UK Inheritance Tax for Expats Living in Portugal: How the New Residence Rules Apply

Portugal takes a different approach. It does not impose a conventional inheritance tax, but certain transfers can be subject to Stamp Duty (Imposto do Selo), with important exemptions for close family members.

For UK expats with assets in both countries, estate planning therefore requires more than establishing Portuguese tax residence. Your UK residence history, the location and ownership of your assets, the identity of your beneficiaries and the succession law applying to your estate can all affect the position.

This article explains how UK inheritance tax for expats living in Portugal interacts with Portuguese Stamp Duty and succession law, including the long-term residence rules, post-departure tail period, potential double taxation and practical cross-border estate planning considerations.

Why Moving to Portugal Does Not Automatically End UK IHT Exposure

From 6 April 2025, the scope of IHT on non-UK assets is determined by long-term UK residence rather than domicile. As a result, residence history can keep a former UK resident’s worldwide assets within scope for years after they relocate to a country without IHT.

This makes the timing of departure and the individual’s UK residence history important parts of cross-border estate planning.

What Is the Long-Term UK Residence Test?

Residence is assessed using UK tax residence under the statutory residence test. The rules are as follows:

1. An individual is generally an LTR if they have been UK tax resident for at least 10 of the previous 20 tax years.
2. The 10 qualifying years do not need to run consecutively.
3. A split year, in which an individual is resident for only part of the tax year, counts as a year of UK residence for the purpose of the LTR test.

UK-situs assets can remain within the scope of UK IHT regardless of residence or LTR status. Non-UK assets can also remain within scope if an individual meets the LTR test, even after they have ceased to live in the UK, because of the post-departure tail period.

What Is the Post-Departure Tail Period?

UK IHT liability on non-UK assets does not necessarily end immediately upon relocation. Once LTR status has been established, an individual can remain within the scope of UK IHT on non-UK assets for a further period after departure.

For someone who has left the UK and remains non-resident, the length of this period depends on their UK residence history:

After 10 consecutive tax years of non-UK residence, the LTR test is effectively reset. If an individual returns to the UK before completing the required period of non-residence, their position must be reassessed under the LTR rules.

Separate transitional rules apply to certain people who were non-UK resident in 2025/26 and whose domicile or deemed-domicile status on 30 October 2024 brings them within the transitional provisions.

For example, an individual who was neither UK domiciled nor deemed domiciled on 30 October 2024 and became non-resident in 2025/26 may fall outside LTR status under the transitional rules, provided they remain non-resident. Someone who was deemed domiciled on that date and became non-resident in 2025/26 can instead remain an LTR until the start of their fourth year of non-residence.

Anyone whose departure falls around the introduction of the new regime should therefore have their position assessed individually rather than relying only on the standard tail-period table.

Is There Inheritance Tax in Portugal?

Inheritance tax in Portugal was abolished in 2004. Instead, certain wealth transfers are subject to Stamp Duty (Imposto do Selo).

Stamp Duty can apply to gratuitous transfers of assets, meaning assets received without payment, such as an inheritance or a lifetime gift.

The standard Stamp Duty rate on taxable gratuitous transfers is 10% of the asset’s taxable value. For Portuguese real estate, the taxable value is generally determined by reference to the property’s taxable patrimonial value (Valor Patrimonial Tributário, or VPT) under Portuguese property tax rules.

Lifetime gifts of Portuguese real estate can also attract the 0.8% property transfer Stamp Duty under item 1.1 of the General Stamp Duty Table. This additional 0.8% should not be treated as a general rate applying to Portuguese property inherited on death.

The tax is territorial, meaning it generally applies only to assets located in Portugal or rights treated as situated there, such as:

• Portuguese real estate
• Bank accounts and investments held with Portuguese institutions, subject to the applicable situs rules
• Vehicles registered in Portugal
• Shares and other interests falling within the Portuguese statutory situs rules

Unlike the UK’s estate-based IHT regime, Portuguese Stamp Duty is charged by reference to qualifying gratuitous transfers. In a succession, the inheritance is represented by the cabeça-de-casal (the person responsible for administering and reporting the inheritance) and, where relevant, legatees have specific reporting and tax obligations.

The succession must generally be reported to the Portuguese Tax Authority by the end of the third month following the death.

