sherpeck2

Hi, I run a UK company. I am resident in Canada but still work full time for my UK company. This last year we did good so, I would like to withdraw a lump sum for a personal pension - say £10,000.

As I am now resident in Canada I know I am not allow to invest in a UK pension pot - can I pay this lump sum direct to a a Canadian RRSP? Everything I read is about transferring entire pension's across and all the rules. This is just a one off - company director benefit to contribute to a individual pension for all the hard work I do! Any advise so gratefully received.
cheers

Almost Canadian

If you are asking, "Can I can a $10,000 dividend, or from a bonus, and put it into a Canadian RRSP?" The answer is, "Yes, provided you have $10,000 worth of contribution room available to you." If you are asking can you remove it from a UK pension and put it into a Canadian RRSP?", the answer is way more involved.

sherpeck2

Hi - The first - its a new payment, not connected to a UK pension at all. A new payment from a UK company to a Canada Pension pot - I understand Canada will view this as world earning and agree it will be within my RRSP allocations. So maybe what I am asking is how HMRC will view this? From a company tax/personal UK tax stand point?

SixZeroSix1

I'm not an expert on this and my circumstances are very different to yours, though I will have income from the UK to consider when I retire and I've been trying to figure out the impact on HMRC and CRA so I've been doing a lot a reading lately.
Invariably, I've discovered this subject is fiendishly complicated and depends on, amongst other things, your domicile, your actual residence and your tax-residence.
Anyway, I discovered a gold-mine of information in a vaguely readable format on "expertsforexpats" dot com website (I'm a new user here and not yet allowed to post any links).
I have no affiliation to that website though I may take up their offer of a free 15 minute consultation.

Maybe you should start poking around that website to start with and provide a bit more background on your current circumstances?

(Edit: I am assuming you are asking whether HMRC will tax the £10,000 when you "withdraw" it from your company account...
As said above, if you have sufficient contribution room, you can pay it into an RRSP though how CRA treat this cash before it's paid into the RRSP,I have no idea...)

sherpeck2

than you I will look into this. such a mind field and so over complex

Mordko

My understanding is that UK will not tax the withdrawals as long as you complete the right forms. Might be missing something but doing this could be counterproductive. You would lose your RRSP contribution room for no benefit. Why not leave the money where it is until you need to start spending and contribute new money to your RRSP?

Note that even if you are a tax resident you might still be able to contribute to a UK pension scheme as long as its within a certain period of time of leaving the UK (5 years?)

glendem4

Tax uk income living abroad is a guide. Would suggest calling HMRC if you need help. Can only contribute to RRSP based on your previous years income. If you earned $100k in tax year 2020, you could contribute $18k to your RRSP. RRSP contributions are limited to 18% of your earned income with a maximum contribution $27830 for year 2021.