For many, Portugal remains a leading destination thanks to its stability, attractive tax regimes and lifestyle advantages. But what does the latest UK Budget mean for private clients weighing up their options?

Key budget measures affecting individuals

Chancellor Rachel Reeves’ Autumn Budget introduced a £26 billion package of tax increases aimed at stabilising the UK economy. While headline rates of income tax, National Insurance and VAT remain unchanged, several measures will have an impact on individuals:

Extended freeze on income tax thresholds

The freeze on personal allowances and tax bands will now run until April 2031. This “fiscal drag” means that as incomes rise, more taxpayers will be pulled into higher brackets, increasing the effective tax burden without any formal rate hikes.


Higher taxes on investment and property income

The Budget confirmed a two-stage increase:

Dividend Income: From April 2026, the basic and higher rates on dividends will rise by 2 percentage points, moving to 10.75% (basic rate) and 35.75% (higher rate). The additional rate remains unchanged at 39.35%. This change primarily affects business owners and investors who rely on dividends for income.

Property and Savings Income: From April 2027, tax rates on property and savings income will also rise by 2 percentage points across all bands, creating separate property income rates of 22% (basic), 42% (higher), and 47% (additional). Savings income will follow the same pattern. These changes will impact landlords and those with substantial savings outside tax wrappers.

Mansion tax

A new “High Value Council Tax Surcharge” will apply from April 2028 to properties in England, adding annual charges of £2,500 for homes worth over £2 million and up to £7,500 for properties above £5 million. While these amounts are relatively modest compared to the overall value of such properties, they represent an additional ongoing cost. This measure is unlikely to incentivise wealthy homeowners to remain in the UK and for some, it may prompt a review of whether holding UK property aligns with their long-term plans. However, it is unlikely to trigger widespread property sales on its own.

Salary sacrifice cap for NIC relief:

The Budget has introduced a cap at £2,000 per year for NIC relief on pension salary sacrifice. Currently, salary sacrifice allows employees to exchange part of their salary for pension contributions, avoiding both income tax and NICs on the sacrificed amount. This has been a popular and highly tax-efficient way to boost retirement savings. From April 2029, contributions above this £2,000 limit will attract normal employee and employer NIC rates, reducing the tax efficiency of large pension contributions.

One notable absence from the Budget was the introduction of a UK wealth tax, a measure that had been widely speculated in recent months. While this will come as a relief to many, the Budget offered little in the way of incentives for high-net-worth individuals to remain in the UK. Instead, the combination of frozen thresholds, increased property taxes and tighter pension rules adds to a sense of long-term fiscal pressure without providing any new benefits for wealth holders.

Planning considerations

For those considering a move, timing is critical. While the UK Budget did not introduce an “exit tax” on unrealised gains or a wealth tax, future changes cannot be ruled out. Individuals should review their UK tax residency status, manage exposure to anti-avoidance rules and seek advice on structuring assets before relocating.

by Keith Graham, Forvis Mazars (Keith.Graham@mazars.co.uk)