Retiring from the UK to Portugal: What Changes, and How Much You Need
A 2026 guide for Britons planning the move
Figures current as of October 2026. Edited by The Pensora Team. Education, not personal advice. See Important information at the end.
Portugal has long been a favourite with British retirees: the Algarve, Lisbon, the Silver Coast, and a cost of living well below the UK's. Two things changed recently. Brexit turned Britons into non-EU movers who need a visa, and a brand-new UK–Portugal tax treaty took effect at the start of 2026, replacing one signed in 1968. Much of what you'll read online was written before either. Here's how it works now.
In short Most new British retirees need Portugal's D7 visa, which asks for €920 a month of passive income in 2026. Under the new tax treaty, Portugal taxes your UK State Pension and private pensions once you're resident, and the UK stops. Government pensions (civil service, armed forces, police, most teachers) stay taxed in the UK. The ten-year NHR tax break is closed to newcomers. The 25% tax-free lump sum isn't tax-free in Portugal. Once you draw your State Pension, the UK can pay for your Portuguese healthcare. Moving a pension into an overseas scheme can cost 25%.
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1. How much you need
Work it out in one line: annual cost, minus state pension, divided by a safe withdrawal rate. For a 30-year retirement, Morningstar puts that rate at 3.9% [1].
Our working estimate for a comfortable year on Portugal's coast is about €33,000 per person (mid-2026). Inland towns cost less; Lisbon, Cascais and the busier parts of the Algarve cost more.
The full new State Pension is £241.30 a week from April 2026, about £12,548 a year [2]. At €1.15 to the pound (an illustration, not a forecast), that's roughly €14,400:
€33,000 yearly cost − €14,400 State Pension = €18,600 for your savings to cover €18,600 ÷ 3.9% = about €477,000
Two warnings. The State Pension age is rising from 66 to 67 between 2026 and 2028, so stopping work at 65 means your savings carry everything until it starts [3]. And a weaker pound shrinks your pension in euros. Run the free Global Retirement Portability Check for the UK → Portugal route. It takes about a minute, and you can set the state pension to match your own forecast.
Reminder: education only, not financial, tax or personal advice.
2. The right to live there
If you were legally living in Portugal before 1 January 2021, the Withdrawal Agreement protects your rights for as long as you stay [4]. Everyone else now moves as a non-EU national.
Most retirees use the D7 visa, built for people living on pensions or investment income [5]. The income bar is tied to Portugal's minimum wage: in 2026, €920 a month for the main applicant, plus €460 for a spouse and €276 per child [6]. That's the legal floor, not a budget, and consulates can ask for more evidence. Without a visa, you're limited to 90 days in any 180.
3. Who taxes what
When Portugal starts taxing you. You generally become Portuguese tax resident after more than 183 days in a 12-month period, or once you keep a home there as your usual residence [7]. Portugal then taxes your worldwide income, at progressive rates from 12.5% to 48% [7]. The Non-Habitual Resident regime (NHR), the ten-year break many older guides still describe, closed to new applicants in 2024; people already registered keep it until their ten years run out. Its replacement, IFICI, targets certain research and innovation jobs, not retirees [7].
The new treaty. The UK and Portugal signed a new tax treaty in September 2025. It entered into force on 29 December 2025 and replaced the 1968 one [8]. Some websites still describe the old rules, so check the date on anything you read:
| Income | Portugal | United Kingdom |
|---|---|---|
| UK State Pension | Taxes it, at normal progressive rates | Doesn't tax it |
| Workplace and private pensions, including SIPPs | Taxes them | Stops taxing once HMRC accepts your residence |
| Government service pension | Doesn't tax it, unless you're a Portuguese national | Taxes it |
| Pension lump sum, including the "tax-free" 25% | Taxes it as pension income | Doesn't tax it |
| ISA interest and dividends | Usually taxes them at a flat 28% | Doesn't tax them |
The UK State Pension isn't a government service pension under the treaty, so it goes to Portugal like any private pension [8]. Government service pensions, such as civil service, armed forces, police and most teaching pensions, stay with the UK. Whether an NHS pension counts as government service depends on the scheme, so check yours [8].
A worked example. A single retiree aged 67 receives €30,000 a year from a UK State Pension and a workplace pension, with no other income.
