Tax planning before your move to Portugal
Your worldwide estate and how it will be affected must be one of your highest considerations when you’re moving to Portugal. How can you ensure that you can continually maximise your income and the interest from your pensions and other assets, even after you leave the UK?
One of the best ways to look at this is by seeking the advice of a professional, independent financial advisor, who will be able to discuss your situation with you and assess your options. There are a number of things that you must do before you go, including notifying HMRC about your departure from the UK. This is a formality, especially as there could be tax implications from leaving behind a let property in the UK, but it could also result in a tax rebate for you.
If you are moving to Portugal under retirement age, you may find that there are UK state pension benefits to continuing National Insurance contributions after you have moved. If you are already paying into your UK pension, you may find that you can continue paying in and receive tax relief.
It’s really important to assess your life insurance or savings policies before you go, to see how relevant these will be in your new life in Portugal. You will also need to look at any ISAs that you have, because you will generally find that non-residents of the UK can no longer contribute to these. Additionally, if you hold large cash balances in the UK, it would be wise to decide what to do with this.
There are a number of things that you must do before you go, including notifying HMRC about your departure.
If you deal with tax returns in the UK, you will need to make sure that you act correctly with these – especially as there are often significant penalties for the late submission of these. You will also need to discuss inheritance laws and any other taxation that may affect you – Portuguese laws will often be different from those you are used to in the UK, so you will need to make sure everything is protected.
You will also need to assess the implications of the Statutory Residence Test and your residence status.
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 [LINK] 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!
Get in touch with an Independent Financial Advisor
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