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Working for UK company in Canada

Working for UK company in Canada

Old Apr 6th 2021, 5:18 pm
  #1  
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Default Working for UK company in Canada

Hi guys, I am planning to move to Canada (initially on a spousal visa) in September. I will be continuing to work for the same company I do now in the UK, but obviously this is going to affect me when it comes to tax and my pension.

I've done some research but to be 100% honest I am very confused! Even my company are struggling a bit to understand how it all works! I guess what I want to know is:

- How does my tax get affected and what do and don't I have to pay
- How does my existing UK student loan get effected?
- What impact will it have on my private pension scheme - and are there schemes I can pay into over here easily?
- Who can I talk to about this (preferably not for a large fee) to help better guide me through it?

I know there must be other people who have done this, so what steps and hoops do I have to jump through to make sure this is all legal?

Thank you in advance!
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Old Apr 6th 2021, 9:34 pm
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Default Re: Working for UK company in Canada

Hello and welcome to BE!

There are dozens of threads on the subject

1) You become self employed - you invoice the company monthly / quarterly / weekly (* your choice)... no HST requirement as you are providing a service to an overseas (non-Canadian) organisation.. you deduct 'use of home office' for tax purposes - you pay taxes, CPP etc., on your income.
(suggest you start a transferwise or similar account - where they can pay into a 'virtual UK account' and you can then transfer the money to your Canadian account without wire transfer fees)
No affect on your student loan - you need to register that you have moved abroad
Private Pension - not as self employed, you pay into the Govt scheme (CPP)
No need to talk to anyone - just ask questions here for now
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Old Apr 8th 2021, 1:37 am
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Default Re: Working for UK company in Canada

Being self employed is one option, you would need to keep records and do books for tax filing. If you anticipate revenue of over $35000 you would need to register for a GST/HST account with CRA and file, most likley annually with small business. This is not optional, even if you don't charge sales tax to a client.
If you were to remain an employee and had deductions taken in the UK, credit can be claimed for foreign tax paid against Canadian tax due. CRA would charge the difference between what you paid overseas and what taxes would have been in Canada.
https://www.canada.ca/en/revenue-age...ax-credit.html
I don't believe you can contribute to UK pensions as a non resident. Canada does not really have pension schemes. There are registered retirement plans, contribution limits are set based on the previous years Canadian tax return. Funds in a registered account grow as untaxed income, tax is only payable when funds are withdrawn, at your marginal rate in the year of withdrawal. Folks usually deposit money into an RRSP in years of higher income to save for retirement in years of lower income, maximising the tax benefit. For someone on a temp permit, who is returning to their home country, this can get complicated.
Professional advice that one pays for should pay for itself. Ill advised mistakes can themselves be costly. You may want to seek out an accountant when you are in Canada. Personally, I would use an accountant and not a tax filer or preparer.

Last edited by Farmer on a bike; Apr 8th 2021 at 1:39 am.
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Old Apr 9th 2021, 6:50 pm
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Default Re: Working for UK company in Canada

Afternoon Simon, hope you are well. I am in a similar position to you (moving to Canada and continuing to work remotely for a UK company as a full time employee of the company). I have been getting advice from various places, lots of reading including a degree on the SRT test (lol) and this is what I have found out so far:

1) Best to contact an accountant in the UK for UK taxes and a Canadian accountant for Canadian taxes - there doesn't seem to be a one shoe fits all solution. I have come across a company called TaxScouts (UK) who do everything online and for a flat fee for a one off filing, I haven't used them yet. They have decent reviews
2) When leaving the UK, I will submit a P85. Based on what I submit, HMRC *may* issue me with a NT tax code, meaning I don't pay tax on my UK income in the UK and will pay this in Canada instead
3) As mentioned in the post above, when filing a CRA return, you can claim a foreign tax credit against tax paid in the UK. Canadian tax rate is generally higher than the UK so you will surely end up paying some tax to CRA. I have been caught in the double tax trap twice since 2013 and I only learnt about the foreign tax credit this time round, my useless accountant did not advise on this!!!
4) NI contributions - I have no clue on this one but I spoke to a legal adviser here who googled some information for me and advised there is a social security agreement (https://www.canada.ca/en/revenue-age...ments.html#tbl). I'm not entirely sure how this works but I am waiting to get to Canada to contact the equivalent authority (probably Service BC) to find out what to do.

