Income
Apr 28th 2022, 4:44 am
#16
BE Enthusiast
Joined: Sep 2019
Posts: 665
Re: Income
Sally-You are not the first person to be misled by what is commonly called a "Double Taxation Agreement" and people will say that this means you cannot be taxed on the same income in two countries.Basically each country has a specific treaty with other countries about which country has first dibs on different types of income As a general principle income from property is taxed in the country in which the property is situated.Likewise government occupational pensions are usually taxed in the country of origin.The country in which you are resident then usually applies an allowance based on what you would have paid according to the tax system of your resident country
So you need to be aware of the Anglo Portugal tax agreement and also how the tax system works in Portugal
There are many companies available to give advice according to your situation
So you need to be aware of the Anglo Portugal tax agreement and also how the tax system works in Portugal
There are many companies available to give advice according to your situation
Apr 28th 2022, 4:49 am
#17
BE Enthusiast
Joined: Sep 2021
Location: Peniche
Posts: 540
Re: Income
Yes, but the financial provisions for Portugal are not especially onerous - if someone can't meet them then I doubt they could afford to live in the UK either!
Apr 28th 2022, 4:51 am
#18
BE Enthusiast
Joined: May 2011
Posts: 809
Re: Income
You don't say where you intend to move to . Is that because you have not decided yet , and is the cost of your new home a factor in that decision?
Algarve and Lisbon are much more expensive now than , eg, far Alentejo or North East.
I can see the attraction of selling everything in the UK for simplicity's sake...........But for me I would want to keep a tight hold of the rental property in UK : you cannot be sure that at some point in the future you might not want to make use of that bolthole yourself, if only for lengthy holiday breaks, but with an option of a return.
18 grand a year seems plenty to me, esp. if you don't indulge in luxuries.
On the subject of a car : you might want to consider taking advantage of the new resident exemption from importation taxes / charges whatever : if you have , or could acquire, a very reliable cheapo UK reg car and bring it over to Portugal with a view to putting it on Port. plates. There are NO cheapo reliable second hand cars in Portugal, in case you were expecting to buy one.
[ Well ,someone will contradict that but I still think you would need luck to find one. ]
Algarve and Lisbon are much more expensive now than , eg, far Alentejo or North East.
I can see the attraction of selling everything in the UK for simplicity's sake...........But for me I would want to keep a tight hold of the rental property in UK : you cannot be sure that at some point in the future you might not want to make use of that bolthole yourself, if only for lengthy holiday breaks, but with an option of a return.
18 grand a year seems plenty to me, esp. if you don't indulge in luxuries.
On the subject of a car : you might want to consider taking advantage of the new resident exemption from importation taxes / charges whatever : if you have , or could acquire, a very reliable cheapo UK reg car and bring it over to Portugal with a view to putting it on Port. plates. There are NO cheapo reliable second hand cars in Portugal, in case you were expecting to buy one.
[ Well ,someone will contradict that but I still think you would need luck to find one. ]
Apr 28th 2022, 5:02 am
#19
BE Enthusiast
Joined: Sep 2021
Location: Peniche
Posts: 540
Re: Income
Split year is not granted and could be applied subject to certain criteria listed on HMRC website, which might cover the mainstream, but do not cover a number of real life situations - self-employed, pensioners, etc.
If you want to further complicate the matter, have a look at the Statutory Residence Test.
In practical terms the best time to move would be either in the two months before 6 April, or in the two months after that.
In the first case the OP would remain UK resident for the whole year, but would hardly have any foreign income in Portugal for the first two months of residing there, which could increase her UK liability, and even if that happens, the additional tax would be offset by the PT tax paid.
In the second case the OP would likely be a non-resident in the UK for the whole year, considering the relevant ties as defined in the SRT.
If you want to further complicate the matter, have a look at the Statutory Residence Test.
In practical terms the best time to move would be either in the two months before 6 April, or in the two months after that.
In the first case the OP would remain UK resident for the whole year, but would hardly have any foreign income in Portugal for the first two months of residing there, which could increase her UK liability, and even if that happens, the additional tax would be offset by the PT tax paid.
In the second case the OP would likely be a non-resident in the UK for the whole year, considering the relevant ties as defined in the SRT.
Apr 28th 2022, 5:15 am
#20
BE Enthusiast
Joined: Sep 2021
Location: Peniche
Posts: 540
Re: Income
You don't say where you intend to move to . Is that because you have not decided yet , and is the cost of your new home a factor in that decision?
Algarve and Lisbon are much more expensive now than , eg, far Alentejo or North East.
I can see the attraction of selling everything in the UK for simplicity's sake...........But for me I would want to keep a tight hold of the rental property in UK : you cannot be sure that at some point in the future you might not want to make use of that bolthole yourself, if only for lengthy holiday breaks, but with an option of a return.
18 grand a year seems plenty to me, esp. if you don't indulge in luxuries.
On the subject of a car : you might want to consider taking advantage of the new resident exemption from importation taxes / charges whatever : if you have , or could acquire, a very reliable cheapo UK reg car and bring it over to Portugal with a view to putting it on Port. plates. There are NO cheapo reliable second hand cars in Portugal, in case you were expecting to buy one.
