Under the 2025 UK/Portugal double tax treaty, if you are tax resident in Portugal (and not UK resident) in 2026, most UK private and workplace pensions are generally taxable only in Portugal. Portugal taxes them as pension income (Category H) at progressive rates that run from 12.5% to 48% in 2026, depending on your total taxable income. UK government service pensions are generally taxable only in the UK instead, subject to a nationality exception.

A new treaty applies from 2026

The UK and Portugal signed a new double taxation convention in London on 15 September 2025. According to GOV.UK it entered into force on 29 December 2025 and has effect:

  • in Portugal from 1 January 2026
  • in the UK for income tax and capital gains tax from 6 April 2026

For pensions, the core rules are:

  • Article 17 (Pensions): pensions paid to a resident of one country "shall be taxable only in that State". For a Portuguese resident, that is Portugal.
  • Article 18 (Government service): pensions paid by the UK government, or from funds it created, for services to the UK state are taxable only in the UK. Where the person is not a UK national but is a Portuguese national, both countries may tax.

So a British national living in Portugal with a civil service, NHS, teachers' or armed forces pension would generally pay UK tax on that pension, while private and workplace pensions fall to Portugal.

How Portugal taxes the pension

Portugal taxes residents on worldwide income. UK pensions generally fall into Category H (pensões). Article 11(2) of the IRS code says a lump sum or other early payment of pension income does not change its nature as a pension, so the UK 25% tax-free lump sum is not automatically tax free in Portugal.

Category H income receives a specific deduction set by the IRS code, and the rest is added to your other taxable income. The 2026 general rates under Article 68 of the IRS code are progressive:

  • 12.5% on taxable income up to EUR 8,342
  • rising through several bands
  • 48% on taxable income above EUR 86,634

Married couples and civil partners may be able to file jointly. Exact outcomes depend on your total income, deductions and any surcharges.

What about NHR?

The Non-Habitual Resident regime closed to most new applicants from 2024, with transitional rules. People who already hold NHR status may keep it for the remainder of their 10 year period, and the treatment of foreign pensions under NHR depends on when the person registered. If you hold NHR status, confirm your specific pension treatment with a Portuguese tax professional.

If you are moving to Portugal now, plan on the basis of normal progressive rates unless you have confirmed otherwise.

Stopping UK tax being deducted

Your UK provider will deduct UK tax under PAYE until HMRC tells it otherwise. To be paid without UK tax, you apply for treaty relief using HMRC's form DT-Individual. The form must be certified by the Portuguese tax authority, or accompanied by a Portuguese certificate of residence, before HMRC issues an NT (no tax) code. You need a new claim for each new pension.

Under the IRS code you are generally Portuguese tax resident if you spend more than 183 days there in any 12 month period starting or ending in the year, or have a home there on terms suggesting you intend to keep it as your usual residence. You also need to be non-UK resident under the Statutory Residence Test. Tax residence is fact-specific.

Read more in our guide to tax in Portugal for expats, or drawing a UK pension abroad.

Worked example

Illustrative example only, not a real client.

Claire moves to Porto in 2026. Assume she is Portuguese tax resident and non-UK resident under the treaty, is a British national without Portuguese nationality, does not hold NHR status and takes no lump sum. She has:

  • a private pension paying GBP 18,000 a year
  • a UK teachers' pension paying GBP 12,000 a year

After her certified DT-Individual claim is accepted, the private pension is paid without UK tax and declared in Portugal as Category H income at progressive rates. The teachers' pension stays under UK PAYE and is taxable only in the UK under Article 18.

Common mistakes

  • Assuming the UK tax-free lump sum is also tax free in Portugal.
  • Relying on NHR rates when you do not hold NHR status.
  • Not making a treaty claim, so UK tax keeps being deducted and must be reclaimed.
  • Assuming the old 1968 treaty rules still apply from 2026.

A regulated financial adviser can help. Get in touch for a free introduction.

Sources and further reading

Last reviewed: October 2026. Tax year: 2026/27 (UK); 2026 (Portugal). Jurisdictions covered: UK, Portugal. Rates, legislation and guidance change, so recheck before relying on this. Rules can differ between England and Wales, Scotland and Northern Ireland; tax residence is fact-specific; treaty outcomes depend on residence, domicile or nationality provisions; examples are simplified and omit reliefs, costs, exchange rates and anti-avoidance rules. This is general information, not financial, tax or legal advice. Take advice in the relevant country before acting.