One of the reason that drives many of my clients to come to Portugal is for the Non Habitual Residence (NHR) scheme and the tax benefits it provides.

I have covered this in more detail in the video below also:

However, the equally important part of the planning is to make sure you understand the rules of your current country of residence and that you are stay out of that country’s tax ‘net’.

You do that by having a clear understanding of the tax residency rules and definitions.

The focus of this video is on the UK but as a cross border tax adviser, I can guide on other jurisdictions.

The UK’s tax residency rules are governed by the 2013 Statutory Residence Test (SRT). This is a complicated area consisting of over 60 pages of legislation and over 100 pages of HMRC guidance notes. Although this video is intended to be a guide, please make sure you take personalised advice to understand how the rules apply specifically to you.

Although complex, the SRT provides clear steps to establish your tax residency status, and it effectively consists of three sub-tests and they are followed in this order.

The first test is the Automatic Overseas test. If you qualify under this test, you are automatically considered non-UK resident, and would not need to continue working through the SRT.

If you cannot satisfy this test, you move on to the next sub-test which is the Automatic UK Tests and again, by satisfying any of these conditions, you would automatically be considered UK tax resident
and you would stop at this stage.

If you do not meet the criteria in any of the “automatic” tests, then you move on to the final stage of analysis which is the ‘sufficient ties’ to the UK test.

The sufficient ties test guides you through your connections to the UK and produces a day count number of total days you are allowed to spend in the UK in any one tax year. The more ties or connections you have to the UK, the less time you are able to spend back in the UK without becoming UK tax resident.

From experience of helping many clients over the last 8 years, most clients tend to have a 90-120 day count allowance, but I stress that personalised advice is needed.

Other points to consider

Tax years

The tax year in the UK runs from April to April whereas Portugal runs from January to January. This can create opportunities for planning.

Temporary non-residence rules

In addition to making sure you remain out of the UK for the set day limits, you need to be cognizant of the temporary non res rules.

Tie breaker rules

You can be considered tax resident in two countries at once – the double taxation treaty will contain rules for determining which country has the taxing right, but ideally you do not want to get into this position because you have no certainty for planning

Summary

I’ll be going into more detail in written guides that you will be able to download from my website soon.

If you find this useful please like and subscribe to my channel. Also if you have any suggestions as regards content for future videos and articles, please just drop me a line and I will be pleased to build this into my future videos and articles.

#movingtoportugal #NHR #goldenvisa #d7visa

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