The UK government's latest budget introduced updates to Inheritance Tax (IHT) regulations, offering considerable savings for UK expatriates residing in Portugal. With changes proposed to start from April 2025, the UK will adopt a residency-based system for Inheritance Tax, altering how the tax impacts expatriates. This shift means UK expats in Portugal may no longer be liable for inheritance tax.
Under the revised rules, British expats who have lived outside the UK for at least 10 out of the last 20 years will be exempt from Inheritance Tax on non-UK assets, such as overseas property, savings, and investments, as highlighted in a recent Financial Times report. These reforms, detailed in the UK government's last budget, could offer significant inheritance tax savings for individuals living in Portugal for a decade or longer—provided their assets remain outside the UK and are held in Portugal or other international locations. For expats who have been UK tax residents for more than 10 out of the last 20 years, Inheritance Tax will still apply to all worldwide assets under the current rules.
Expats intending to stay in Portugal or considering relocating from the UK should also strongly consider moving their assets so that their inheritance beneficiaries are exempt from future tax burdens. This would be a significant relief for British expats who plan their financial and property portfolios wisely. By keeping assets outside the UK, British expats can ensure they remain free from.
