Do I still pay UK tax?

When you move to Canada you usually stop being UK resident for tax and become Canadian resident instead. Getting the paperwork right on both sides stops you paying tax twice, or missing a filing you didn’t know about.

Tell HMRC you’re going

Are you still UK resident?

The Statutory Residence Test (SRT) decides your UK tax residence for each UK tax year. In short:

• You are automatically non-resident if you were UK resident in any of the last 3 tax years and spend fewer than 16 days in the UK
• You are also non-resident if you work full time abroad, spend fewer than 91 days in the UK, and work more than 3 hours on fewer than 31 days in the UK
• You are automatically UK resident if you spend 183 days or more in the UK
• Otherwise the “sufficient ties” test looks at your UK family, home, work and days spent here

Long trips home in your first year can keep you UK resident. Count your days.

Split-year treatment

When you leave part-way through a tax year, the year is usually split into a UK-resident part and a non-resident part. You then only pay UK tax on foreign income for the time you lived here. Conditions apply, such as leaving to work full time abroad or to live abroad with no UK home.

UK income after you leave

• As a non-resident you still pay UK tax on UK income such as rent and UK wages
• You report it on a Self Assessment return with the SA109 pages
• Rent from a UK home falls under the Non-Resident Landlord Scheme. See Should I rent out or sell my UK home?
• The UK and Canada have a double taxation convention, so you can claim relief and not pay tax twice on the same income

How Canada taxes you

Canada decides residence mainly on your “residential ties”: a home, a partner or children in Canada are the main ones, and a car, bank accounts and a provincial health card count too. Most people who move for work or PR become resident on the day they arrive.

• From that day you pay Canadian tax on your income from anywhere in the world. Before it, you pay Canadian tax only on Canadian income
• Canada treats most of what you own when you arrive as bought at its market value that day. Only growth after you arrive is taxed in Canada when you sell
• Unlike the UK, Canada’s tax year is the calendar year. You file one return a year, usually by 30 April, even if you are employed
• Every province adds its own income tax. See How much tax will I pay in Canada?

ISAs, savings and foreign reporting

You can keep your ISA, and it stays tax-free in the UK, but you can’t pay more in once you are non-resident. Tell your ISA provider. Canada doesn’t recognise ISAs, so interest, dividends and gains inside one are taxable in Canada once you are resident. The same goes for UK savings accounts and investments.

If the total cost of your property outside Canada (UK bank accounts, shares, ISAs and a let UK home) is over C$100,000 at any time in a year, you must file Form T1135 with your return. You don’t need to for the year you first become resident. Penalties for missing it are high. Get advice from a cross-border accountant (a CPA who knows UK and Canadian tax).

What else to tell

• The Student Loans Company, if you are leaving for more than 3 months, so you don’t build up arrears
• The Child Benefit Office. Check whether your Child Benefit can continue; in most cases it stops when you move to Canada
• Your bank, pension providers and investment platforms, with your new address