Leaving the UK for Portugal? The tax “exit costs” people don’t see coming.
- Steve Thompson
- Dec 17, 2025
- 4 min read
Helping UK families with £1m+ assets move to Portugal with clarity, confidence, and tax-smart planning | Published author | Founder & CEO | Chartered Fellow FCSI | “Steve helped us avoid costly mistakes during our move.”
December 17, 2025
Moving abroad is exciting… until you realise the UK doesn’t need a formal “exit tax” to make your departure expensive.
In reality, the cost often shows up in quieter ways: reliefs you lose, allowances that no longer apply, pension rules that change direction, and cross-border admin that catches people out. pasted
At Atlas Bridge Wealth, we help UK families moving to Portugal line things up before they change tax residency, because timing is usually where the biggest wins (or mistakes) happen.
“We thought we’d just ‘move to Portugal’… but it turns out we were switching tax rulebooks mid-chapter. Having it mapped out properly saved us a lot of stress, and likely a lot of tax. Steve really helped with this"
First job: don’t accidentally fall back into the UK tax net
The biggest early risk is simple: spending too many days in the UK and unintentionally becoming UK tax resident again under the Statutory Residence Test (SRT). Depending on your ties, your allowance can be surprisingly low.
This is why we encourage clients to treat travel like a compliance exercise for the first couple of years:
track days properly (use ChatGBT if necessary for this or a planner)
keep evidence (boarding passes, receipts, calendars)
be careful with UK “ties” (home, work, family, etc.) pasted
And zooming out: from 6 April 2025, UK IHT moved onto a long-term residence footing (broadly, if you’re UK tax resident for 10 out of the last 20 tax years, your overseas assets can be dragged into scope). That adds extra urgency to clean planning and clean records.
The reliefs you may lose the moment you become Portugal-resident
UK Private Residence Relief (PRR)
While UK residents can often sell their main home without UK CGT because of PRR, once you’re Portugal tax resident the picture changes: Portugal doesn’t mirror the UK’s PRR concept in the same way, and property sale timing can become a big deal. I wrote a previous article around this, you can view that here: https://www.linkedin.com/pulse/selling-your-uk-property-from-portugal-heres-tax-twist-steve-thompson-iv56f
Business Asset Disposal Relief (BADR)
BADR (ex-Entrepreneurs’ Relief) is another one that trips people up. The UK rules have changed: 14% on qualifying disposals from 6 April 2025 (and widely reported to rise further from 6 April 2026).
But the key “moving abroad” point is the one many people miss: your tax residence can determine how gains are treated, and treaty interaction matters. pasted If you’re selling a business, selling shares, or exiting anything meaningful — get the sequence right before the move.
“25% tax-free cash” (PCLS) doesn’t travel well
The UK’s pension commencement lump sum is a UK incentive. Portugal doesn’t automatically recognise “tax-free cash” the same way — so withdrawals can be treated very differently once you’re resident in Portugal. pasted
Pensions: the planning conversation has changed (again)
For years, many people treated pensions as a near-perfect inheritance planning tool. But the landscape is shifting:
UK IHT on pensions from April 2027
The UK government has published measures indicating that most unused pension funds and death benefits will be brought into the value of the estate for IHT from 6 April 2027.
That doesn’t mean “empty your pension at all costs”, but it does mean the old assumptions need reviewing, especially for larger funds and for clients with cross-border beneficiaries.
QROPS transfers and the 25% charge
Since 30 October 2024, the UK removed an exclusion that previously helped some transfers to EEA/Gibraltar QROPS avoid the 25% Overseas Transfer Charge. So, for many people, a transfer is no longer a casual “admin tidy-up”, it’s a major cost/benefit decision (think 25% vs IHT of 40%?).
Can you still contribute after leaving the UK?
Often, yes, but the rules tighten. A common rule of thumb is:
in the tax year you leave: up to 100% of relevant UK earnings
then up to £3,600 gross per year for up to five tax years, if conditions are met.
The “hidden” cross-border traps that cause messy (and expensive) outcomes
A few we flag early:
Company residency risk: if you’re effectively running a UK company from Portugal (especially as sole director), you can create unwanted corporate residence issues.
Permanent establishment: continuing business activity from Portugal can trigger local corporate tax exposure.
Temporary non-resident rules: returning to the UK within five years can expose certain gains/income realised while away.
This is the stuff that doesn’t sound dramatic, until it is.
“Wealth tax” - not confirmed, but the direction of travel matters
There’s no UK net wealth tax today, but the topic keeps resurfacing in policy discussions and think-tank commentary. Whether or not anything materialises, the bigger point is this: the UK tax environment is evolving, and cross-border planning works best when it’s done proactively rather than reactively. pasted
A simple “before you move” checklist
If you want to reduce surprises, here’s a practical starting list:
Map your UK day-count / ties position for the next 2 tax years
Identify any “big events” you might trigger soon (property sale, business exit, pension crystallisation)
Review pension strategy in light of April 2027 IHT changes
Check whether you have any EIS/SEIS positions still in qualifying periods
If you have a UK company, get advice on management/control, PE risk, and practical operating structure
Final thought
Tax-efficient emigration isn’t about “escaping tax”. It’s about moving jurisdictions cleanly, avoiding accidental mistakes, and making sure the order of decisions doesn’t cost you money unnecessarily. pasted
If you’re planning a move to Portugal — or you’ve already moved and want a second opinion — Atlas Bridge Wealthcan help you build a clear, joined-up plan alongside the right tax and legal specialists.
General information only. this is not tax advice. Cross-border outcomes depend on individual facts, timing, residency status, and the exact nature of assets and income.
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