[ Well ,someone will contradict that but I still think you would need luck to find one. ]
Algarve and Lisbon are much more expensive now than , eg, far Alentejo or North East.
I can see the attraction of selling everything in the UK for simplicity's sake...........But for me I would want to keep a tight hold of the rental property in UK : you cannot be sure that at some point in the future you might not want to make use of that bolthole yourself, if only for lengthy holiday breaks, but with an option of a return.
18 grand a year seems plenty to me, esp. if you don't indulge in luxuries.
On the subject of a car : you might want to consider taking advantage of the new resident exemption from importation taxes / charges whatever : if you have , or could acquire, a very reliable cheapo UK reg car and bring it over to Portugal with a view to putting it on Port. plates. There are NO cheapo reliable second hand cars in Portugal, in case you were expecting to buy one.
[ Well ,someone will contradict that but I still think you would need luck to find one. ]
You can get a pretty decent car for 10K, if you don't want anything too big and fancy, but yes, not sure I would go too much lower than that. But would you really want to have the steering wheel on the wrong side just to save a few K?
Apr 28th 2022, 7:35 am
#21
Forum Regular
Joined: Apr 2017
Location: Greater Lisbon
Posts: 263
Re: Income
We actually found HMRC pretty OK on applying split tax year, providing it's clear that you are making a permanent move, not just trying to do some fancy tax dodging. You are right that SRT is a PITA, though for OP, with all current assets in the UK and no planned income in PT until future pension starts being paid, it's probably not too worrying. Worth reading about, but not stressing about
The other thing is that PT almost always applies the split year treatment, especially for a newcomer, while in the UK it is more down to the discretion of HMRC, especially when it comes to leavers.
One may find himself dual resident, at least for a period of time, which, among others, may require some extra tax, and certainly some extra money for financial advice, submission of two tax returns, etc.
While for someone with annual income above £XXX,XXX that may not be an issue, for someone with an annual income of, say, £30,000, that could be an extra 5%+ of hidden tax for expenses, which could be easily avoided with a bit more careful planning
Few years ago for a year or so my time was almost equally split between four countries, and I would never go again through the enormous waste of time for reading, advice, enquires, confirmations, emails, etc, etc in the following year, when it came to the annual tax returns, even when there was no source of income from a particular country...
Apr 28th 2022, 8:04 am
#22
BE Enthusiast
Joined: Sep 2021
Location: Peniche
Posts: 540
Re: Income
Personal experience is not always indicative of their application of the statue.
The other thing is that PT almost always applies the split year treatment, especially for a newcomer, while in the UK it is more down to the discretion of HMRC, especially when it comes to leavers.
One may find himself dual resident, at least for a period of time, which, among others, may require some extra tax, and certainly some extra money for financial advice, submission of two tax returns, etc.
While for someone with annual income above £XXX,XXX that may not be an issue, for someone with an annual income of, say, £30,000, that could be an extra 5%+ of hidden tax for expenses, which could be easily avoided with a bit more careful planning
Few years ago for a year or so my time was almost equally split between four countries, and I would never go again through the enormous waste of time for reading, advice, enquires, confirmations, emails, etc, etc in the following year, when it came to the annual tax returns, even when there was no source of income from a particular country...
The other thing is that PT almost always applies the split year treatment, especially for a newcomer, while in the UK it is more down to the discretion of HMRC, especially when it comes to leavers.
One may find himself dual resident, at least for a period of time, which, among others, may require some extra tax, and certainly some extra money for financial advice, submission of two tax returns, etc.
While for someone with annual income above £XXX,XXX that may not be an issue, for someone with an annual income of, say, £30,000, that could be an extra 5%+ of hidden tax for expenses, which could be easily avoided with a bit more careful planning
Few years ago for a year or so my time was almost equally split between four countries, and I would never go again through the enormous waste of time for reading, advice, enquires, confirmations, emails, etc, etc in the following year, when it came to the annual tax returns, even when there was no source of income from a particular country...
I'm totally with you on the sheer time wasting and cognitive load of trying to manage too many different things, in too many different places. Despite my desire for simplicity, we currently still have to interact with three different countries, in three different languages and it drives me crazy sometimes!
Apr 28th 2022, 9:11 am
#23
Forum Regular
Joined: Apr 2017
Location: Greater Lisbon
Posts: 263
Re: Income
I'm totally with you on the sheer time wasting and cognitive load of trying to manage too many different things, in too many different places. Despite my desire for simplicity, we currently still have to interact with three different countries, in three different languages and it drives me crazy sometimes!
A week usually involves communication in at least three languages, now not so much as a necessity, but just to keep in the loop.
Simplicity takes time and requires a clear focus on the priorities.
In a way it is like digitalizing those 80+ folders with various paperwork we had, which I did a while ago - the first dozen was difficult and I thought maybe I'd better still keep this or that on paper, but with the next few dozens I was getting more and more motivated, and finally we now have only five folders with paperwork, everything else is in digital format
