Hello,

If i work part time in canada as a permanent resident am i classed as a non UK resident I.e paying income tax in canada? (Assuming i do not ever return to the uk)

How does that affect me if i have rental income in the UK? Would i just pay my canadian income tax then my UK tax on the rental income?

Thanks!

Thanks for your replies.

Are you certain on this Paul? I think I have just confused myself now as i tried to read through the waffle on HMRC website. It says you have to pay UK tax?

https://www.gov.uk/tax-uk-income-live-abroad/rent

I heard someone say the same as you and he claimed it was better to pay tax in canada anyway as they can deduct 100% of costs from taxable income, i.e maintainence fees and mortgage interest. Where as the new rules here just give a 20% tax refund. It just doesn’t make sense that the UK government wouldn’t get tax on that rental income earned in the UK, why should canada get it? I’m totally lost with all this now.

Assuming you live in Canada enough to be classed as tax resident here, I think there are two things you need to do
- register as a non resident landlord - check out gov.uk site for details
- complete P85 to confirm that you’re leaving the UK and being taxed elsewhere. It’s a while since we did it so I can’t remember whether it’s this form, or yet another, that you then get signed off by CRA and return to HMRC who then accept that you’re being taxed elsewhere. Although as a Paul says, they may still require you to fill in a UK tax form - don’t know why, think it depends on level of income.

Makes sense what you say about declaring it, but it does say on the link you will pay tax in the uk, nothing about just letting them know. Doesn’t this way make sense with the double tax treaty too? The canadian tax return has a foreign income section for it to be declared and something about it being taxed already. So to me and going on the website you pay btl income tax in the uk and tax on the canadian income, then show as part of the double tax treaty its been taxed so canada dont pinch it twice..

then again if the above posted has been paying tax in canada on that income he’d surely know if it was wrong by now!
i think i’ll just have to find an ex pat tax advisor from somewhere.

I get what you’re saying but HMRC does state payable in UK for btl income and then says it can be claimed back under the double tax treaty when reporting foreign earned income on the canadian tax return. Did you see the link?

its also reaffirmed on ex pat tax advice websites : Individuals that are non-residents of the UK and/or who have their “normal place of abode” outside the UK need to register with HMRC as non-resident landlords if they receive income from letting out UK property. If they do not, either the letting agent they appoint or the tenants must withhold 20% tax at source from the rental income.
Spouses who are joint owners of property must each register separately under the scheme to avoid the tax withholding.

We regularly see individuals who believe that UK income tax is not due on UK property income if they are tax resident in another country and reporting the income there. This is an incorrect assumption and under UK domestic law (and international tax treaty law) the UK will have the first right to tax income from UK situated real estate, even if it is also subject to tax in another country.

either way its fine as ill get the tax credit back wherever tax is paid so im not overly fussed. Maybe theres some other variable involved that makes this more complex. Thanks for assisting and ill try find a specific advisor to see whats going on. Its doing my head in trying to figure it out myself! Also i havent moved to canada yet im just preparing for when i do. Thanks fkr the warnings ill get a pro to check it out. Maybe others are paying it in canada due to the form you mentioned being sent to hmrc.

what is actual tax rate due on uk rental income and can you deduct costs such as maintence , mortgage interest , letting agent fee etc?

Normal income tax rules, first bracket being 20%. You can deduct everything but mortgage interest rules have changed.. 50% of your mortgage interest receives a 20% tax relief credit instead of a full claim on the interest. I once spoke to a guy here who said his btl was paid in canada for tax too which was good for him as they let him deduct 100% of the interest. He saved more money.

Just

[QUOTE=Addzz120;12682043]

[QUOTE=Fraserl;12682050]I can’t tell you the exact tax brackets but to do our taxes here in Canada, we use Turbotax and it gives us the option of inputting agreed expenses, such as letting fees, gardeners etc as well as our income, from our rented house in the UK, so it’s taken into account with everything else. Everybody has to file taxes here hence the reason tax receipts are given for donations etc.not like the much simpler UK system.

[QUOTE=Twitcher1958;12682055]

[QUOTE=Fraserl;12682061][/QUOTE

I don’t know but if you google ‘Canada allowable expenses on rental property’, you should find the correct information.

[QUOTE=Twitcher1958;12682065]It’s all the interest on a canadian tax return. There’s no mention of partial interest claims like the UK.
Hence you could be better off claiming expenses on a canadian tax return than partial one with hmrc.
The guy i spoke to before claimed he filed a non resident landlord form to hmrc, which meant that tax was not deducted of his btl income by the estate agency. He then declared his btl income on the canadian tax form and claimed 100% interest so was better off for it. All he had to do then was declare his money was taxed in canada to hmrc.

This is what confuses me as although you can’t chose you tax residency, you appear to be able to technical do that by submitting said form. Maybe this is where theres a double tax treaty agreement and things get very complex. It you have several btl it may be worth checking out which would be more tax efficient as canadian taxes are progressive and it could throw you into the next tax bracket. Then despite claiming the interest this may make someone worse off still.

all speculatiom as this situatiom seems far more complex. I would consider paying 400 pounds or so to get an hour consultation and you could save yourself that money easily with the right advice