United Kingdom vs Portugal taxes (2026): income, corporate tax and VAT

United Kingdom vs Portugal tax rates at a glance

Tax	🇬🇧 United Kingdom	🇵🇹 Portugal
Income tax	Personal income tax: 20% to 45% Personal allowance: GBP 12,570 Scottish top rate: 48% Employee National Insurance: 8% Employer National Insurance: 15%	Personal income tax: 12.5% - 48% Non-resident employment rate: 25% Dividend and interest income: 28% Employee social security: 11% Employer social security: 23.75%
Corporate tax	Corporation tax: 25% Small profits rate: 19% Marginal relief band: GBP 50,000 to GBP 250,000 VAT: 20%	Standard corporate tax: 19% SME rate: 15% Municipal surtax: Up to 1.5% State surtax: 3% - 9% Madeira / Azores: 13.3%
Capital gains tax	Annual exempt amount: GBP 3,000 Basic rate CGT: 18% Higher and additional rate CGT: 24% Business Asset Disposal Relief: 18%	Default capital gains tax: 28% Property gains taxed: 50% Blacklisted jurisdictions: 35% Non-resident Portuguese securities: 0% / 28%
Dividend tax	Dividend allowance: GBP 500 Basic rate dividend tax: 10.75% Higher rate dividend tax: 35.75% Additional rate dividend tax: 39.35% Withholding tax on ordinary dividends: 0%	Individual dividend tax: 28% Portuguese withholding tax: 25% Foreign dividend tax: 28% Blacklisted jurisdictions: 35%
Wealth tax	Net wealth tax: 0% Inheritance tax: 40% Capital gains tax: 24% ATED scope: GBP 500,000+	Net wealth tax: 0% AIMI for individuals: 0.7% AIMI for companies: 0.4% AIMI for tax havens: 7.5% IMI urban property: 0.3% - 0.45%
Inheritance / estate tax	Standard inheritance tax: 40% Nil-rate band: GBP 325,000 Residence nil-rate band: GBP 175,000 Lifetime gifts: Potentially 0% to 40%	Inheritance tax: 0% Stamp duty on free transfers: 10% Spouse / descendants / ascendants: 0% / 0.8%
VAT / GST / sales tax	VAT: 20%	VAT: 23%
Standard VAT	20%	23% mainland
General personal income tax	Up to 45% / 48% Scotland	Up to 48% plus surcharges

Who wins on each tax

Personal income taxUnited Kingdom

The UK's top headline rate is 45% outside Scotland, while Portugal reaches 48% before surcharges.

Corporate taxPortugal

Portugal's 19% mainland corporate rate is below the UK's 25% main rate.

Capital gains taxUnited Kingdom

The UK's top CGT rate is generally lower than Portugal's common 28% investment rate, though asset type matters.

VATUnited Kingdom

UK VAT is 20%, below Portugal's 23% mainland standard VAT.

EU residencePortugal

Portugal offers EU residence and EU lifestyle access; the UK does not.

The verdict

Neither country is a low-tax base. The UK has high income tax, National Insurance, capital gains tax, inheritance tax and 20% VAT. Portugal taxes residents on worldwide income, has progressive rates up to 48%, a 23% mainland VAT rate and broad taxation of investment income. A qualifying UK newcomer can claim the four-year foreign-income-and-gains regime after at least ten years of non-UK residence, so that exception needs separate modelling.

Portugal usually looks better for people who want EU residence, a lower mainland corporate headline rate and a lifestyle base in the EU. The UK looks better when the practical value is London, English law, local customers, hiring, banks or advisers.

Choose Portugal for EU footing and potentially lower company tax. Choose the UK if the commercial center of gravity is genuinely British and the higher tax burden is part of that trade-off.

How to read this comparison

The UK and Portugal are not tax havens. This comparison is really about which higher-tax country gives you the better commercial and residence trade-off.

Which one fits you

🇬🇧 Choose United Kingdom if you're a…

Founders with UK customers, investors or staff
People who need London finance, courts or advisers
Residents who value UK market access over tax cost

🇵🇹 Choose Portugal if you're a…

People who want EU residence
Companies comparing a lower headline corporate rate
Families prioritising Portuguese lifestyle and EU mobility

Frequently asked questions

Is the UK or Portugal better for tax?

It depends on the income type. Portugal is often better for corporate headline tax and EU residence, while the UK can be better for VAT and some capital gains outcomes. Neither is a low-tax jurisdiction.

Does Portugal tax worldwide income?

Yes. Portuguese tax residents are generally taxed on worldwide income unless a treaty or specific relief changes the result.

Is Portugal still a simple NHR tax play?

No. The old NHR regime is no longer the simple default for new arrivals, so new-resident planning needs a fresh review under current rules.

Does the UK have a new-resident foreign-income regime?

Yes. From 6 April 2025, a person in their first four years of UK tax residence after at least ten consecutive non-UK tax years can claim relief for eligible foreign income and gains. Eligibility and the loss of allowances need to be checked.