GiantSantaCruzer

Does anyone currently living/domiciled in Canada have any UK income which they have "persuaded" HMRC to be tax-free in the UK?

Theoretically, you fill out the HMRC "Canada DT" form, get someone at CRA to sign-offs that CRA will tax you on the income and then you send the signed off form to HMRC in the UK.After that, I'm not sure what happens...

I'll be claiming my UK works pension soon and I'm just wondering whether I understand the process correctly. I'm hoping that HMRC provide some sort of form or certificate (and send to me?) which can then be sent to my pension administrator so that they can pay my pension 'gross'. (Obviously, I'm expecting to declare the full UK pension on my Canadian tax return and pay the appropriate Canadian tax).

Can anyone shed any light on this? Is my understanding correct? If not, please let me know what to expect!

BristolUK

I have recently done exactly this.

It all sounds very easy. And it probably is...or should be.

I sent my form off to CRA with a covering letter asking them to do it. I only included the part of the form they complete, reasoning why print off the whole thing when it's only a small part for them to do plus it saved me digging out the details, reference numbers and so on.

About two months later, I was looking at something (unrelated) on my CRA account and noticed they'd sent me a message. Usually I get an email alert telling me of a secure message, but not this time. So that was an unnecessary delay of a few weeks.

Worse was that the message said they didn't understand my request.

So I did it again.
This time they understood but then they sent it all back saying they needed the whole form.
This can only mean they are going to look at it, presumably so they get to see any detail of the income to check that I declare it on my tax return.

I found this a little puzzling. I mean, if I am the sort of person who will not declare my full income to avoid paying tax on it in Canada that little precaution doesn't necessarily prevent it.
I could, for example, make reference to the source of the smallest UK income so that CRA expects to see that declared (as was already happening with an earlier income), but then when the stamped form comes back to me I could replace the misleading pages CRA saw with the real details so HMRC doesn't tax me on my million pound pension and CRA doesn't get to know about it.

Anyway, once done it was all smooth. I received my UK pension free of tax and have reported it to CRA to pay Canadian tax.

GiantSantaCruzer

BristolUK
Thanks for that. I'll make sure I provide CRA with the complete form.
Do you remember the details of the questions? I'd just like feedback on Q5 and Q6 which relate to the UK statutory residence test:

Q5: Under the UK Statutory Resident Test, if you've departed the UK in the current tax year, confirm you will either be:
(a) non-resident OR
(b) eligible for split year treatment

Q6: If you departed the UK in a previous tax year, confirm if you expect to be non-resident under the Statutory Resident Test in the current tax year?
(a) Yes
(b) No

Neither question is relevant to my circumstances as I've lived and worked in Canada continuously since 2007 with no link to the UK other than an old Nationwide FlexAccount with a couple of hundred quid for my very occasional returns to Blighty and an old ISA I haven't contributed to, or drawn from, since inception in about 1998, (plus my forth-coming UK pensions of course).
So, I'm not sure whether to ignore Q5 completely and I presume I'd select (a) for Q6 even though I doubt anyone would be applying the Statutory Resident Test to my circumstances...
I'm nervous of leaving questions unanswered on official forms as it's a convenient way for my form to be ignored or returned to me, delaying the process...
Thoughts?

Also, did HMRC provide a P60 (?) to you or do they send it direct to the pension administrator?

BristolUK

I honestly don't remember Q5 and 6 but I'd say the answer at Q2 (2004 for me, 2007 for you) means Q5 falls because you didn't leave the UK in the current tax year - but marking NO wouldn't do any harm. As for 6, that could get a little confusing if it was different things for different years. I also wonder that if Q5 is about the current tax year, does Q6 mean to ask about the previous year rather than a previous tax year. Logically if it's not the current year it will be a previous one and if it wasn't the one immediately before then you'd probably have done one of these forms previously.

The wording is poor too. Yes, you expect to be non (UK) resident. "Do you expect to be UK resident" and No would make more sense.

I have received P60s over several years - with two different payers receiving tax codes that exempted both from tax, but that was all a bit academic because the amount involved was somewhat less than the personal allowance anyway, so wasn't enough for income tax to be due.

It's only now, with state pension due that the total would have been above the allowance that I have done something about it.

I suppose any day now I'll get P60s reflecting a new code - or maybe I just won't get any.

Investor

The form you need is probably the only one in the whole world that doesn’t have a number. Type this into your search engine and you will get it;

HMRC Application to claim relief from UK Income Tax and
claim to repayment of UK Income Tax Canada DT

Once you have filled it in you send it to the CRA to get it verified, they send it back to you having stamped it then you post it off to HMRC. I have had to do this three times when my various pensions became payable. It doesn’t happen fast but it’s worth the wait.

btar

I think the form I used is available here Double Taxation: UK/Canada (Form Canada/Individual) - GOV.UK (www.gov.uk)
Print and complete, send to CRA for signature etc, they return it to you and then you send it to HMRC.

Investor

I didn’t have to do that part. HMRC contacted my pension providers after receiving my application to notify them that I now had a N/T tax code. My pensions are UK government ones so maybe they are processed differently to private providers.

HGerchikov

Apparently you need to wait until you actually have the pension before filling out the form. I tried to get ahead of the game by getting the form all completed just before the pension was paid out. I got a letter from HMRC saying they couldn't process it until after the commencement date of the pension and I would have to go through the whole rigmarole again.

BristolUK

That completely contradicts my experience last year.
I did exactly as you hoped. I even asked the Pensions office if they could delay the payment to make sure the form got to them ahead of time to avoid a deduction.
I hit an unrelated snag with CRA but got it done, sent it to HMRC.

There was a delay in the pension payment (unexplained and a shocked call centre person had to escalate it because it was just sitting there) but no tax was deducted when they got around to it.

HGerchikov

I phoned them to confirm as I understood that you could send it in early from the information accompanying the form. I was told I had to wait until after it was paid and then claim the money back and then going forward it wouldn’t be taxed. I guess it depends on which HMRC employee gets the form and who you talk to.

BristolUK

That's quite a depressing thought and possibly indicative of problems with the current set up. I wonder if the call centre people are just employed on the phone lines with little real experience.

I suppose it's also possible that mine worked because there was already a pension in payment - and, in theory, a taxable income - at the time I applied for the state pension.

HGerchikov

That could explain it. When I called I did get out through to a supervisor so I think the answer I got was correct for my situation. I don’t have any additional UK income.

British Columbian

HMRC overseas pensions dept don't routinely send out year end statement of pension amount paid, you have to request one, but the problem is UK tax year is April to April so statement does not arrive in time for the cut off date for filing with Revenue Canada. I just put a note (for line 11500) in with my return saying how much i received in pounds sterling (always the same amount year after year as we all know) then use the average exchange rate for the year supplied by Bank of Canada to fill in line 11500. CRA have never questioned me on this and i have been doing it for 7 years. You can check to see if your double taxation application has been processed by logging in to your HMRC tax account, it should say NT (no tax) for your tax code.

btar

"I just put a note (for line 11500) in with my return saying how much i received in pounds sterling (always the same amount year after year as we all know)"

That's a good idea, I must make a note for next year!

GiantSantaCruzer

Question 3 on the Canada DT form specifically states:
From what date did you pay tax, or will you pay tax in Canada blah, blah blah....
(My emphasis)
So, that clearly implies that you don't need to wait to receive the payment before claiming tax relief. My intended pension commencement date is July 1st but I've not got the form back from CRA yet as I have no idea how long they will take to process their part of the form.
Assuming I get the form back from CRA in plenty of time, I may hang onto it for a few weeks then send over to HMRC a shortly before July...