Wealth planning turns attention to Portugal

  • 16 September, 25

From April 2027, changes to Inheritance Tax in the UK will see unused pension pots become subject to duties of up to 40%, with Income Tax also applied to remaining funds.

The change means that families planning to pass wealth down to future generations now need to reassess their position and consider alternative options. One option that is increasingly coming to the fore, according to tax and wealth planning advisory Sovereign, is swapping the UK tax regime for the favourable taxation schemes of Portugal.

Portugal presents both taxation and lifestyle benefits for those happy to relocate to the sunshine. The country abolished Inheritance Tax in 2004; since then, it has charged no tax in relation to inherited assets to direct heirs. A 10% flat rate stamp duty on the value of inherited assets that are located within Portugal applies to siblings, more distant relatives and unrelated individuals – still a significant saving compared to the UK’s approach.

Specialist international tax firm Forvis Mazars points out the value of thinking in the medium to long term about such plans, with residency rules, anti-avoidance provisions, double tax treaties, and the UK’s temporary non-residence regime all needing consideration. The firm emphasizes the value of timing, particularly for UK residents with properties and/or businesses to sell as part of their relocation plans.

Cre: theportugalnews

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