A move to Portugal is one of the most popular retirement plans British buyers tell us about. Warm winters, lower running costs and a slower pace all play their part. The money question that comes up first, though, is almost always the same one.
How does the UK state pension in Portugal actually work once you live there? Will it still increase each year, who taxes it, and what do you need to organise before you go? The answers changed in January 2026, when a new tax treaty came into force, so it’s worth getting the current picture rather than relying on older advice.
This guide walks you through the rules as they stand for the 2026 to 2027 tax year. It covers how much you’ll receive, where the money is taxed, the lump-sum trap that catches people out and the practical steps to get your pension paid into a Portuguese account.
Key takeaway: You can claim your full UK state pension while living in Portugal, and it still rises each year under the triple lock, because Portugal sits inside the European Economic Area. Once you become a Portuguese tax resident, the new 2026 treaty means your state pension is taxed only in Portugal at progressive rates. Government service pensions are treated differently and stay taxable in the UK.
Financial planning in Portugal: NHR, pensions and tax
Get practical guidance on tax residency, pensions and planning your move with SJB Global.
Contents
- Can you still claim your UK state pension in Portugal?
- How much is the UK state pension in 2026?
- Will your pension still increase each year?
- Where is your UK state pension taxed?
- What you’ll pay: Portuguese income tax rates
- NHR has closed: what IFICI means for pensioners
- The 25% lump-sum trap
- How to get your pension paid in Portugal
- The order to do things in
- What should I do next?
- Summary
- Frequently asked questions
- Sources
Can you still claim your UK state pension in Portugal?
Yes. Your entitlement is based on your National Insurance record, not on where you live. You can claim the same pension in Portugal that you would receive at home.
You claim through the International Pension Centre, and you can start up to four months before you reach state pension age. You’ll need your National Insurance number, proof of identity and the bank details for the account you want to use. Payments can go into a UK account or a Portuguese one.
In our experience, many buyers leave the claim until the last minute. Starting early avoids a gap in income while the paperwork is processed.
How much is the UK state pension in 2026?
For the 2026 to 2027 tax year, the full new state pension is £241.30 a week, which works out at £12,547.60 a year. That is a rise of 4.8% on the previous year’s rate of £230.25 a week.
Your own figure depends on your qualifying years. The full new pension needs 35 qualifying years, with at least 10 years for any payment at all. Each qualifying year is worth roughly 1/35th of the full rate.
| State pension (2026/27) | Weekly | Yearly |
|---|---|---|
| Full new state pension | £241.30 | £12,547.60 |
| Full basic state pension (old system) | £184.90 | £9,614.80 |
You can check your personal forecast free on the gov.uk state pension service before you make any plans.
Will your pension still increase each year?
This is the question that separates Portugal from places like Australia and Canada, where pensions are frozen at the rate first paid. Portugal sits inside the European Economic Area, so your pension is uprated every year in line with the triple lock, exactly as it would be in the UK.
The arrangement is protected under the UK and EU Trade and Cooperation Agreement and has no current end date. Over a long retirement that difference is worth thousands of pounds, so it’s a genuine point in Portugal’s favour.
Where is your UK state pension taxed?
A new UK and Portugal Double Taxation Convention came into force on 1 January 2026, replacing the old treaty that had stood since the 1960s. The headline change matters for every retiree.
Once you become a Portuguese tax resident, your UK state pension and most private and workplace pensions are taxable only in Portugal. The UK should no longer tax them at source. To stop your provider deducting UK tax under PAYE, you apply for an NT (No Tax) code using form DT-Individual, which the Portuguese tax authority certifies to confirm your residency.
Government service pensions work differently. Civil service, armed forces, police, local authority and most teaching pensions stay taxable in the UK under the treaty’s government service rule, unless you’re also a Portuguese national. NHS pensions sit in a grey area and aren’t always treated as government service, so it’s worth speaking to a specialist about your specific scheme.
You become a Portuguese tax resident broadly once you spend more than 183 days a year in the country or keep your main home there. Our guide to the UK and Portugal double tax treaty goes into how rental income, savings and gains are split between the two countries.
Looking at a move to Portugal?
Browse property listings on our portal or speak to an expert who knows the country.
What you’ll pay: Portuguese income tax rates
Portugal taxes pension income at progressive rates, the same scale that applies to most income. For 2026, the rate starts at 12.5% on the first band of income, up to €8,342 (£7,100), and rises across eight bands to 48% on income over €86,634 (£73,600).
Two surcharges sit on top for higher incomes. A solidarity tax of 2.5% applies to income over €80,000 (£68,000), rising to 5% over €250,000 (£213,000). For most retirees living on a state pension and a modest private pension, the effective rate lands well below the 48% headline.
| Portuguese income tax (2026) | Rate |
|---|---|
| First band, up to €8,342 (£7,100) | 12.5% |
| Progressive bands in between (eight bands total) | rising rates |
| Income over €86,634 (£73,600) | 48% |
| Solidarity surcharge over €80,000 (£68,000) | +2.5% |
| Solidarity surcharge over €250,000 (£213,000) | +5% |
You declare foreign pension income each year on the Portuguese tax return, the Modelo 3, usually in the Anexo J section for income earned abroad.
NHR has closed: what IFICI means for pensioners
Many buyers still ask about the Non-Habitual Resident (NHR) scheme, which once gave a flat 10% rate on foreign pensions. NHR closed to new applicants on 1 January 2024. If you secured it before then, you keep the benefit for the rest of your 10-year window.
