Lamin

Hi all, I've been here 2.5 years now and have finally settled in. Home owner, contractor / casual worker and a little self employed, not the route I thought but hey .

I obvoiusly pay tax here however I don't think I'm doing things smart as I also have ties in the UK . I receive a modest UK pension to my UK bank which I then transfer to my CDN bank. It is about £15,000 a year and I believe tax is deducted before it hits my bank?

I also rent out a small small two bedroom house, where rent covers my interest only mortgage and the remainder $500 I put into a RRSP here. I have a tax advisor in the UK who number crunches for me and so far with his fee £370 and tax owed usually about £700 sees me having to off set this each year.

I also pay a tax specialist here who incorporates all this as well as my earnings here ( which are not much). I seem to owe money as well as getting odd refunds back here. Equally I'm paying two people across either side of the pond to sort my tax.

It seems very very messy to me, I don't actually earn a lot and feel there must be a better approach. Can I opt to have my military pension paid at source , collect my rental and cut all ties to the UK and just declare it ( which I already do) here as worldwide earnings, paying one lot of tax and only one tax agent.

If anybody has any advice or a better solution I would be very grateful.

Many thanks.

Lamin

Benson55

Messy and expensive it seems ok.
Why not have your UK pension paid into Transferwise which IS possible through the borderless account they have.
They have a deal with natwest in London and its confidential.
The UK does NOT tax you before it pays the pension out thats up to the taxpayer to declare to CRA yearly.
Accountants will always take the fees but those seem very high...look around.

Twitcher1958

It’s been suggested by others on this forum to do a trial tax filing yourself, using simple tax or turbo tax, and compare to what your tax people do. That would give you the confidence to do it yourself in the future - set up a spreadsheet to show your income, expenditure etc - you need to bear in mind the exchange rates for your Uk numbers (google Bank if Canada annual rate). I’m not sure what value your UK person adds anyway?
It’s no bad thing anyway to spend a few hours each year evaluating your money situation - no one else has the same vested interest as you in your interests.
And remember if your assets (property and pension) total more than $100k, you need to be filing a T1135 too but the tax software will promote you about this.

Pulaski

The general rule with pensions resulting from working for the government, including military pensions, is that they are taxed by the paying government even if you live in another country. I am not certain if/how this applies to a resident of Canada.

Hurlabrick

Not necessarily true. The UK pension provider will tax at source according to what HMRC tell them. You need to get tge dual tax HMRC for completed by CRA then send to HMRC and tell HMRC who you have pensions with and ask for an NT tax code. HMRC will then tell the pension provider to NOT take tax you tge declare to CRA. Links for the forms in wiki. I did this and my private pension from the UK is now paid gross.

Pulaski

But my post relates to a pension paid as a result of employment by a government, and yours is a private pension. The taxation of "government pensions" is defined by the applicable tax treaty, and generally tax treaties specify that government pensions will be taxed and source and not by the country where the pension recipient lives.

As I hinted at above, I am not an expert on the Anglo-Canadian tax treaty.

Hurlabrick

I used to work in a back office administration capacity for the company that administers UK nurses pension (yes, it was Crapita!). I assure you that they and other government pension operate the way I have described vis a vis HMRC. Quite simply, they will deduct at source whatever HMRC tell them to do. Suggest the OP has a read of the immigration taxes wiki page andbthe dual tax agreement link, where the official HMRC page talk about what to do to get pensions paid gross

IIRC, many UK public sector pensions are administered by equiniti UK, who provide BPO services to these large pension schemes.

The wiki page I am referring to and the entry for changing pension income to gross is here: https://britishexpats.com/wiki/Taxes...e_to_pay_gross (now changed to my desktop computer, so easier for me to do links than on my tablet!!).

Pulaski

Well ya didn't say you worked for the government! .... Although outsourcing adds another layer of complexity as to whether or not you "work for the government" and therefore where you will pay tax on your pension, but I 100% agree that you have no choice in the matter, the decision is entirely governed by the British and Canadian tax authorities under the treaty between the two countries.

Hurlabrick

Nope, never said I worked for government (my wife did). Always worked in UK Life and Pensions admin, with 10 years in the UK reserve army if that helps).

Pulaski

I finally think I understand what you said, but it is one of the most opaque posts I have seen in a while on BE - You worked for a company (non-governmental) that administered pensions for people who did work for the government. Right?

Hurlabrick

Is correct. While it isnt a secret, it is pretty universal that both UK private AND public sector pensions are administered by commercial third parties (often with separate groups that answer calls and letters as though they are the original employer). For example, Capita until a year or so ago administered most of the Prudential UKs Life and Pensins business. I know it seems confusing, but it is a fact (this trend to 'outsource' started 60 years ago and is now at the point where I don't know of any large private or public employers who actually have their onw pension department with employees that they pay for themselves - although there might still be some). Another big UK pensions outsourcer is Diligenta (subsidiary of an Indian IT company, Tata).