Portugal deducts €4,587 from pension income first, leaving €25,413 to tax [7]. Under the 2026 rates, that comes to about €4,800, roughly 16% of the €30,000 [7]. Deductions for health and household costs can trim a few hundred euros more. UK tax: nothing on this income [8].
Reminder: education only, not financial, tax or personal advice.
4. Your pensions and savings
Leaving pensions in the UK is often allowed and sometimes sensible. Check whether your provider will keep serving you at a Portuguese address.
Moving them abroad got dearer. Since 30 October 2024, transferring a UK pension into an overseas scheme (QROPS) in the EU usually triggers a 25% overseas transfer charge, unless the scheme is based in Portugal itself [9]. HMRC publishes the list of recognised overseas schemes, so you can check what exists before anyone suggests one. An international SIPP keeps the money inside UK rules. For defined-benefit (final salary) pensions worth more than £30,000, UK law requires advice from an FCA-authorised specialist before any transfer [10].
The lump sum. The 25% tax-free cash is a UK rule. Take it after you become Portuguese resident and Portugal taxes it like the rest of your pension [8]. Whether to take it before you move is a decision to make with an adviser: cash outside a pension loses its shelter and its future growth is taxed.
Filling gaps in your record. Since 6 April 2026, you can no longer pay cheap Class 2 contributions from abroad. Only Class 3 remains, and new applicants need a ten-year UK link [11]. Check your State Pension forecast before you leave.
Currency. If your pensions arrive in pounds and you spend euros, a 10% fall in the pound is a 10% pay cut. Decide how much of your savings should sit in euros, and move toward it gradually. The free Borderless Retirement Blueprint has a full UK ↔ EU chapter on pensions, transfers and the traps above.
Reminder: education only, not financial, tax or personal advice.
5. Healthcare
Once you draw your UK State Pension, you can usually register an S1 form, and the UK pays for your Portuguese state healthcare [12]. This survived Brexit, for existing residents and new movers alike.
Before you draw it, the D7 application asks for health cover [5]. Quotes we found for people aged 65 and over range from about €100 to €450 a month per person, depending on cover and medical history, and many Portuguese insurers stop taking new customers between 65 and 70 [13]. Registered residents can also use the national health service (SNS).
6. Before you sign anything
Leaving the UK properly. Portugal can only tax you as a resident once you've genuinely moved, and the UK decides whether you've left under its Statutory Residence Test, which counts days and ties such as a home or work in the UK [14]. Keep a UK home available and spend long stretches back, and you may still be UK resident.
Inheritance. Since April 2025, UK inheritance tax follows residence, not domicile: if you've lived in the UK for at least 10 of the last 20 years, your worldwide estate can stay in UK inheritance tax for up to 10 years after you leave [15]. Portugal has no inheritance tax as such. It charges 10% stamp duty on what passes to heirs outside the close family; spouses, partners, children, grandchildren and parents are exempt, though Portuguese property carries a separate 0.8% charge [16]. EU rules let you choose, in your will, the law of your nationality for your estate [17].
Before you move: a six-point checklist
- Run your number for the UK → Portugal route.
- Get your State Pension forecast and check your record for gaps.
- Check with an adviser whether to take your 25% lump sum before you become resident.
- Ask each pension provider if they'll keep serving you at a Portuguese address.
- Price health insurance before your 65th birthday.
- Book one session with a tax adviser who knows both countries.
Reminder: education only, not financial, tax or personal advice.
Questions people ask
Is my UK State Pension taxed in Portugal?
Yes, once you're Portuguese tax resident. Under the treaty in force since 2026, only Portugal taxes it [8].
Can I still get the NHR tax break?
Not as a new applicant. It closed to newcomers in 2024, and its replacement mostly doesn't cover retirees [7].
How much income do I need for the D7 visa?
In 2026, at least €920 a month for the main applicant, plus €460 for a spouse and €276 per child [6].
Edited by The Pensora Team. Last reviewed: October 2026. The review covers the accuracy and clarity of the information presented. It is not personal advice.
Important information
This article is general information for educational purposes only. It is not financial, investment, pension, tax, legal, immigration or insurance advice, and it is not intended as a financial promotion. Nothing in it is a recommendation, offer, solicitation or invitation to buy, sell, hold or transfer any product or pension, to engage in any investment activity, or to take any particular course of action, including whether or when to move, draw a lump sum, transfer a pension or claim a state pension.