Assets situated outside Portugal, such as UK property and certain UK pensions and investments, are generally outside the scope of Portuguese Stamp Duty, regardless of the residence status of the deceased or beneficiary. The situs of financial and intangible assets should, however, be checked under the relevant Portuguese rules.

Who Is Exempt From Portuguese Inheritance Stamp Duty?

Portugal exempts close family members from the 10% Stamp Duty on gratuitous transfers, regardless of the value of the asset transferred. The exemption covers:

1. Spouses and qualifying unidos de facto (de facto partners)
2. Direct descendants (children and grandchildren)
3. Ascendants (parents and grandparents)

Beneficiaries outside this direct family line, including siblings, nieces and nephews, can be subject to the standard 10% rate on taxable Portuguese assets.

The exemption from the 10% gratuitous-transfer charge should not be confused with the separate 0.8% property transfer Stamp Duty that can apply to lifetime gifts of Portuguese real estate.

How Do UK IHT and Portuguese Stamp Duty Compare?

UK IHT and Portuguese Stamp Duty differ significantly in how they tax wealth transfers, treat family members, and determine which assets fall within their respective regimes:

The standard UK nil-rate band (NRB) is £325,000. An additional residence nil-rate band (RNRB) of up to £175,000 may be available where a qualifying residence passes to direct descendants.

The RNRB is subject to conditions and is tapered for estates worth more than £2 million. Other exemptions and reliefs, including the spouse or civil partner exemption, can also materially affect the amount of UK IHT due.

Portugal does not have an equivalent general nil-rate band. Instead, the relationship between the person making the transfer and the beneficiary is central to whether the 10% Stamp Duty charge applies.

Is There Inheritance Tax for UK Nationals in Portugal?

Liability for inheritance tax for UK nationals in Portugal cannot be determined by nationality or Portuguese tax residence alone.

For Portuguese Stamp Duty, the location and nature of the asset and the relationship between the deceased and the beneficiary are central to determining whether tax is due. A British national living in Portugal can therefore be subject to the same Portuguese Stamp Duty rules on Portuguese assets as a Portuguese national, although the precise treatment depends on the asset and transfer concerned.

A spouse or child inheriting qualifying assets in Portugal can benefit from the Portuguese Stamp Duty exemption. However, it is important not to confuse this exemption with an exemption from UK IHT, which may still apply depending on the deceased’s long-term UK residence status and the assets concerned.

How Does Portuguese Succession Law Affect UK Expats?

Unlike the broad testamentary freedom available under the laws of England and Wales, Portuguese succession law includes forced heirship rules that protect the inheritance rights of certain close family members.

Legitimate heirs under Portuguese succession law can include:

• A spouse
• Children and other descendants
• Parents and other ascendants

These heirs can be entitled to a legally protected portion of the estate, known as the legítima. This reserved portion cannot generally be disposed of freely through a will, and the amount protected depends on the deceased’s family circumstances:

Where ascendants inherit without a spouse or descendants, further rules determine the reserved portion according to which ascendants survive.

The part of the estate outside the protected portion can generally be disposed of through a will.

Does Portuguese Succession Law Automatically Govern a UK Expat’s Estate?

Cross-border succession is governed by a separate set of rules, including the EU Succession Regulation (Brussels IV).

As a general rule, Brussels IV applies the law of the country in which the deceased was habitually resident at death to the succession as a whole. Article 22 also allows a person to choose the law of a country whose nationality they possess to govern their succession.

A British national living in Portugal can therefore generally make an appropriate choice of their national law in a will. Where the relevant UK legal system is England and Wales, this can allow English succession law to apply instead of Portuguese forced heirship rules.

The choice needs to be drafted carefully. The United Kingdom contains separate legal systems, including those of England and Wales, Scotland and Northern Ireland, whose succession rules are not identical.

The EU Succession Regulation does not govern taxation, so choosing a British national law for succession purposes does not remove UK IHT exposure or Portuguese Stamp Duty.

UK expats should therefore ensure their wills, choice of succession law, asset ownership and tax planning are coordinated. Separate UK and Portuguese wills can sometimes be useful where assets are held in both jurisdictions, but they need to be drafted to work together and must not unintentionally revoke or conflict with one another.

