Portugal Beckons as UK Wealth Tax Threatens Affluent Families

A rising wave of affluent Britons is setting its sights abroad, with Portugal fast becoming the destination of choice.

This trend is gaining momentum as the UK Government rolls out sweeping tax reforms and refuses to rule out a contentious wealth tax.

Sweeping Reforms Redefine the Fiscal Landscape

In 2025, the Labour Government enacted far-reaching tax changes, including the scrapping of the long-standing non-domicile (non-dom) tax status and extending inheritance tax to offshore trusts.

These reforms have significantly eroded the financial incentives once available to non-residents and non-domiciled individuals, bringing their tax obligations in line with UK residents.

Fuelling further concern, ministers have not ruled out the introduction of a wealth tax. Despite vocal warnings from tax experts about the economic drawbacks—including diminished tax revenues and capital flight—the Treasury remains unmoved.

A Downing Street spokesperson reaffirmed this stance in early July, stating: “We have repeatedly said those with the broadest shoulders carry the greatest burden and the choices we have made reflect that.”

The pressure on public finances is intensifying after the reversal of key welfare reforms, leaving Chancellor Rachel Reeves with a £5 billion budget shortfall. Some economists caution that if growth forecasts worsen, the real deficit could surpass £20 billion.

Chief Secretary to the Treasury Darren Jones hinted that the Government’s tax stance will be clarified in the upcoming autumn budget: “The Chancellor will set out any decisions on tax one way or the other at the budget.”

Surge in Wealthy Brits Departing the UK

These developments have triggered a record-breaking outflow of millionaires from the UK. According to research from New World Wealth, 16,500 millionaires are expected to leave Britain in 2025—a 53% rise from 2024’s figure of 10,800, and the highest annual departure recorded for any country.

Notable departures reportedly include Aston Villa FC co-owner Nassef Sawiris and property magnates Ian and Richard Livingstone, as reported by The Financial Times and The Times.

Economists Sound Alarm Over Wealth Tax Consequences

The notion of a wealth tax has been widely criticised by financial experts, who argue it would do more harm than good. Past implementations in other countries suggest such policies tend to provoke capital flight while delivering modest revenues.

Paul Stannard, Chairman and Founder of Portugal Pathways and the Portugal Investment Owners Club, warned: “It’s simple. If the UK implements a wealth tax, high-net-worth individuals will leave the country.”

Global case studies support this concern. In Norway, a hike in the wealth tax to 1.1% prompted an exodus of wealthy residents, costing the government an estimated £435 million per year, according to IMI Daily.

The Cato Institute notes that out of the 12 advanced economies that adopted wealth taxes in the 1990s, only three maintain them today. The Institute for Fiscal Studies adds that most nations have since abandoned such taxes, with Switzerland being a rare exception due to its relatively low overall tax burden.

Portugal’s Appeal as a Strategic Location for the Wealthy

As the UK’s financial climate becomes less hospitable, Portugal is emerging as a prime destination for those seeking favourable tax conditions and a high quality of life. In just the past two years, more than 2,700 millionaires have relocated to Portugal, according to Portugal Pathways.

Portugal’s IFICI (NHR 2.0) tax scheme, launched in January 2024, offers considerable advantages. Eligible individuals pay no tax on foreign income—including dividends and capital gains—and enjoy a flat 20% tax rate on Portuguese-sourced income.

Portugal’s Golden Visa remains another strong draw. A €500,000 investment in an approved alternative investment fund grants residency to high-net-worth individuals and their families, along with visa-free travel across the EU.

Crucially, residents under the Golden Visa programme need only spend seven days per year in Portugal to maintain their status. After five years, they become eligible to apply for citizenship.

“Combining Portugal’s favourable tax environment and Golden Visa residency by investment programme with its climate, growing expat community, low crime rate, stunning beaches, culture, and geostrategic location, we’re seeing more HNWIs look to Portugal as a place to live and invest.” Adds Stannard.

A Shift with Long-Term Consequences

As the UK grapples with the consequences of its evolving tax policies—including the potential loss of investment, talent, and economic dynamism—Portugal and similar jurisdictions are capitalising on the opportunity. For many of Britain’s wealthy, the decision to relocate is increasingly viewed not just as a financial move, but a strategic repositioning for the future.

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The Portugal Future Fund strategically invests in key sectors, driving growth and innovation across Portugal. Approved for Portugal’s Golden Visa residency-by-investment, it offers a unique opportunity for impactful and rewarding participation.

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