All to say I am slowly finding information, including from the helpful posters on this site, but I do feel like I am becoming a tax expert the more hours I spend reading stuff! The deeper you go the easier it is to get lost. I've found I have significant ties to Canada and technically meet requirements to be a tax resident of Canada, but at the same time I meet some requirements of the UK too. I have studied the double taxation agreement and got to the conclusion you could argue your tax residency to be in either country depending on how you look at the facts.

Last edited by dj322; Apr 9th 2021 at 6:53 pm.
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Old Apr 10th 2021, 1:14 am
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Default Re: Working for UK company in Canada

Originally Posted by dj322 View Post
Afternoon Simon, hope you are well. I am in a similar position to you (moving to Canada and continuing to work remotely for a UK company as a full time employee of the company). I have been getting advice from various places, lots of reading including a degree on the SRT test (lol) and this is what I have found out so far:

1) Best to contact an accountant in the UK for UK taxes and a Canadian accountant for Canadian taxes - there doesn't seem to be a one shoe fits all solution. I have come across a company called TaxScouts (UK) who do everything online and for a flat fee for a one off filing, I haven't used them yet. They have decent reviews
2) When leaving the UK, I will submit a P85. Based on what I submit, HMRC *may* issue me with a NT tax code, meaning I don't pay tax on my UK income in the UK and will pay this in Canada instead
3) As mentioned in the post above, when filing a CRA return, you can claim a foreign tax credit against tax paid in the UK. Canadian tax rate is generally higher than the UK so you will surely end up paying some tax to CRA. I have been caught in the double tax trap twice since 2013 and I only learnt about the foreign tax credit this time round, my useless accountant did not advise on this!!!
4) NI contributions - I have no clue on this one but I spoke to a legal adviser here who googled some information for me and advised there is a social security agreement (https://www.canada.ca/en/revenue-age...ments.html#tbl). I'm not entirely sure how this works but I am waiting to get to Canada to contact the equivalent authority (probably Service BC) to find out what to do.

All to say I am slowly finding information, including from the helpful posters on this site, but I do feel like I am becoming a tax expert the more hours I spend reading stuff! The deeper you go the easier it is to get lost. I've found I have significant ties to Canada and technically meet requirements to be a tax resident of Canada, but at the same time I meet some requirements of the UK too. I have studied the double taxation agreement and got to the conclusion you could argue your tax residency to be in either country depending on how you look at the facts.
There are tax experts in Canada who have knowledge and understanding of the tax rules and regulations in the UK, and the impact on Canada taxes.
https://britishexpats.com/wiki/Category:Taxes-Canada

NI contribution have no effect on Canada Social Insurance (CPP contributions) via the social security arrangement unless you are working temporarily for a Canadian company in the UK... lots of threads on the subject You can pay voluntary NI payments ... as well as CPP in Canada.
https://www.canada.ca/en/services/be...d-kingdom.html
https://www.gov.uk/voluntary-nationa...-contributions

Working as an employee for a UK company may well leave you with a nightmare in contra'ing the taxes in the UK offset against taxes due in Canada... together with the gains on the exchange rates https://britishexpats.com/wiki/Curre..._Losses-Canada .. it's often simpler to invoice them and then be able to offset your expenses for home office against your taxes in Canada.

These may also be of use
https://www.canada.ca/en/revenue-age...mmigrants.html
https://www.canada.ca/en/revenue-age...-expenses.html
https://www.canada.ca/en/revenue-age...-expenses.html
https://www.canada.ca/en/revenue-age...cy-status.html

Last edited by Siouxie; Apr 10th 2021 at 1:29 am.
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