feelbritish

At end of July the money from the sale of our house is going to be in our bank in a savings account earning nothing! Unfortunately for us since we started this process the Canadian dollar has dived and pound strengthened meaning we have probably lost around £50 000!

Water under the bridge and all that I know but we are going to have to do something with that and I would rather have all our funds in GBP but it is a bad time to do a conversion. Do we leave money in Canada, providing they let us keep our bank account while being non residents, or do we just take the lot back to UK? What is the tax implications? This is money from our house sale which was our primary residence and I don't want to be taxed on it as we are already paying capital gains tax on our UK property when we leave Canada!

Novocastrian

I hear you: between the time we signed off on the selling price in the last few days of April and today the $C has depreciated ~6% against the pound.

C'est la vie. I'm just going to suck it up. Largely because my work pension is to be paid in $C too, so I'm always going to be exposed to currency fluctuations on that.

Just for sanity's sake I'll move the capital over once and and for all.

It's only money where you spend it.

Pistolpete2

For UK Tax purposes - It's my understanding that when the sale proceeds become cash you will need to do a conversion to sterling calculation and make a note of it.

Then when you become resident for UK tax purposes and you actually remit the funds you would need to work out whether there has been any gain or loss in the intervening period.

I've had to do exactly that for the funds that I'm just repatriating to the UK for a property purchase - those same pesky expensive pounds, I might add. In my case I had to calculate the gain/loss, and make a note, from the date the funds originally arose as US dollars.

I would also add that the way things are looking, the UK is going to raise rates in tandem with the US, which is one of the reasons for Sterling's resilience right now.

There are some things that could hurt the pound, like the EU in/out referendum but they are a fairly long way off.

Actually (seemingly sensible) studies being published right now point to the UK clearly benefiting from an EU exit on balance.

Editha

Why? You don't become liable for UK tax until you become resident, so I can see why the CRA might be interested in any gain or loss before that point, but why HMRC?

Pistolpete2

Indeed you only become liable when you are tax resident but the base date for the asset is not the actual date that you take up residency, it's the date you acquired that asset or it arose due to income creating it.

It would have been nice if I hadn't had to worry about UK property becoming Capital Gains Tax 100% taxable until the date that I arrived and then on the gains thereafter.

The entire gain right back to when it was acquired was taxable the moment that I became tax resident.

Ironically, I asked about this on BE several times and got no response, so did my own research and exchanged contracts on disposals BEFORE I returned, to escape the tax.

The new Capital Gains Tax rules for non-residents holding UK real estate are different, however, in that those gains were not previously taxable on non-residents but are effective April 6th and only the gains since that date are taxable - therefore one would need to have any UK property valued as of April 6th.

Editha

My understanding is that on the date you leave Canada and become resident in the UK there is a deemed disposal of your assets for Canadian CGT purposes, and a deemed acquisition for UK tax purposes.

feelbritish

Editha is correct. The capital gains we have will be paid on our UK property as the date we leave we will have "deemed" to have disposed of all our world assets and we pay tax to CRA. We knew about this and we therefore got a valuation on property last year plus we had a valuation done when we left UK in 2002 so we have something to work with.

It may be different with US and other countries but there is a reciprical agreement between UK and CA.

We now have to decide do we send all the money over to our bank in UK before we leave or let it stay here in CA. What tax implications are there if we send money over to UK before we leave? Quite a few Canadians have moved back with cash from sale of houses so I am wondering what they did?

As Nova said, probably best to just suck it up.

We may also write to our accountant to ask him. This house was our primary residence though.

feelbritish

Am I reading this correctly? We get the rate of exchange on our bank account savings and house sale on day we transfer money over to UK. Then we arrive in UK a week or so later and if there has been an increase/decrese we work on that increase or decrease as capital gains?


What if you transfer the money a day before you leave? Would that give you less risk?

Editha

Sorry, but I don't think Pistol Pete is right. You don't become liable for UK tax until the day you become resident, and you can't be liable for capital gains (which is what a profit on exchange would be) accrued before that point.

lf1

You shouldn't have a problem leaving bank accounts open in Canada. I have accounts with two of the major Cdn banks and also with HSBC. All of the banks know that I am no longer residing in Canada and have changed my account details to reflect my UK details.

If you don't want to change the proceeds of your house sale from Cdn to GBP, at this stage, then you could open an account with HSBC where you can hold CND$$ and GBP and transfer money as you wish from one account to another. I use their Premier account, but they might have other options now as I opened my account several years ago. I like the ease of use of this account and hope it will still be available when I start collecting CPP and drawing down on RRSP's.

We sold our primary residence in Canada 3 years ago prior to moving back. We also owned a property in the UK, but no CGT was payable in either Canada or the UK. We took professional tax advice from advisors on both sides of the pond and they confirmed that we would not pay tax on Cdn house sale proceeds.

feelbritish

Thanks If1, we have HSBC accounts both here in Canada (with a GBP account open but no money in it yet) and in UK and once the dust has settled with discuss with the bank what to do. May leave it open for time being. We will have to look towards some sort of income from our capital from the sale of this house. We will also pay our CGT to Canada next tax year so that it is not hanging over our heads in the future. Just wanted to figure out what to do but then none of us have "crystal balls" and as Nova says probably best to just suck it up!

Editha

I have done very badly recently, in trying to predict exchange rates. I thought that the pound would weaken after the general election, so I exchanged pounds for Euros in April and put off transferring money over from Canada to the UK.

Bad idea.

I'd done rather well guessing which way the pound would go in 2013 and 2014. Members of this forum told me it was just luck. Now I'm getting my comeuppance!

not2old

why is the GBP getting stronger?

http://www.xe.com/

Editha

I don't know why it is getting stronger. Are you going to tell me?

feelbritish

Does not look good for us changing back to pounds! Question is do we suck it up and take the whole lot in one shot getting the best rate possible with "Treats" or leave it in Canada hoping for better exchange in years to come? Our feeling at moment is to send the lot over as soon as we get it and take the loss Now OH is kicking himself for not listening to me a year ago and walking around muttering to himself! We opened a GBP account with our bank and I asked him to transfer our savings over and he waited and waited for better rate! It is amazing how much exchange rate can effect your future! Since planning this move we have lost about £50 000