Portuguese taxes for Brits: leaving the UK system, the new treaty and your State Pension

Once you're tax resident in Lisbon, Portugal taxes your income from everywhere. The trick is to leave the UK system cleanly and let the brand-new UK–Portugal treaty decide who taxes what.

The short version

• Portugal taxes residents on worldwide income through IRS (Imposto sobre o Rendimento das Pessoas Singulares), with nine bands running from 12.5% to 48% in 2026 [6].
• You're resident if you spend more than 183 days in Portugal in any 12-month period, or if you have a home here you clearly mean to live in [7].
• The UK taxes by residence, not citizenship: tell HMRC you've gone with form P85, or the SA109 pages if you file Self Assessment [1].
• A new UK–Portugal Double Taxation Convention, signed in September 2025, replaced the 1968 one from 2026. Private and State Pensions are taxed only where you live; UK government service pensions stay with the UK [2][3].
• Your UK State Pension still rises every April in Portugal, as it would back home [4].

When Portugal treats you as resident

Portugal's tax year is the calendar year, not the UK's April-to-April one. Under Article 16 of the IRS Code, you're tax resident if, in any 12-month period that starts or ends in the tax year, you either [7]:

1. Spend more than 183 days in Portugal, in a row or in bits. Any day or part of a day that includes a night here counts.
2. Have accommodation on any day of that period in conditions that suggest you mean to keep it and live in it as your habitual home.

Residence starts on your first day here, so the year you arrive is usually split: Portugal taxes you as a resident from the day you land, and as a non-resident (on Portuguese income only) before that [7]. That fits neatly with the UK's split-year treatment, more on which below.

Signing a 12-month lease in Campo de Ourique can make you resident under the second test before you've clocked up 183 days. If both countries claim you, Article 4 of the treaty breaks the tie by looking at your permanent home, then your centre of vital interests, then where you habitually live, then nationality [3].

IRS: how much Portugal takes

The Tax and Customs Authority (the Autoridade Tributária, or AT, the Portuguese equivalent of HMRC) publishes the 2026 rates under Article 68 of the IRS Code. Tax works like the UK's: each slice of taxable income pays its own rate [6].

Source: AT, Sistema Fiscal Português – Taxas Aplicáveis 2026, May 2026 [6]. Pound conversions use the Bank of England spot rate of 5 November 2026 (£1 = EUR 1.2002).

On top of that comes a solidarity surcharge (taxa adicional de solidariedade) of 2.5% on taxable income between EUR 80,000 and EUR 250,000 (about £66,660 to £208,300), and 5% above that [6]. Most investment income, such as interest and dividends, is taxed separately at a flat 28%, though you can choose to add it to your other income if that works out cheaper [6].

Two things surprise Brits. First, there's no UK-style personal allowance; instead, each type of income has its own deduction, low incomes are protected by a minimum-income rule (the mínimo de existência), and there are tax credits for things like health and school costs, which is why children need a NIF of their own. Second, married couples and civil partners can choose joint taxation. Your NIF (tax number) is the key to all of it; see NIF, NISS and AIMA.

Returns and deadlines

You file a Modelo 3 return each spring for the previous calendar year, online on the Portal das Finanças, between April and the end of June. UK income goes on Anexo J, the foreign income annex. Many Brits pay a contabilista (an accountant) for the first year, which is money well spent when the forms are in Portuguese.

Leaving the UK tax system properly

The UK doesn't stop taxing you because you've bought a navegante pass.

1. Check the Statutory Residence Test for the year you go. See the Statutory Residence Test explained.
2. Tell HMRC. Use form P85 if you don't normally file a return, with parts 2 and 3 of your P45. If you file Self Assessment, use the SA109 residence pages instead; you can't tell HMRC online that you're leaving [1].
3. Claim split-year treatment if you qualify, so the Portuguese part of the year stays out of UK tax. See split-year treatment.
4. Keep proof of the move: your Lisbon lease, your residence card, flights and Portuguese payslips.