It does not take account of any reader's personal circumstances, objectives or needs, and no adviser-client relationship is created by reading it or by using Pensora's tools. Pensora is not authorised or regulated by the Financial Conduct Authority, the Portuguese CMVM or any other financial authority, and does not provide regulated advice. Pension transfers, lump-sum decisions, cross-border tax, immigration and healthcare decisions are best taken with suitably qualified and regulated professionals in both the United Kingdom and Portugal. In the UK, advice on transferring safeguarded pension benefits above the legal threshold must come from an FCA-authorised specialist.
Rules, rates, thresholds, exchange rates and projections differ by country and individual, and change often. Figures are as published by the sources listed, as of October 2026, may have changed since, and may not apply to any individual case. Treaty interpretations can differ between tax authorities and practitioners, and the 2025 UK–Portugal treaty is new. Exchange rates used are illustrations, not forecasts. Projections are the estimates of the bodies named, not guarantees. Examples, cost estimates and planning approaches are illustrations only, not forecasts or recommendations. The value of investments and pensions can fall as well as rise. Past performance is not a reliable guide to future results.
Pensora is an independent publisher. It is not a government body, is not affiliated with or endorsed by any authority or organisation named here, and receives no commission or payment from any product, provider or adviser mentioned. Pensora's tools produce estimates only; actual entitlements and tax liabilities are decided by each national authority. This article is not directed at any person in any jurisdiction where its publication would be unlawful. While care is taken to keep this information accurate, no warranty is given as to its accuracy or completeness, and, to the extent permitted by law, Pensora accepts no liability for any loss arising from reliance on it. Links to third-party sources are provided for reference only.
References
- Morningstar, The State of Retirement Income, December 2025 (3.9% safe starting withdrawal rate, 30 years).
- UK Government, Benefit and pension rates 2026 to 2027; DWP press release of 4 April 2026 (full new State Pension £241.30 a week). gov.uk
- UK Pensions Act 2014, Section 26 (State Pension age rising from 66 to 67 between 2026 and 2028). legislation.gov.uk
- Agreement on the withdrawal of the United Kingdom from the European Union (2019), Part Two (citizens' rights); UK Government, Living in Portugal. gov.uk
- Portugal, Law 23/2007 (Foreigners Act), Articles 52 and 58 (residence visa for persons with own income).
- Portugal, Decree-Law 139/2025 (national minimum wage of €920 for 2026); Ministry of Foreign Affairs means-of-subsistence scale.
- Autoridade Tributária e Aduaneira, Personal Income Tax Code (CIRS), Articles 16, 25, 53, 68 and 72 as amended by Law 73-A/2025 (2026 State Budget); NHR transition rules and the IFICI regime. info.portaldasfinancas.gov.pt
- Double Taxation Convention between the United Kingdom and Portugal, signed 15 September 2025, in force 29 December 2025, Articles 17 and 18; HMRC, Portugal tax treaties. gov.uk
- HMRC, Pension schemes newsletter 164 (October 2024): removal of the overseas transfer charge exclusion for EEA and Gibraltar QROPS from 30 October 2024. gov.uk
- UK Pension Schemes Act 2015, Section 48 (advice requirement for transfers of safeguarded benefits above £30,000); FCA rules on pension transfer specialists.
- HMRC, Voluntary National Insurance contributions for periods abroad (rules from 6 April 2026). gov.uk
- UK Government, Healthcare in Portugal (S1 form for UK State Pension recipients). gov.uk
- Published 2026 premium ranges from Portuguese insurers and brokers; individual quotes vary.
- UK Finance Act 2013, Schedule 45 (Statutory Residence Test); HMRC guidance RDR3. gov.uk
- UK Finance Act 2025 (residence-based inheritance tax from 6 April 2025; long-term UK resident rules). gov.uk
- Portugal, Stamp Duty Code (Código do Imposto do Selo), General Table items 1.1 and 1.2 and Article 6(e); Tax Authority binding information PIV 26029.
- Regulation (EU) No 650/2012 on succession (choice of the law of nationality, Article 22).