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Resolve to review your financial planning for 2024

The New Year is a time when most of us take stock of our situation and set goals to improve our health, happiness, lifestyle and wealth. This year, make it one of your resolutions to confirm that your financial planning is on target to meet your needs and provide financial security for as long as you’ll need it to.

Why regular reviews are important

Regular reviews help keep your financial affairs up to date and compliant.

It is important to keep ahead of any developments that may affect you, for better or worse. Tax rules or financial regulations can change at any time, which may affect the tax efficiency and security of your existing arrangements. There may also be new opportunities that you could find beneficial … but only if you know about them. You don’t know what you don’t know, which is why conducting your review with the help of a professional financial planner can prove so valuable.

You also need to consider if any changes in your personal and family circumstances mean you should adjust your arrangements. Did you welcome any new family members or are there any upcoming major life events – such as retirement, relocation or divorce – that may warrant a rethink of your plans?

For a truly effective review, and to ensure it is suitable for your life in Portugal, consider how your tax planning, investments, pensions and estate planning work together.

Tax planning

You should first make sure you know where you are resident for tax purposes, especially if you are new to Portugal or spend time in more than one country.

You then want to structure your investments and wealth in the most suitable way to minimise taxation – in Portugal, the UK and wherever you have financial interests – while still meeting your tax reporting obligations. Research the local tax regime to establish what opportunities it may provide residents if you structure your assets correctly.

With all the ‘automatic exchange of information’ that goes on these days, you need to ensure that you get it right. Your local tax office receives financial information about your offshore assets without having to even ask for it.

Cross-border tax planning is complex, so take specialist advice to achieve peace of mind and potentially secure significant tax savings.

Savings and investments

If you do not already have a financial plan in place for Portugal, you need to take a fresh look at your savings and investments. Are they actually better suited to a UK resident? Do they meet your risk/reward appetite? Are you taking advantage of suitable tax-efficient opportunities in Portugal?

Successful investing is about having a strategy specifically based around your personal circumstances, time horizon, needs, aims and risk tolerance. You should ensure you have adequate diversification to avoid over-exposure to any given country (including the UK), asset type, sector or company. Explore investment structures that allow multi-currency flexibility to help minimise exchange rate risk.

Pensions

For most people, their pension is key to their financial security through retirement, so deciding what to do with yours could be one of the most important financial decisions you make.

So take the time to ensure you are up-to-date on the latest pension regulations and to explore all the available options. Weigh up all the pros and cons and consider the tax implications and potential benefits in Portugal.

Make sure you take regulated professional advice to protect your retirement benefits from pension scams and do what is right for your personal circumstances and aims.

Estate planning 

It is vital to review your estate planning. Portugal’s equivalent of inheritance tax is much more beneficial than the UK’s, but you need to familiarise yourself with Portuguese succession law and how it will affect your family and heirs.

Are you aware, for example, that Portugal’s ‘forced heirship’ rules could automatically pass a significant proportion of your worldwide estate to your direct family, whatever your intentions? You can specify in your will for the EU regulation ‘Brussels IV’ to apply relevant British law to your estate instead, but first understand your options and any tax implications.

Your estate plan should be set up to achieve your wishes in the most tax-efficient way possible. If you remain UK domiciled – as many expatriates do – you continue to be liable for UK inheritance tax, so you should plan to reduce this liability for your heirs.

To bring all these complex elements together and ensure you have not missed out on any suitable opportunities, take expert, cross-border advice. Spending time on a financial health-check now can secure peace of mind that you and your family are in the best position to enjoy a prosperous 2024 and beyond.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com.

By Dan Henderson

Dan Henderson is a Partner of Blevins Franks in Portugal. A highly experienced financial adviser, he holds the Diploma in Financial Planning and advanced qualifications in pensions and investment planning from the Chartered Insurance Institute (CII). | www.blevinsfranks.com