Its replacement, the IFICI regime (sometimes called NHR 2.0), is built for skilled workers, not retirees. It specifically excludes pension income, so a UK pensioner arriving in 2026 cannot use it to shelter their pension. New arrivals pay the standard progressive rates above.
The 25% lump-sum trap
This is the single most expensive mistake we see. UK rules let you take 25% of a private or workplace pension pot as a tax-free lump sum, the pension commencement lump sum. That tax-free treatment does not cross the border.
If you take the lump sum after becoming a Portuguese tax resident, Portugal treats it as ordinary pension income and taxes it at progressive rates, with no tax-free slice. Many buyers find that taking the lump sum while still UK resident, before the move, protects the tax-free status. The timing can change the tax bill by a large amount, so it’s worth modelling before you commit to a moving date.
How to get your pension paid in Portugal
Once your claim is set up, you choose how you’re paid. Payments can arrive every four or 13 weeks, into a UK or Portuguese account, in pounds or in euros.
The choice affects what reaches you. If the Department for Work and Pensions converts to euros at source, you take whatever rate applies on the day, plus a conversion cost. If you’re paid in pounds and convert it yourself, you control the timing but still face a conversion at some point. Either way, currency movement quietly eats into a fixed income over a long retirement.
This is where a currency specialist earns its place. Many buyers we help set up a regular overseas payment plan, which fixes the rate and the timing so the euro amount landing in their account is predictable. You can speak to a currency specialist about regular pension transfers to see how that works in practice.
You’ll also need a Portuguese tax number, the NIF, to open a local bank account and file your return. That’s one of the first things to organise once you arrive.
The order to do things in
A clean sequence avoids unnecessary tax and cash-flow gaps:
- Check your state pension forecast on gov.uk and fill any National Insurance gaps if you can
- Decide on any tax-free lump sum and consider taking it before you become Portuguese resident
- Move and register as a Portuguese tax resident, and get your NIF
- Claim through the International Pension Centre, choosing how and where you’re paid
- Apply for an NT code with form DT-Individual so the UK stops taxing your pension at source
- Set up a currency plan for predictable euro payments
- File your first Modelo 3 declaring the pension in Portugal
What should I do next?
If Portugal is your retirement plan, the tax and pension picture is worth getting right before you move, not after. A few practical next steps:
- Read our guide to retiring to Portugal for the wider relocation picture, from healthcare to residency.
- Compare your day-to-day budget with our look at the cost of living in Portugal versus the UK.
- Talk to a currency specialist about a regular payment plan so exchange rates don’t erode your income.
- Join one of our Portugal webinars to put your own questions to the experts.
“The pension itself is the easy part, because Portugal keeps uprating it. Where people lose money is timing, taking a lump sum a month too late, or letting the exchange rate decide what their income is worth. Sort the order of events first.” – Jana Korpova-Harris, overseas property specialist, Your Overseas Home
Summary
You can claim your full UK state pension in Portugal, and it keeps rising each year under the triple lock because Portugal is in the EEA. Since 1 January 2026, a new treaty means your state pension is taxed only in Portugal once you’re resident there, at progressive rates from 12.5% to 48%. Government service pensions stay taxable in the UK. The old NHR scheme has closed and its replacement excludes pensions, so new arrivals pay standard rates. Take any 25% tax-free lump sum before becoming resident, apply for an NT code to stop UK tax at source, and set up a currency plan to protect a fixed income.
Frequently asked questions
Once you’re a Portuguese tax resident, the UK state pension is taxed only in Portugal under the treaty that took effect on 1 January 2026. You apply for an NT code so the UK stops deducting tax, then declare the income in Portugal on your annual Modelo 3 return. Government service pensions, such as civil service or armed forces pensions, stay taxable in the UK.
Yes. Portugal is in the European Economic Area, so your pension is uprated each year under the triple lock, just as it would be in the UK. This is protected under the UK and EU Trade and Cooperation Agreement with no current end date. It’s a real advantage over frozen-pension countries like Australia and Canada, where the amount never rises.
You can take it, but it may no longer be tax-free. Portugal doesn’t recognise the UK’s tax-free treatment, so a lump sum taken after you become resident is taxed as pension income at Portuguese rates. Many buyers take the lump sum while still UK resident to keep it tax-free. Take personal advice before fixing your moving date.
The Non-Habitual Resident scheme closed to new applicants on 1 January 2024. It once gave a flat 10% rate on foreign pensions. Its replacement, IFICI, is aimed at skilled workers and specifically excludes pension income. A UK retiree moving to Portugal now pays standard progressive income tax rates on their pension. Existing NHR holders keep the benefit until their 10-year period ends.
Claim through the International Pension Centre and give the details of the account you want to use. You can be paid in pounds or euros, every four or 13 weeks. You’ll need a Portuguese tax number (NIF) to open a local account. Because exchange rates affect a fixed income, many retirees use a currency specialist to set up regular transfers at a predictable rate.
Sources
- House of Commons Library, Benefits uprating 2026/27 – https://commonslibrary.parliament.uk/research-briefings/cbp-10403/
- Age UK, The new state pension amount – https://www.ageuk.org.uk/information-advice/money-legal/pensions/state-pension/new-state-pension/
- UK government, State pension if you retire abroad – https://www.gov.uk/state-pension-if-you-retire-abroad
- HMRC, Double Taxation: UK and Portugal (form DT-Individual and treaty texts) – https://www.gov.uk/government/publications/portugal-tax-treaties
- PwC Worldwide Tax Summaries, Portugal – taxes on personal income (2026 IRS bands 12.5% to 48% and solidarity surtax) – https://taxsummaries.pwc.com/portugal/individual/taxes-on-personal-income
