The measures unveiled by Chancellor Rachel Reeves raise taxes on savings interest, dividends and rental income, while also clearing the way for earlier and deeper interest-rate cuts by the Bank of England.

There are no two ways about it: the rules underpinning UK-linked wealth have shifted.

Jake McLaughlin, Executive Director of deVere Portugal, part of the global financial advisory giant deVere Group, which has more than 80,000 expat clients, says the Budget marks a turning point for people holding UK assets from abroad.

“This isn’t a single change that can be absorbed quietly,” he says. “It’s a combination of higher taxation, lower yields and currency pressure, all moving in the same direction. This alters outcomes pretty quickly.”

From 2027, tax on interest, dividend income and rental earnings rises by two percentage points across all bands. Treasury projections show that, for higher earners, nearly half of savings income will be lost to tax. Dividend income — long a cornerstone of UK investment strategies — also takes a hit, as after-tax yields are compressed just as interest rates are expected to fall.

McLaughlin argues that the damage lies in the interaction of policies rather than any single measure.

“Higher taxes hurt income. Lower interest rates reduce future returns. When those forces combine, the compounding effect is significant,” he explains.

“People still looking at their UK assets in isolation risk missing that bigger picture.”

The Budget has also changed expectations in currency markets. Sterling has weakened as investors price in slower UK growth and likely faster interest rate cuts.

For investors living in the eurozone, that decline translates directly into reduced spending power when UK income is converted.

“Currency effects tend to get waved away until they start hitting real-world returns,” McLaughlin says. “Once income is lower after tax and lower again after conversion, the gap becomes impossible to ignore.”

Crucially, the fallout is not limited to UK nationals. UK equity markets, pensions and property are widely held by international investors who built exposure earlier in their careers or inherited it through family ties.

Many have kept those assets untouched for years, assuming the UK’s framework would remain broadly stable.

That assumption now looks fragile.

Dividend-heavy UK equity portfolios face a clear challenge as net yields decline. Buy-to-let property becomes harder to justify once rental income is taxed more heavily while borrowing costs remain restrictive in real terms.

Cash deposits, meanwhile, fall victim to expected lower interest rates just as taxation rises on the modest returns they still generate.

McLaughlin says inertia is one of the biggest threats. “The most common mistake is doing nothing because change feels incremental,” he says.

“However, policy shifts like this don’t need to be dramatic to be damaging. They erode value gradually, quarter by quarter.”

Portugal provides a useful lens through which to view the issue because of the number of residents with international exposure.

Many live, spend and pay tax locally while their assets remain tied to UK rules written for domestic taxpayers.

“This mismatch is where problems emerge,” McLaughlin explains. “Assets structured for one tax system can perform very differently once you live under another. The Budget widens that gap.”

Lower UK interest rates may support asset prices in the short term, but McLaughlin cautions against confusing that with long-term resilience.

“Market relief rallies don’t solve structural problems,” he says. “Income is what sustains long-term strategies, and income is what this Budget weakens.”

The global context only sharpens the contrast. Other jurisdictions actively compete for capital, offering clearer tax treatment on investment income and more predictable policy frameworks.

Against that backdrop, the UK’s higher-tax, lower-yield trajectory looks increasingly unforgiving.

McLaughlin believes timing matters as much as direction. “People who review their position while changes are happening still have options,” he says.

“To address these issues, deVere Portugal is hosting a live online session titled What It Means for Your UK Assets in Europe.

“The webinar, taking place on Tuesday 2 December, is open to Portugal residents of any nationality who hold UK assets and want to understand how the post-Budget environment could affect them.

Registration here: https://us06web.zoom.us/webinar/register/3717622601409/WN_GSxTCKmUQSCicL9JFu9cVQ

“This Budget forces serious questions,” McLaughlin says. “Where income comes from, how it’s taxed, and whether assets are still working as hard as people think they are. Ignoring those questions now carries a real cost.”

As Britain reshapes its economic priorities, the consequences extend far beyond its borders.

For anyone with UK assets, the Budget has turned long-standing assumptions into risks that need to be confronted, directly and without delay.


By Staff Reporter