Why UK tax uncertainty is driving interest in Portugal

Why Are UK Residents Looking Elsewhere?

The prospect of increasing tax rates in the UK, combined with the abolition of the non-domiciled regime, has accelerated interest in relocating from the UK. For individuals born in the UK, the shift to a residency-based inheritance tax (IHT) regime means it is now easier to remove non-UK situs assets from the scope of UK IHT. Meanwhile, those who were previously non-UK domiciled are reassessing how long they wish to remain UK resident, given the erosion of historic advantages.

For those who do choose to leave the UK, many will retain ties – whether through family, property, or business interests. This makes it critical to monitor time spent in the UK as becoming UK resident again can have significant tax implications and may trigger anti-avoidance provisions. Careful planning and ongoing review are essential to avoid unintended tax consequences.

Why Portugal? Stability and Opportunity

Against this backdrop, Portugal offers a combination of stability and predictability that contrasts sharply with the current mood in the UK. The recently introduced IFICI regime, which replaced the former Non-Habitual Resident (NHR) regime, provides a ten-year period of favourable tax treatment for new residents. Under IFICI, qualifying foreign-source income such as dividends, interest, and capital gains can benefit from significant exemptions, creating an attractive framework for business owners, entrepreneurs, and high-net-worth individuals seeking a long-term relocation option.

Beyond IFICI, Portugal’s tax system boasts structural advantages:

• No wealth tax, unlike several European countries.
• No inheritance or gift tax between parents and children, easing succession planning.
• A moderate cost of living, excellent climate, and strong infrastructure for international schools and healthcare.

For British nationals post-Brexit, residency remains accessible through visas such as the D7 (passive income), D2 (entrepreneur), and the digital nomad visa for remote workers. Once settled, new arrivals can register under the Portuguese tax system and apply for available regimes.

New International Tax Desk in the Algarve

To support clients considering a move to Portugal, Forvis Mazars has launched a dedicated International Tax Desk in Quinta do Lago in the Algarve. This hub provides on-the-ground expertise for individuals and families navigating cross-border tax planning and relocation strategies.

From January 2026 through to the end of June, UK private client tax advisors will be available at the Algarve desk to offer tailored guidance on UK and Portuguese tax matters. This initiative ensures clients receive seamless, integrated advice during the critical planning and transition period.