Transferring UK workplace pension to another UK pension scheme
#1
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Transferring UK workplace pension to another UK pension scheme
I have a couple of defined contribution workplace pensions from my past UK employers. For one of them I'm not really happy with the performance and I'd like to move it away from Scottish Widows. Now that I am tax resident in Canada, can I transfer that Scottish Widows pension to another UK pension (probably a SIPP) without creating any tax problems here? Obviously I don't want to end up paying capital gains tax or something like that just to do the transfer.
#2
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Location: White Rock BC
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Re: Transferring UK workplace pension to another UK pension scheme
I have a couple of defined contribution workplace pensions from my past UK employers. For one of them I'm not really happy with the performance and I'd like to move it away from Scottish Widows. Now that I am tax resident in Canada, can I transfer that Scottish Widows pension to another UK pension (probably a SIPP) without creating any tax problems here? Obviously I don't want to end up paying capital gains tax or something like that just to do the transfer.
#3
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Re: Transferring UK workplace pension to another UK pension scheme
Thanks for your prompt reply.
That's no good then. I'm not sure if this is even possible now, but if I were to transfer from one ex-employer workplace pension scheme to another ex-employer workplace pension scheme, would that avoid this problem?
That's no good then. I'm not sure if this is even possible now, but if I were to transfer from one ex-employer workplace pension scheme to another ex-employer workplace pension scheme, would that avoid this problem?
#4
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Re: Transferring UK workplace pension to another UK pension scheme
In theory, yes.
Canadian pension funds have a protocol that allows them to transfer money from one fund to another. They report the transfer to the CRA. You also have to report the withdrawal from the paying pension fund as income on your tax return but the receiving pension fund will give you a tax slip that enables you to have an offsetting deduction. No net tax.
Transferring from one workplace pension to another workplace pension should not be a taxable event in the spirit of Canadian law. I cannot be sure that the UK pension funds will issue paperwork that will satisfy Canadian tax authorities (though I may be wrong). This leaves you with two options:
Canadian pension funds have a protocol that allows them to transfer money from one fund to another. They report the transfer to the CRA. You also have to report the withdrawal from the paying pension fund as income on your tax return but the receiving pension fund will give you a tax slip that enables you to have an offsetting deduction. No net tax.
Transferring from one workplace pension to another workplace pension should not be a taxable event in the spirit of Canadian law. I cannot be sure that the UK pension funds will issue paperwork that will satisfy Canadian tax authorities (though I may be wrong). This leaves you with two options:
- show the income inclusion and offsetting deduction on your tax return, and trust whatever paperwork the UK pension funds supply will satisfy the CRA . There is a chance the CRA will initially assess the income inclusion but deny the offsetting deduction.
- ignore the transaction on your Canadian tax return. Ethically this is OK. Legally it is not, as you understate your income. I don't think "what they don't know won't harm them," is a sound defensive strategy.