Thanks for your question
No your understanding is incorrect I am afraid. The double taxation treaty menas that any tax suffered from a UK source would NOT be charged tax twice on the receiving country.
So tax will arise in the UK but then your declaration of the pension and any tax suffered would be taken into account for Portuguese tax position.
(So 25% might be possible to be drawn tax free and the remaining 75% liable to UK tax and the appropriate tax rates but usually the cut off age starts at 55 before a quarter of the pension pot can be drawn tax free - so do check with your pension provider. )
Your first tax position of any UK source falls in the UK so HMRC WILL tax you on the pension as they have to follow UK legislation.
There is the ability to apply for No Tax status in the UK - but this IS on the strict proviso that the country in which you will reside takes up the tax baton and as there is no tax baton from what you advise then HMRC will not release the No Tax status on the pension) and this relates to a regular monthly pension position not a full down draw which is what you asked after.
If you wish to take this forward - you would need to wait until you were 55 - take 25% tax free and then allow the monthly pension to be established (so let the first payment get made) , and then apply for NT (NO tax on form P85 for HMRC to review if you qualified as not resident ) If HMRC agreed you could be treated as not resident this would then allow them to issue Tax code NT to your pension provider would then apply against the next pension payment allowing tax free payment. Then under this preferential tax treatment - you could have your pension come into Portugal with no taxation on it all the while this scheme lasts.
Thanks for your response
You should have completed a P85 as soon as you were due to leave the UK so HMRC could establish your residency status for that year and subsequent tax years - I would rectify this as soon as possible - link here for the P85
This provides the option of completing online (if you are registered for online services) or to print off a paper copy, complete and post to HMRC
You only are issued an NT code if you have a source of income in which to use it against, which you have and will not (as the SIPP is not a income that can be taxed/paid tax free through the PAYE system) so this is not a viable option unless you make a test withdrawal initially after age 55 so that it highlights on HMRCs radar thereby allowing a PAYE record to be created by HMRC and a tax code issued (NT) But this is a long shot.
Instead you will normally have to suffer the tax deducted (code OT so the correct rates are applied) and then claim a tax refund through self assessment (with a pension part of the main SA100 return and also complete SA109 residency and remittance) which then should see HMRC reviewing for any refund due.
But usually with SIPPS you are only permitted to take a certain amount per year - so do check with the SIPP provider. And if this proves to be an issue then a suggestion that a consideration of transferring the whole pot into QROPS - but do take pension advsie and also what terms and conditions apply with accessing funds and the timeline relating to this.
Tis should be a transfer that can be made tax free - then fall out of UK jurisdiction -
BUT ensure it has the flexibility that you require and the ability to action also at 55
(I am sure you can appreciate we are tax experts and not pension or financial advisers!)
Do let me know if I can assist further - or, if you have all that you need, then it would be appreciated if you could rate me for the level of service I have provided (or click accept)