal circumstances. The UK statutory residence test, introduced in 2013, determines UK residency status and can limit stays to as little as 16 days in some cases, or as many as 182 days in others.

Given the complexity of these rules, tracking travel days across Portugal, the UK, and other jurisdictions is crucial.

2. The UK’s Five-Year Anti-Avoidance Rule
This rule prevents individuals from temporarily leaving the UK to realise income or capital gains tax-free before returning. To avoid UK tax liabilities on income or gains realised abroad, individuals must remain non-UK residents for at least five years.

Application Process and Deadlines

Applications for NHR 2.0 registration must be submitted by 15th January of the year following the year of Portuguese residency. However, individuals becoming residents in 2024 have an extended deadline until March 31, 2025.

While this article provides an overview based on current regulations and practices, tax laws can change with little or no notice.

As such, seeking professional advice tailored to individual circumstances must always be sought.

With over 35 years’ experience, Debrah Broadfield and Mark Quinn are Chartered Financial Planners (Level 6) and UK Tax Advisers specialising in cross-border advice for expatriates. For a complimentary initial consultation please contact +351 289 355 316 or portugal@spectrum-ifa.com. Alternatively, visit www.spectrum-ifa.com.

Good financial planning can protect your family´s future, save money and provide peace of mind. But where do you start?

When it comes to living in Portugal, understanding key tax rules, your financial options and the right questions to ask, can really make the difference.

1. Tax residency determines where you pay taxes

You cannot choose where to pay your taxes—your tax residency determines this. If you are a tax resident in Portugal, you must declare and pay tax on your worldwide income and gains in Portugal, even if tax is also due in another country. For instance, if you receive rental income from a UK property, tax is due in the UK, but it must also be reported and potentially taxed in Portugal. You will get a tax credit from the UK so you will not pay tax twice, but tax may still be due in both countries.

2. Overseas income must be declared

Some believe that if they do not bring foreign income or assets into Portugal, they do not need to report or pay tax on them. This is incorrect, as Portugal does not operate a remittance-based tax system. All worldwide income and gains are taxable in Portugal, regardless of where they arise.

3. Non-UK long term residency rules and inheritance tax (IHT)

In Labour’s budget in October 2024, the government announced that the concept of UK domicile (which currently determines one´s liability to UK inheritance tax on their worldwide estate) will be  replaced by a residency based system from 6^th April 2025. Therefore, individuals who spend 10 or more years out of the last 20 (before death) will only face UK IHT on UK based assets. Restructuring your asset base outside of the UK can greatly reduce or eliminate any future UK IHT.

4. Estate planning for Portuguese residents

Portugal does not have a direct inheritance tax, but stamp duty at 10% applies to Portuguese assets inherited by non-immediate family members (e.g. siblings, nieces, and nephews). Holding assets outside of Portugal and proper estate planning can help minimise future tax burdens for your heirs.

5. UK pension transfers are not mandatory

If you are living in Portugal, you do not have to transfer your UK pension overseas. Whether an overseas transfer is right for you depends on multiple factors, including how you plan to use your pension. For example, if you intend to withdraw your pension in full, a transfer may be unnecessary and could incur fees without added benefits. However, if you do not intend to use your pension during your lifetime and meet the UK non-long-term residency rules, a transfer could remove your pension from the UK Inheritance Tax net.

6. Plan pension taxation beyond Non-Habitual Residency (NHR)

Foreign pensions, including UK pensions, are generally taxable in Portugal. While NHR offers a temporary reduced tax rate (currently 0% or 10%), this benefit does not last indefinitely. Planning ahead and restructuring during your NHR period could significantly reduce future taxation.

7. Choosing between QNUPS and investment bonds

Investing in a Qualifying Non-UK Pension Scheme (QNUPS) or an investment bond depends on your personal circumstances. However, a key difference is that QNUPS income is always taxable, meaning you may pay tax even if no gain is made or you have made a loss! With an investment bond, only the gain element is taxable, which may be a more tax-efficient option.

8. Investment income is taxable, even if not withdrawn

A common misconception is that if you do not take income from your investments, you will not be taxed. In Portugal, tax is due on an arising basis, meaning income, dividends, and capital gains are taxable when they are paid or realised (sale or switch of any fund/holding), unless held in a tax-efficient structure such as a pension, company, trust, or investment bond.

