Portugal will always be popular with British pensioners for many reasons – and if you are one of these then you will need to assess the best way to transfer your pension into the country, and how and where you pay tax on this.

If you receive a UK state pension, this will usually be paid into your UK bank account – which makes it a good idea to ensure this bank account remains income after your move. If you have money crediting this account regularly, your bank will usually not object to your changing your contact address to one in Portugal.

The best way to draw this money out in Portugal is to set up a Regular Payments Plan with Smart Currency Exchange.

If this is how you receive your pension, the best way to draw this money out in Portugal is to set up a Regular Payments Plan with Smart Currency Exchange. There is no fee for this service and all you will need to do is set up a standing order that automatically sends your funds at a pre-agreed exchange rate at pre-agreed intervals (usually monthly for a UK pension) – giving you the chance to plan your budget with price certainty.

You should receive a pension claim form from the UK Pension Service in the months before you retire. If you move to Portugal before you receive this, you must make sure that they have your new address in Portugal so that you continue to receive all important documentation.

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You will be taxed on your pension and it’s a good idea to speak to a qualified financial advisor who can help you make sure everything is right with these.

 

Taxes on pension income

As with all tax concerns, when it comes to tax on your pension, we would highly recommend speaking to a qualified financial advisor [LINK] who can assess the best options to ensure you don’t pay tax on the same funds twice. Fiscal residency in Portugal is determined by quite specific criteria – and broadly speaking, once you become properly resident in Portugal, and cut ties with the UK, you will be taxed in Portugal on your worldwide income. One exception to this is if you are in receipt of a forces or public service pension – these pensions are always liable for tax in the UK.

There are different tax criteria in Portugal, however, and you may well find out that certain tax deductions and allowances give you more disposable income to fund your life in Portugal.

Get in touch with an Independent Financial Advisor

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