Hurlabrick

We are now on 'Plan C'!

Basically, our UK house (primary residence) hasn't sold (nothing wrong with it and keenly priced, just the market is very quiet - totally sick of the UK Conservative party for playing party politics over the last couple of years! So we plan to move to Canada anyway from mid0November and declare ourselves 'tax resident' (i.e. send an R85 to HMRC and submit Canadian tax returns etc.). We plan to return for a few weeks in the spring to help sell the UK house, which we will leave fully furnished with the heating on low and our agent checking on it every two weeks - so NOT renting out, we will continue to market.

I know there is a dual taxation agreement between Canada and the UK. My questions are:

1. I know I have to tell HMRC when I do eventually sell, but who is interested in possible gain in GBP from the time we left to the time it sold, HMRC or CRA?

2. I think it is highly unlikely that there will be any increase in value over such a short period, but would it be sensible to get a formal 'chargeable gains valuation' now or wait until it is sold and see if anyone specifically asks for it (I suspect the latter)?

3. Am I correct in thinking that I would be 'on the hook' for any currency gain between GBP and CAD from mid-November to the time it is sold and proceeds available? I assume I would use the Bank of Canada 'official' exchange rate as of mid-November to establish this?

Thanks. Just trying to get all of my 'worry beads' in order!

glendem4

A good source of information can be found hereTax and House Sales-Canada : British Expat Wiki

I have lived and worked abroad in 5 different countries.

You are still tax resident in the UK until you exceed 183 days in another country. As the UK tax year runs from 6 April to 5th April the following year, you will be deemed tax resident in the UK for tax year ending April 2018.

Hurlabrick

Very helpful, thank you!

Almost Canadian

This is not correct. It is perfectly possible to be tax resident in two jurisdictions for different periods of a year, however the beginning and end of a tax year is determined by the jurisdictions.

Try arguing with the CRA that, one only has to pay tax on income earned in Canada, while a PR, after one has worked in Canada for 184 days.

Aviator

This is incorrect. The are a number of factors in determining tax residency and it is quite possible to be deemed tax resident in Canada the first day in the country.

https://www.canada.ca/en/revenue-age...cy-status.html

Aviator

You don't just arrive and 'declare' yourself tax resident, you either are, or are not by virtue if your ties and intentions. There is nowhere to make such a declaration.

It is wise to get a valuation on foreign property before becoming tax resident. This is the basis for a CGT calculation. You primary residence is considered to remain so in the tax year you arrive as a tax resident.

Any CGT paid in the UK, I believe can be claimed on your tax return as foreign tax paid. The UK CGT for non residents is relatively new.

In tax year 2 don't forget the T1135.

When you sell it, the difference between the original valuation (in CAD using the BOC FX rate) and the sale price in CAD is the basis for a CGT calculation. If you do the FX right away, that can be the basis of the gain calculation.

If you hold GBP and do the FX later, any gain in the currency is also subject to CGT.

Hurlabrick

This is all very interesting and VERY relevant to me! I am trying to work through HMRC RDR3 (Statutory Residence Test). If I total all the days I was PHYSICALLY in the UK, assuming we fly out to Canada on 10 Nov and stay in Canada until at least 06 Apr, then we would have spent 180 days in the UK in this tax year (less than the HMRC 183 days). I must add that I have only counted days we were actually in the UK and have not included days spent either overseas in different countries on holiday or of course days in Canada

So we seem to 'fail' the automatic HMRC test, but it then degenerates into loads of other 'yes we have no bananas' type test and I suspect that I may then 'fail' the 'ties' test.....

I find it hard to understand why, if I spent less than 183 days (which is the plan) in the UK tax year for 2017-18 and sent in a P85 stating the date we leave (early November), why I would continue to be taxed by the UK until 05 Apr 2018. I read something about 'split tax years' for HMRC but not sure if that applies. I find it hard to believe that CRA will say 'yep, sure, you still pay UK tax for 5 months even though you live here'!

Anyway, trying to speak to a specialist at HMRC, but none available yet, will keep trying!

I am thinking the possible 'key' to this is the HMRC stuff on 'split year' tax treatment.

Almost Canadian

Most remained a tax resident in the UK until the day they leave to relocate to Canada, whereupon they become a tax resident in Canada. They paid taxes to the UK until the day they leave, and then they pay taxes in Canada from the day they arrive. In your instance, I imagine that you may have CGT liabilities in the UK and in Canada (on the basis that it is no longer your primary residence, but that could be debateable depending upon what you do in Canada) and, if so, you will pay CGT in the UK and can use that to reduce the CGT liability you have to CRA.

Hurlabrick

That is my understanding. I have to claim DTA from HMRC using a form stamped by the CRA then AIUI HMRC should allow me to draw from my UK income drawdown free of UK tax at source. Enough of the alphabet soup!