9. Capital gains tax applies when selling a home

When selling a property in Portugal, 50% of the capital gain is taxed at scale rates. However, main residence relief is available if 100the full proceeds are reinvested into a new primary residence, a pension, or a long-term investment. The latter options allow flexibility to release capital while securing future income.

10. Consider the impact of exchange rates on your income

If you receive income or pensions in a currency other than euros, fluctuations in exchange rates can impact your finances. Using a currency exchange service or planning ahead with fixed-rate transfers can help stabilise your income and reduce the risk of unfavourable rate changes.

With over 35 years’ experience, Debrah Broadfield and Mark Quinn are Chartered Financial Planners and UK Tax Advisers specialising in cross-border advice for expatriates. For a complimentary initial consultation please contact +351 289 355 316 or portugal@spectrum-ifa.com. Alternatively, visit www.spectrum-ifa.com.

The UK’s latest budget announcement has ushered in significant reforms that could transform how British expats manage their pensions and inheritance tax (IHT) liabilities.

These changes, particularly impactful for long-term expatriates, redefine key aspects of domicile, residency, and asset protection. Here’s what you need to know that will affect British expats and why understanding the changes is critical.

From Domicile to Long-Term Residency: a seismic shift
Historically, the concept of “domicile” has been central to determining UK IHT obligations for British citizens. Many expats found that, despite decades abroad, they were still deemed UK domiciled, exposing their global estates to IHT.

The new rules mark a major shift, particularly impacting British expatriates who have been living overseas for extended periods, replacing the concept of domicile with new long-term residence (LTR) rules. Under these new rules, the test for liability to UK IHT will be based on residency.

Those who have lived outside of the UK for at least 10 of the last 20 years will now be classified as non-UK long-term residents. This change means their global assets (except UK based holdings such as pensions, property, investments) will be exempt from UK IHT.

Therefore, expats intending to remain out of the UK for extended periods of time should seriously consider moving assets outside of the UK.

If an individual does not meet the non-residency criteria at death, their entire estate remains subject to UK IHT and the usual rules, exemptions, and tax rates apply.

New incentives: tax breaks on return to the UK
The budget introduced two noteworthy provisions for British expats considering a return to the UK:

1. Four Years of Tax-Free Foreign Income and Gains: The Foreign Income & Gains (FIG) rules allow non-UK LTRs returning to the UK to enjoy tax-free treatment on income and gains from overseas assets for up to four years.

2. 10-Year IHT Exemption: Returning expats can benefit from a 10-year IHT exemption on non-UK assets, provided they are are still classified as non-UK LTRs at the date of death. After this 10 year period, full UK LTR status applies, reinstating IHT liability on worldwide estates.

Pensions, QROPS & QNUPS – what has changed?
Under the revised rules, expats who have previously relied on UK pensions and offshore pension schemes such as Qualifying Recognized Overseas Pension Schemes (QROPS) and Qualifying Non-UK Pension Schemes (QNUPS) to protect their wealth will no longer be sheltered from UK IHT if deemed UK LTR at death.

Moreover, those who are non-UK LTR at death, but still hold UK based pensions will still suffer UK IHT on the pension as it is a UK situ asset.

An added element is how pensions interact with the Portuguese Non-Habitual Residence (NHR) regime and how, once the scheme ends, pension are generally taxed at scale rate of income tax (up to 53% with solidarity taxes).

Therefore, Portuguese residents with or without NHR who are holding UK, QROPS and QNUPS pension holders should revisit their pension planning.

Double whammy tax – 85%
Where death of the pensioner occurs before age 75, beneficiaries receive UK and overseas pension income tax free and post age 75, the beneficiary is taxed at their marginal rates of income tax. There have been no changes to these rules.

However, with the introduction of IHT to pensions, where death occurs after age 75, beneficiaries could be hit with a “double whammy” of 40% IHT and then income tax up to 45% on any drawdown.

Expats holding pensions should therefore be aware of this potential for double taxation and consider restructuring options for their intended beneficiaries.

Other benefits for expats
Most Brits will be aware of the “7 year rule” when making gifts during their lifetime, whereby there is the potential for the gift to be brought back into the UK IHT net if death occurs within 7 years.