After that, as a non-resident you pay no UK tax on income from outside the UK, but you may still owe it on UK income such as rent [1].

The new UK–Portugal treaty: who taxes what

This is the big change for 2026. The 1968 convention has been replaced by a new one signed in London on 15 September 2025, which came into force on 29 December 2025. It applies in Portugal from 1 January 2026 and in the UK from 6 April 2026 for income tax and capital gains tax; the old treaty still covers income from before those dates [2][3].

Portugal removes double taxation by a credit: it deducts the UK tax paid on income the UK is allowed to tax, up to the Portuguese tax on that income [3]. There's no special clause clawing pensions back to the UK if Portugal taxes them lightly [3].

Two points worth knowing:

• Government pensions. If you draw a teacher's, NHS or civil service pension, it stays taxable in the UK under Article 18. Portugal may still take it into account when working out the rate on your other income, so get it checked.
• Private pensions paid with UK tax taken off. If a UK pension provider is still deducting tax, you can ask HMRC to pay it gross and refund any overpayment under the treaty, using the double taxation relief claim form (DT-Individual). Our guide to double taxation agreements and reliefs explains how.

UK rent still goes through HMRC on the UK side, including the Non-Resident Landlord Scheme, and Portugal then gives credit for the UK tax. See UK income while you live abroad.

Your UK State Pension in Portugal

The good news first: Portugal is in the EEA, so your State Pension goes up every April just as it would back home in Blighty [4]. The full new State Pension is £241.30 a week in 2026/27 [5], about £12,550 a year or roughly EUR 15,060.

Under the 2025 convention it's taxed only in Portugal [3]. It's paid gross, so it goes on Anexo J of your return and is taxed at the IRS rates above. Add a workplace pension and you'll climb the bands quickly, because Portugal's are narrower than the UK's. See the UK State Pension abroad for claiming from abroad.

What about the famous NHR regime that let pensioners pay little or nothing? It closed to newcomers from 2024. People already registered keep it for the rest of their ten years, and the AT's 2026 rate tables still list a special 10% rate for NHR pensions [6]; some early registrants are on older terms. Its replacement, IFICI, doesn't cover pensions at all; After NHR: Portugal's IFICI tax regime explains who still qualifies for what.

Never transfer a pension because of a move. A UK pension can be paid to you in Lisbon as it is. Transfers to overseas schemes need regulated financial advice, can trigger the overseas transfer charge, and attract scammers; read the FCA and MoneyHelper warnings first. See UK workplace and private pensions abroad.

ISAs and the other loose ends

An ISA is tax-free only in the UK. As a Portuguese resident, the income and gains inside it are taxable in Portugal like any other investment income [6]; see ISAs when you move abroad. Remote workers for a UK employer should read working abroad for a UK employer.

The FCDO's advice is short and sensible: consider professional advice on paying tax in Portugal [8]. A tax adviser who knows both countries can check your situation, especially in your first year. And for a reality check from people who've survived their first Anexo J, try our community group for Brits in Portugal.

Sources

1. GOV.UK: Tax if you leave the UK to live abroad
2. GOV.UK (HMRC): Portugal tax treaties (2025 convention confirmed in force on 8 January 2026)
3. GOV.UK (HMRC): 2025 UK–Portugal Double Taxation Convention, in force
4. GOV.UK (DWP): Countries where we pay an annual increase in the State Pension
5. GOV.UK: The new State Pension, what you'll get
6. Autoridade Tributária: Sistema Fiscal Português – Taxas Aplicáveis 2026 (May 2026)
7. Portal das Finanças: Código do IRS, Article 16 (residence)
8. GOV.UK (FCDO): Living in Portugal (last updated 10 July 2026)

Keep reading

• After NHR: Portugal's IFICI tax regime
• Banking in Portugal as a Brit
• Double taxation agreements and reliefs
• Leaving the UK: telling HMRC (P85) and your last tax year