Portugal and Pensions

nigelbb

noh wrote: »

Access to health care in Portugal including Madeira is residence based. Once you have registered as a resident you would be entitled to the same care as any other resident.

https://www.expatica.com/pt/healthcare/healthcare-basics/healthcare-in-portugal-106770/#Healthcare-in-Portugal

Are you sure that you don't have to pay social charges like you do in France? If you are retired with an S1 form from the UK then the UK pays for your healthcare but the future of reciprocal EU healthcare arrangements is all up in the air at present.

TBC15

So could you retire to Portugal for a couple of years to drain the pension and keep your ISA in the UK?

lisyloo

https://www.gov.uk/individual-savings-accounts/if-you-move-abroad

You can keep it but you cannot contribute more.

ratechaser

I've skimmed the surface of this subject, because I could definitely see this as a viable option for my wife and I, however it's still several years before I can actually access my pension pots and clearly a lot can change in that time...

But the idea of being able to draw down my pension completely over 10 years tax free does definitely sound encouraging.

lisyloo

Me too as we could both save 6 figure sums and coupled with cheap property, nice climate and cheap cost of living it’s got to be attractive.

I would certainly be talking to a professional specialist.
With 6 figure sums at stake, that’s got to make sense to get it right and maximise the position.

But as you say who knows, life can change quickly if someone gets ill and the tax regime could change.

cjking

If you withdraw you whole pension you might start to pay tax on investment growth, and the balance may come in scope for inheritance tax.

I was interested in this thread because It's only recently dawned on me there are a couple of fairly nice non-European countries I could retire in, where I'd pay 0% tax on my pension, but I'd have to organise healthcare. Then I realised: on the first 50K of pension income you only pay 7.5K in tax in the UK, I don't think I would go out of my way to live in another country for the sake of avoiding that. Particularly as private healthcare could easily wipe that out. (So Portugal might be a better option, not sure how healthcare there compares to NHS.)

Is it technically possible to be non-tax-resident in the UK for 1 year, and withdraw a lot from your pension in a low-tax country within that year, or are there rules to prevent this? (Someone posted something up-thread about you having to be away a few years?)

lisyloo

cjking wrote: »

Then I realised: on the first 50K of pension income you only pay 7.5K in tax in the UK, I don't think I would go out of my way to live in another country for the sake of avoiding that.

Well I make that a six figure sum over 27 years and double that if you are a couple.

I know expats in Spain say the health care is good and they actually deliberately get all their dentistry done when they are in Spain. After brexit who knows.

But I agree money can’t be your only reason and one needs to do due diligence especially on issues like home owning obligations and healthcare (I heard in Spain home owners have obligations for infrastructure), but home owning is not essential.

But money can’t be the only reason, it’s also got to be about climate, standard of living, activities etc.

I would definitely want to spend a few winters in various places before deciding which could be very nice on its own.

ratechaser

Totally agree with everyone that's commented on the need for both professional financial advice, as well as researching the location thoroughly. I can imagine the algarve in winter to have quite a different feel from summer (and not just the weather).

Personally I don't have any great desire to be tied down to living in any one country for a set number of days per year just for the sake of saving tax. But if it was only requirement for a few years, in a place that we both like (admittedly from holidays only) and it meant getting a 7 figure sum tax free then it may be at least worth considering!

Anyway, will follow this thread with interest...

Anonymous101

cjking wrote: »

If you withdraw you whole pension you might start to pay tax on investment growth, and the balance may come in scope for inheritance tax.

I was interested in this thread because It's only recently dawned on me there are a couple of fairly nice non-European countries I could retire in, where I'd pay 0% tax on my pension, but I'd have to organise healthcare. Then I realised: on the first 50K of pension income you only pay 7.5K in tax in the UK, I don't think I would go out of my way to live in another country for the sake of avoiding that. Particularly as private healthcare could easily wipe that out. (So Portugal might be a better option, not sure how healthcare there compares to NHS.)

Is it technically possible to be non-tax-resident in the UK for 1 year, and withdraw a lot from your pension in a low-tax country within that year, or are there rules to prevent this? (Someone posted something up-thread about you having to be away a few years?)

Portugal were ranked 12th best Healthcare system in the world by the World Health Organisation in 2010. The UK were ranked 18th!


I can't imagine the NHS has improved any relatively since then so moving to Portugal shouldn't represent too much of a problem from that point of view.

Malthusian

As others have touched on, the main barrier to using this as a tax strategy is that you actually have to become Portugese. Not that there's anything wrong with being Portugese, but most of us choose a country to retire to first and look at the tax situation second, whereas this is looking at it the other way round.

If you later move back to the UK (e.g. because you want to be closer to your children in your less active years, miss being able to speak English to everyone, etc) then the tax advantage is significantly lower, because now you have a load of money in your own hands which is subject to Inheritance Tax whereas if you'd left it in the pension, it would be free of Inheritance Tax. It would be taxable in the hands of the beneficiary if you die after 75, but hey, your children could always move to Madeira...

There are always swings and roundabouts, especially when interacting with two tax systems or more. This is one of the most obvious examples where the swings generally work in your favour and even then there are lots of ifs and buts.