An interesting outcome of the budget is, where a non-UK LTR gifts a non-UK asset, the gift is immediately exempt from UK IHT. There is no 7 year waiting period. Moreover, if the donor subsequently returns to the UK this gift will remain outside of the scope of UK IHT, even if death then occurs within the 7 years or the donor becomes a UK LTR again.

Final word
The sweeping changes underscore the importance of careful financial planning for British expats.

Restructuring assets and revisiting long-term strategies are crucial steps to minimise IHT, income and capital gains tax exposure, and to optimise tax efficiency, and those who are intending to be long-term, or permanent expats should certainly revisit their affairs in light of the new changes.

If you would like to discuss your position in detail, please contact us for a confidential and complimentary meeting.

Are you interested in learning more about Succession and Domicile Planning? Join us at our free to attend educational workshop on 7th November, where our speakers will be discussing the 2024 tax landscape, retirement planning options, investment solutions and tax strategies for expatriates living in Portugal.

The workshop will cover:

• Portuguese and UK inheritance taxes: thresholds, rules and allowances
• Succession laws: UK rules, Portugal and forced heirship, Wills and Brussels IV
• IHT mitigation strategies and planning ideas
• Gifting: thresholds, rule and avoiding IHT clawback
• QNUPS: does it really shelter UK IHT in practice
• How to protect family wealth, your beneficiaries and bloodline planning
• How to control family wealth during your lifetime and after your demise
• Open Q&A throughout

Succession and Domicile Planning Workshop
7th November 2024

Date: 7th November
Time: 10am-1pm
Venue: Wyndham Grand Algarve
Quinta do Lago, Av. André Jordan 39, 8135-024 Almancil

Pension Planning and Income Generation Workshop
27th November 2024

Date: 27th November
Time: 10am-1pm
Venue: Wyndham Grand Algarve
Quinta do Lago, Av. André Jordan 39, 8135-024 Almancil

The workshop will cover:

• How different types of pensions are taxed in Portugal
• Where tax should be paid on different types of pension income
• Double taxation and how to avoid it
• Drawdown options and the tax implications
• UK pension changes: LTA abolition, impact on taxation
• Tax planning opportunities: Pre-April 2025 planning window
• QROPS & QNUPS: Do you really need one or should you keep your UK pensions?
• How to pass on your pensions and the implications for your beneficiaries
• Open Q&A throughout

After years, or even decades, of building up your pension and investments, you eventually reach the point where you want to start drawing from these savings. This marks the transition from the accumulation phase of your financial life to the decumulation phase.

Navigating this phase effectively can make a significant difference to your financial well-being and your legacy. Below, we outline five key rules to help ensure that your withdrawals are both tax-efficient and investment-savvy.

1. Only withdraw your lump sum if necessary
Under UK pension rules, you can withdraw 25% of your pension fund tax-free. This is known as the “Pension Commencement Lump Sum.” Whilst this payment is tax free for UK residents, those living in Portugal must report and pay tax (unless 0% NHR) on this sum.

If you have a specific plan for this money, such as paying off a mortgage or clearing other debts, withdrawing the lump sum may be a wise choice. However, if you don’t have an immediate need for it, it might be better to leave the funds in your pension, where they can continue growing tax-free.

Another key consideration is inheritance tax (IHT). Currently, pension funds are exempt from UK IHT. By taking money out of your pension, you may unintentionally move it into your taxable estate. This is fine if you plan to spend the funds, but it could be inefficient if you are simply holding on to or reinvesting the cash.

2. Dynamic withdrawals
When withdrawing from your investments, striking the right balance between enjoying your lifestyle now and securing your financial future is crucial. Some people prefer to prioritize their current lifestyle, while others aim to leave a larger estate for their beneficiaries.

Market conditions should also influence your decisions. For instance, if stock markets have risen, it might be wise to take profits. Conversely, during market downturns, you might choose to reduce your withdrawals until conditions improve.

Cashflow planning can also help you plan for the future. Forecasting allows you to balance your spending today with the need to preserve funds for the future. It also allows you to adjust for variables like inflation, market performance, and unexpected expenses, helping to prevent the risk of outliving your savings while maintaining your desired lifestyle.

