UK Portugal tax advisor: the new treaty, FIG and TRF, and what both sides ask about.

About Taxbordr: founder-led UK Portugal tax advisor

Taxbordr is a Portugal-registered cross-border tax practice run by Telmo Ramos, member of the Ordem dos Economistas (Cédula nº 16379), based in Lisbon, with prior Big Four experience at KPMG Luxembourg and EY Lisbon. We work with British residents, dual UK-PT citizens, and UK accountants whose clients have moved or are about to move to Portugal. Most engagements are either a Tax Position Review before move, an IFICI eligibility decision, or coordinated annual filing once Portuguese residency is in place. We do not file UK returns. We work alongside the client's UK accountant on UK-side mechanics (DT-Individual relief claims, P85 timing, FIG and TRF claims, SIPP wrapper questions) and own the Portuguese return, the AT correspondence, and the Modelo 3 Anexo J position.

The new UK-PT Double Taxation Convention (in force 29 December 2025)

The 1968 UK-PT treaty was replaced by a new Convention that entered into force on 29 December 2025. The two sides operate on different effective dates. Portugal applies the new withholding rates from 1 January 2026. The UK applies the new rules to Income Tax and Capital Gains Tax from 6 April 2026 (the start of the UK tax year 2026/27) and to Corporation Tax from 1 April 2026. Two structural changes matter for individuals. First, the Convention contains an OECD Principal Purpose Test (PPT): treaty benefits can be denied if obtaining them was a principal purpose of an arrangement, even where the literal article applies. Second, gains on shares deriving more than 50% of their value from immovable property in the other state may be taxed in that state (the property-rich shares rule), which closes a route some structures relied on. Pension articles, the dependent-personal-services rule, and the methods for relief from double taxation should be read against the new text, not the 1968 treaty.

UK 2025 reforms: remittance basis, FIG regime, TRF

The remittance basis ended on 6 April 2025. New UK arrivals after 10 consecutive tax years of non-residence can claim the FIG (Foreign Income and Gains) regime for four UK tax years: foreign income and gains arising during that window can be brought to the UK without UK tax, subject to the FIG conditions. For UK residents who used the remittance basis under the old regime, the Temporary Repatriation Facility (TRF) lets pre-6-April-2025 unremitted foreign income and gains be designated and brought onshore at flat rates: 12% for designations in tax years 2025/26 and 2026/27, and 15% in 2027/28. UK Inheritance Tax moved to a residence basis with Long-Term Resident (LTR) status, broadly UK tax residence in at least 10 of the previous 20 tax years. Departure does not stop the LTR clock immediately. None of these are Portugal-side decisions, but they shape the order of operations on the UK side and the dates we anchor the Portuguese filing position to.

Portugal residency: the rolling 12-month test

Portuguese tax residency is set by CIRS art 16. The two main triggers are 183 days of physical presence in Portugal in any 12-month period beginning or ending in the year, or, on any day of that period, having a dwelling in Portugal under conditions that suggest habitual residence (the *habitual abode* leg). The 183-day test is a rolling window: the year of move and the year of departure can both be partial-year residency years if the rolling window straddles a calendar boundary. CIRS art 16 also has the special expat-return regimes (the residente não habitual transitional rules, IFICI under EBF art 58-A) that pivot off the residency start date. Getting the residency start date right is the first decision on every UK move file. It changes which country gets first taxing rights on disposals, dividends, and pension lump sums in the move year.

UK pensions: State Pension, occupational, SIPP

The UK State Pension is paid gross. The frequent advice to "submit a P85 to stop UK withholding" misses that there was no withholding to stop. State Pension receipts are reported in Portugal on Modelo 3 Anexo J as Category H (pensions). UK occupational pensions and SIPP withdrawals are Category H in Portugal as well. SIPP flexible drawdown income, UFPLS, and lump sums under the lump-sum allowances are taxable in the residence state under the private-pensions article of the new Convention. Government-service pensions (UK civil service, armed forces, certain teacher schemes) generally remain taxable at source under the government-service article: those flow as Anexo J informational entries with foreign tax credit limited by the treaty allocation. For PAYE-coded UK pension payers that have applied withholding by mistake, the tool is Form DT-Individual (claim under the relevant article of the Convention) lodged with HMRC. The new Convention does not change the DT-Individual mechanic.

ISAs, Premium Bonds, and brokerage accounts

ISAs are not tax-free in Portugal. Portuguese tax law looks through the wrapper. Income and gains inside a Stocks and Shares ISA are reportable in Portugal as if held in a normal brokerage account (dividends Cat E, gains Cat G under CIRS art 10). The same applies to a Cash ISA: interest is Cat E. Premium Bond prizes are reportable. Spread-betting gains, exempt in the UK, may be taxable in Portugal depending on classification. UK brokerage accounts that withhold dividend tax need a treaty review: under the new Convention, the dividend article sets the withholding ceiling, and the Portuguese Foreign Tax Credit on Modelo 3 is capped at that treaty rate. Anything above the treaty rate is recoverable on the UK side.

National Insurance and Portuguese Segurança Social

The UK is no longer in EU Regulation 883/2004. The 2019 UK-PT social security agreement covers some, but not all, of the same ground. For employed and self-employed individuals moving to Portugal, the default is enrolment in Portuguese Segurança Social from the start of activity in Portugal, with the UK-PT agreement available for posted-worker situations. Voluntary Class 2 / Class 3 NICs in the UK are a separate question: continuing them while a Portuguese resident is administratively allowed but not always optimal. We document the position and hand the UK side back to the UK accountant.

UK Inheritance Tax: residence basis and the LTR clock

IHT now follows residence, not domicile. An individual is in scope as a Long-Term Resident if UK tax resident in 10 of the last 20 tax years. The clock continues to run after departure: a former 10-of-20 LTR can stay in scope for several years post-move. Portuguese Stamp Duty (Imposto do Selo) treats family transfers as exempt under CIS art 6 alínea e): spouses, descendants, and ascendants pay no Imposto do Selo on inheritance or gift, regardless of value. Non-family transfers in Portugal pay 10% (Verba 1.2 TGIS). The IHT-vs-Imposto-do-Selo gap is real for British clients with UK-situs assets and a Portuguese estate plan: it is a planning conversation before the LTR clock matters, not after.

Common UK move mistakes we re-litigate

Treating the ISA as tax-free in Portugal. It is not.

Filing a P85 expecting it to "stop withholding" on the State Pension. The State Pension was already gross.

Forgetting Form DT-Individual where a UK pension payer has applied a UK PAYE code in error.

Citing the old 1968 treaty after 1 January 2026 (PT side) or 6 April 2026 (UK side).

Ignoring the Long-Term Resident IHT clock at departure: a 10-of-20 LTR profile does not stop on the day of move.

Using "Article 16 CIRS" as a residency citation. CIRS art 16 is the residency test on the Portuguese side. The UK residency test is the Statutory Residence Test (SRT), which is not in CIRS at all.