Tax Question
Oct 15th 2011 | 5:49 am
#1
Thread Starter
BE Enthusiast
Joined: Feb 2006
Posts: 481
From: Alberta
Tax Question
Hi - would someone please be able to advise how I handle this tax issue?
My wife secured a redundancy package from her company which basically gave her 3 months gardening leave and then the redundancy payment at the end of the 3 months.
The gardening leave started on 15th July and we landed in Canada a few days later, throughout this period she has paid the UK taxes and will pay UK tax on her final lump sum payment due in the next few days.
I understand we will be able to claim back 'overpaid' taxes via a P85 form from HM revenue & customs.
Is there anything else i should be aware of to ensure we don't overpay and to minimise our tax liabilities?
Many thanks in advance.
Stuart.
My wife secured a redundancy package from her company which basically gave her 3 months gardening leave and then the redundancy payment at the end of the 3 months.
The gardening leave started on 15th July and we landed in Canada a few days later, throughout this period she has paid the UK taxes and will pay UK tax on her final lump sum payment due in the next few days.
I understand we will be able to claim back 'overpaid' taxes via a P85 form from HM revenue & customs.
Is there anything else i should be aware of to ensure we don't overpay and to minimise our tax liabilities?
Many thanks in advance.
Stuart.
Oct 15th 2011 | 5:56 am
#2
Banned
Joined: Oct 2011
Posts: 94
From: Somewhere up Norf.
Re: Tax Question
Expect some bad news anytime soon, I expect you will have to pay canadian tax on the payment......someone will give you chapter and verse very soon.
JonBoyE!
JonBoyE!
Oct 15th 2011 | 6:35 am
#4
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Joined: Oct 2011
Posts: 94
From: Somewhere up Norf.
Re: Tax Question
Oct 15th 2011 | 7:54 am
#5
Thread Starter
BE Enthusiast
Joined: Feb 2006
Posts: 481
From: Alberta
Re: Tax Question
A redundancy payment in UK under £30k will be tax free, although you may have to pay the tax initially and reclaim it, This is what is happening with civil servants in UK, but, if you are resident in canada when you receive the redundancy payment, which is what you indicated, you will have to declare this as income. JonBoyE will put you right, he seems to be the resident expert on tax matters on this forum. Look him up and PM him, I do hope he doesn't mind.
Thanks.
Oct 15th 2011 | 8:16 am
#6
Binned by Muderators
Joined: Jul 2007
Posts: 11,708
From: White Rock BC
Re: Tax Question
Hi - would someone please be able to advise how I handle this tax issue?
My wife secured a redundancy package from her company which basically gave her 3 months gardening leave and then the redundancy payment at the end of the 3 months.
The gardening leave started on 15th July and we landed in Canada a few days later, throughout this period she has paid the UK taxes and will pay UK tax on her final lump sum payment due in the next few days.
I understand we will be able to claim back 'overpaid' taxes via a P85 form from HM revenue & customs.
Is there anything else i should be aware of to ensure we don't overpay and to minimise our tax liabilities?
Many thanks in advance.
Stuart.
My wife secured a redundancy package from her company which basically gave her 3 months gardening leave and then the redundancy payment at the end of the 3 months.
The gardening leave started on 15th July and we landed in Canada a few days later, throughout this period she has paid the UK taxes and will pay UK tax on her final lump sum payment due in the next few days.
I understand we will be able to claim back 'overpaid' taxes via a P85 form from HM revenue & customs.
Is there anything else i should be aware of to ensure we don't overpay and to minimise our tax liabilities?
Many thanks in advance.
Stuart.
However, you can claim a tax credit in Canada for any UK tax paid so you don't pay tax twice.
One thing to keep in mind is that the CRA may review your claim for a credit for the UK taxes paid. This happens quite frequently. You will then need to prove a) you paid the tax in the UK and b) this was your actual tax liability for the year. They are alive to the possibility that somebody might claim a tax credit for tax paid as shown on pay slips, or a P45 then, when they have received the tax credit in Canada, file a tax return or P85 in the UK to claim the tax back. Therefore keep copies of anything and everything HMRC sends you.
Oct 15th 2011 | 9:27 am
#7
Thread Starter
BE Enthusiast
Joined: Feb 2006
Posts: 481
From: Alberta
Re: Tax Question
Expatdoris has this right. In Canada employment type income is taxed when it is received, not necessarily when it is earned, so if you receive employment type income after you have moved to Canada it is taxable here.
However, you can claim a tax credit in Canada for any UK tax paid so you don't pay tax twice.
One thing to keep in mind is that the CRA may review your claim for a credit for the UK taxes paid. This happens quite frequently. You will then need to prove a) you paid the tax in the UK and b) this was your actual tax liability for the year. They are alive to the possibility that somebody might claim a tax credit for tax paid as shown on pay slips, or a P45 then, when they have received the tax credit in Canada, file a tax return or P85 in the UK to claim the tax back. Therefore keep copies of anything and everything HMRC sends you.
However, you can claim a tax credit in Canada for any UK tax paid so you don't pay tax twice.
One thing to keep in mind is that the CRA may review your claim for a credit for the UK taxes paid. This happens quite frequently. You will then need to prove a) you paid the tax in the UK and b) this was your actual tax liability for the year. They are alive to the possibility that somebody might claim a tax credit for tax paid as shown on pay slips, or a P45 then, when they have received the tax credit in Canada, file a tax return or P85 in the UK to claim the tax back. Therefore keep copies of anything and everything HMRC sends you.
Thanks again.
Stuart.