3. Plan for the long haul
Many people underestimate their life expectancy when planning for retirement. A couple in their mid-60s today has a good chance of living well into their 80s or even beyond 100. This means it is important to plan (and think in) decades rather than just a few years.

This increased longevity has important implications for how one should invest. In the past when life expectancy was much shorter, retirees often moved their portfolios into lower-risk assets like bonds or cash but with people living longer, this approach is no longer be suitable.

To ensure long-term growth, it’s essential to maintain a healthy allocation of growth-oriented assets such as shares, while balancing this with safer investments like fixed income and cash. The exact mix will depend on your risk tolerance and other income sources.

4. Review Your Plan Regularly
Global markets and tax laws are constantly changing, which is why it is crucial to review your portfolio regularly against this ever-changing backdrop.

This includes keeping up with changes in tax laws across multiple jurisdictions, for example UK pensions has seen huge changes recently and further changes are expected in the next UK Budget. Adapting to new rules in both the UK and Portugal, can help you avoid costly mistakes and optimise your financial strategy.

5. Control Fees and Taxes
While you can not control market movements, you can manage two major eroders of wealth: taxes and fees.

People often end up paying tax in the wrong country or, worse, in multiple countries at once. Additionally, many fail to take advantage of the tax reliefs and allowances available to them.

Regularly reviewing your financial arrangements can help ensure that your investments and pensions are tax-efficient and that you are not overpaying in fees.

Final word
By following these five rules, you can better navigate the transition to decumulation, ensuring that your hard-earned savings continue to work for you in a tax-efficient and financially secure way.

LONDON, THURSDAY 17TH OCTOBER

Pestana Chelsea Bridge Hotel
354 Queenstown Road London SW11 8AE

Escape the ordinary, embrace the extraordinary, and discover why Portugal is the perfect present for your future.

On Thursday 17th of October 2024, our Moving to Portugal Show & Seminars will return to central London. This one day event, which opens at 10.30am and closes at 7.30pm, mixes live seminar presentations and expert panel discussions with carefully selected exhibitors, who can give you all the information you need on how to make your business or lifestyle move to Portugal a success from day one.

You can learn all about the different visa, residency and tax rules, and how daily life works in terms of jobs, schools, health and the cost of living. You can also learn about investing in Portugal, from the managers of some of the country’s top investment funds who will explain their investment strategies and why some funds are eligible for Portugal’s well known ‘residency by investment’ Golden Visa programme.

If it’s a quiet life you want, come and find out why retiring to Portugal makes good financial sense.

Come and meet our very own team of experts who live and work in Portugal – this means they understand exactly what its like to move to another country. Are team will be presenting and sharing valuable insights on maximising pensions, investments, and estate planning in Portugal.

We are also encouraging the in-person visitors on the day to book one to one meetings in advance with our advisers, or to book a Zoom call or video call with them if you prefer not to attend in person.

Contact our team direct to book your appointment: portugal@spectrum-ifa.com

GOOD NEWS !

Many expats who were eligible for NHR status didn’t apply—either because they weren’t aware of the program or received incorrect advice—resulting in unnecessary tax payments.

Following a recent ruling from Portugal’s Supreme Administration Court, it may still be possible to apply for Non-Habitual Residence (NHR) status – even if you missed the initial deadline.

The detail
To qualify for NHR status, one of the key requirements is that you must not have been a tax resident in Portugal for the five years preceding your arrival and application.

Traditionally, the deadline for NHR applications is 31st March in the year following the start of your tax residency e.g. if you became resident on 1st June 2017, the application deadline was 31st March 2018.

As a result of this ruling, if you were eligible at the time of arrival in Portugal you may still apply for NHR, although the NHR period will start from your original residency date i.e. if you became tax resident on 1st June 2017, the end date of NHR will be 2026.

NHR – a taxation no brainer
To recap, the benefits of NHR lasts 10 years and offers:

• 0% tax on foreign dividends and interest
• 0% tax on capital gains from non-Portuguese property
• 10% income tax on foreign pensions
• 20% tax on income from “high-value” professional activities

These benefits make NHR one of the most attractive tax regimes in Europe. If you’re eligible under this new ruling, it is highly advisable to consult with your lawyer or accountant to review your status and potentially apply.

If you need any assistance in evaluating your investment and pension planning in light of NHR, we would be pleased to assist.