JTM73

Does anyone know of any websites that could help with what happens to pensions and investments held in the UK when emmigrating? I'm trying to find out answers to the following (or maybe someone on here may be able to help answer some of them )

1. I'll have made approx 25 years' worth of NI contributions by the time I leave for Canada. If I emmigrate and stay in Canada for my retirement, am I entitled to any kind of reduced state pension from the UK? Or is it just tough luck?

2. How about if I move between Canada and the UK once I'm a citizen - say, spend a few years in the UK and then a few years in Canada; will I be entitled to any kind of reduced state pension from the UK? Or does this depend on which country I retire in?

3. Is there an equivalent to the state pension in Canada? How is it contributed to? (i.e. is there an equivalent to NI contributions?)

4. How do Canadians tend to save for retirement? Is there the equivalent to personal pensions in the UK?

5. Once I've emmigrated to Canada, what happens to any personal or company pensions in the UK that can't be cashed in until retirement age? Can they be transferred to Canada somehow? Will I need to maintain a UK address for these?

6. Is there any legal way that stocks and shares investments can be kept in the UK once I've emmigrated to Canada? Specifically, long-term investments that could potentially perform better if left where they are rather than selling early.

7. Is there a Canadian equivalent of websites like moneysupermarket / motleyfool / moneyexpert etc. that I can use to compare Canadian savings accounts and investment accounts?

8. I work for myself as a freelance editor, and whereas I'd hope to gain new Canadian customers, I have a pretty good customer-base in the UK that I'd like to carry on working for. I'd also like to try and get some work from US customers too. Is this legal? How would paying tax work (i.e. pay tax to UK or Canada/US)?

I appreciate any help or pointers anyone can give!

Souvenir

I can answer some of those questions. I am in a similar position to you.

Before you leave the UK, make sure the taxman knows about it. You can get yourself classified as non-resident for tax purposes. If you file an annual tax return in the UK you will probably continue to do so (I do) but money you make outside the UK is not included in it.

I work from home and am considered by the Canadian tax people to be self-employed. I can get lots of tax write-offs. Talk to an accountant when you get here. All the work I do is for a company in the UK. That means my "product" is an export and thus not subject to Canadian sales tax (=VAT). I am therefore not registered here for sales tax. If I had Canadian clients, I'd need to be and make regular returns.

The tax year here is the calendar year and you need to file in the spring. In your first year, just let the money pile up and pay your tax in one go. Bear in mind that Canada taxes your worldwide income. If you make no money here but make some elsewhere, you must file a return. I cocked that one up and paid dearly for it.

Eventually, the Canadian taxman will require you to pay tax in instalments (quarterly, in my case but it's negotiable).

The Canadian Pension Plan (CPP) is the state pension. You will pay into this via your taxes. There is also Unemployment Insurance (UI). This is collected either as a deduction (for regular salaried workers) or in a lump sum for people like us. It's not mandatory for self-employed people. My accountant told me not to contribute because I'd never be able to claim on it.

The main method of saving in a personal pension is RRSPs. These are similar to AVCs in the UK. Money you put into these comes off your taxable income for the year and you don't get taxed until you start withdrawing the money (ie when you've retired). You won't be able to put money into these in your first year. Once you have submitted your first tax return, you'll get a statement agreeing or disagreeing with your return. That statement will tell you what your RRSP allowance for the year is. It's based on your earned income for the previous year and there is an absolute limit ($20k, I think). As an example, my limit for this year is $13,944. I can buy RRSPs up to this amount any time before the end of next February, and before I do my return for 2008. My taxable income for 2008 will be reduced by $13,944. I intend to make sure I have that money available. I live in Quebec, which has the highest tax rates in the country, and the high rate kicks in early. Last year, two thirds of my income was taxed at about 50%. If I buy my full allowance of RRSPs, my tax hit will be reduced by about $7k. RRSP allowances can be carried over, if not used. My missus has a big unused allowance. We are planning to take advantage of it and stuff the fund as much as we can. The tax refund she will get will be used to draw down our mortgage. Double dipping.

I don't know anything about your other questions but I ought to find out. Let me know if you find anything useful.

JTM73

Thanks Souvenir; that's all really helpful. If I find anything else useful out I'll make sure I post.

Cassie 10000

Just in case you want to look at the website as well


http://www.thepensionservices.gov.uk...ecast/home.asp

information regarding UK pension

http://www.hrsdc.gc.ca/en/isp/cpp/cppinfo.shtml

information regarding Canadian pension

JTM73

Brill, thanks very much Cassie - much appreciated!

JTM73

Just found this on the very handy UK pensions site:

What happens if I go abroad for 12 months or permanently

We can pay your State Pension straight into your overseas account in some countries.

If this is not possible or if you prefer, we can pay your State Pension into a UK account or we can send a cheque (in sterling) at the end of every 4 or 13 weeks. We can send this straight to you, your overseas bank or someone else outside the UK chosen by you.

If you are away for less than two years we can pay your State Pension as a lump sum when you return to the UK.

If your State Pension is £5 a week or less and is paid once a year, we will continue to pay it in this way while you are abroad.

Your first payment after you leave the UK may be delayed, but we will make every effort to keep any delay as short as possible.

Special arrangements may have to be made if you need payments made to Pakistan, India or Bangladesh.

You can continue to get your State Pension anywhere in the world, but in some countries you may not be able to get an increase in your State Pension for your dependants or the yearly increase in your payments. Contact The Pension Service before you go abroad.

http://www.thepensionservices.gov.uk...happens-if.asp

JonboyE

You don't lose the pension rights you have accrued. You might want to consider making 5 years voluntary contributions so you will be entitled to a full UK state pension.

At the moment, you will be entitled to 25/30ths of the UK state pension. In Canada it will be paid at the rate on the date you apply for it but is not subject to annual increments. Any time you are back in the UK you will also get the annual increments.

Yes. The Canada Pension Plan. This pays a pension based on your contributions. A self-employed person will pay their contributions when they file their tax return. The maximum annual contribution is just over $4,000. There is another element of state pension called Old Age Security. Your entitlement to this is a function of the number of years you are resident in Canada after the age of 18.

As mentioned above, RRSPs are the main savings vehicle for retirement.

Occupational pensions can be transferred to certain qualifying RRSPs in Canada. Personal Pensions have to stay in the UK. You don't need to maintain a UK address.

Not a problem.

No.

It is all legal. The tax will be complex, but at the end of the day you will probably pay the equivalent of Canadian taxes on your income - but it might be spread around the world. You will need an accountant.

BristolUK

I have often wondered about this. I have heard the pension gets uprated to the then current level that it would have been had one stayed.

But what counts as being back in the UK? Does a visit count? A minimum period? Taking up residency again?

JTM73

I take it that you don't pay tax in the UK as well? Do you have to do any tax returns or anything in the UK or just Canada?

JonboyE

I believe that any time counts, including a short holiday. I guess there may be a minimum time but I don't know what it/if there is.

JonboyE

The Tax Treaty has the rules about which government can tax which bit of income. If you are tax resident in Canada and have to pay UK tax on UK source income you can claim a credit for foreign tax paid when you file your tax return here.

There is no double jeopardy - you only pay tax once.

Souvenir

I do still file a UK tax return because they keep sending me one. It's rather pointless. I have UK bank accounts that pay some interest (tiny). That interest is taxed. I claim it back from the UK. Then I declare it in Canada and have the tax taken away again.

I could probably ask the UK tax people to forget about me but something in the back of my brain tells me not to.

JTM73

Thanks Jonboy, appreciate your help.