A will determines how assets should pass, subject to the applicable succession law. A separate tax analysis determines what UK IHT and Portuguese Stamp Duty may arise as a result.

Our international estate planning experts at Titan Wealth International can help identify these issues and ensure that succession, taxation, and asset ownership are considered as part of a comprehensive estate plan.

What Should UK Expats in Portugal Consider for Cross-Border Estate Planning?

Understanding how UK IHT, Portuguese Stamp Duty, and Portuguese succession law interact is only one part of effective cross-border estate and inheritance tax planning for UK nationals in Portugal. The practical work includes checking potential double taxation and making sure wills, ownership structures and financial arrangements work as intended in both countries.

Does the UK-Portugal Double Taxation Agreement Cover Inheritance Tax?

The current UK-Portugal Double Taxation Convention does not cover inheritance tax. The 2025 convention entered into force on 29 December 2025 and applies to taxes on income and capital gains. It does not provide bilateral treaty relief for UK IHT or Portuguese Stamp Duty on inheritances.

Without an inheritance tax treaty, double taxation relief may instead be available under the UK’s domestic unilateral relief provisions, including Section 159 of the Inheritance Tax Act 1984.

Where the same property is subject to Portuguese tax on death and UK IHT, UK unilateral relief may be available if the statutory conditions are satisfied. The calculation depends on matters including the nature of the foreign tax, the property concerned and its situs, so the available credit needs to be established on an asset-specific basis.

The relief can reduce UK IHT attributable to the same property, but it does not necessarily eliminate the UK liability.

What Practical Steps Support Wider Cross-Border Estate Planning?

Effective cross-border estate planning considers several elements together:

• Ownership and location of assets: Portuguese Stamp Duty depends on the location and nature of the assets, while any UK unilateral tax relief needs to be matched to the relevant property and foreign tax. Establishing what is owned, where it is situated and how it is owned provides the starting point for planning.
• UK and Portuguese wills: Separate wills can be appropriate for some people with assets in both jurisdictions, provided they are drafted to work together rather than conflict or unintentionally revoke one another. Any Brussels IV choice of law should also be made clearly and consistently with the wider estate plan.
• Taxation of trusts and investment bonds: Portugal does not tax UK trusts and investment structures in the same way as the UK. Distributions, liquidation proceeds and amounts received by settlors or beneficiaries can fall within different Portuguese tax provisions. Existing trust and bond arrangements should therefore be reviewed in light of Portuguese residence rather than assuming that their UK tax treatment will carry across.
• Asset structuring: The ownership structure of Portuguese property can produce different Portuguese Stamp Duty, AIMI, income tax, capital gains tax and UK IHT consequences. Personal and corporate ownership should therefore be compared across both jurisdictions before changes are made.
• Portuguese life insurance: A seguro de vida policy can provide liquidity to beneficiaries or help meet eventual estate liabilities. Portuguese Stamp Duty legislation excludes life insurance proceeds from the gratuitous-transfer charge, although the Portuguese income tax treatment of the policy and its UK IHT treatment require separate consideration.
• Timing of lifetime gifts: The UK’s seven-year rule for potentially exempt transfers and Portugal’s Stamp Duty treatment of lifetime gifts do not align automatically. In particular, a lifetime gift of Portuguese real estate can have different Stamp Duty consequences from an inheritance of the same property.
• Pension planning: From 6 April 2027, most unused UK pension funds and death benefits will come within the scope of UK IHT, subject to statutory exceptions. Therefore, pension transfer and drawdown decisions may become increasingly important for UK expats in Portugal. Portuguese Stamp Duty legislation excludes specified pension and retirement products from the gratuitous-transfer charge, although the treatment depends on the particular product and contract. Expats should seek qualified pension advice before making transfers or withdrawals.

Each part of the plan needs to be tested against the rules in both countries. Changing the ownership of a Portuguese asset to address one tax can alter its treatment elsewhere, while a succession-law choice in a will does not determine the tax treatment of the assets passing under it.

For HNW families, this distinction is particularly important where the estate includes trusts, investment bonds, pensions, company interests and property in both jurisdictions.

Titan Wealth International’s estate planning advice and expat tax planning services can help coordinate these considerations and develop a strategy aligned with your wider financial and succession objectives.