Do I Have To Declare My UK Pension In Canada?
LEARNING OBJECTIVES
We’re passionate about providing high quality, relevant and up-to-date financial information to British Expats in Canada.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How to declare your UK pensions abroad
What an NT code is and why it is important for pension benefits
How to get flexible pension benefits in Canada
The benefits and disadvantages of transferring to a Canadian RRSP
Reasons to consider an International SIPP
This article is intended for Canadian residents who hold UK pensions.
Cross-border financial planning is complicated, and a very common query for British Expats in Canada is what to do with their UK pension pots.
Declaring Your UK Pension In Canada | The Double Taxation Agreement
In all cases, you will need to declare your UK pension income in Canada. This is the case whether you pay tax in the UK or Canadian tax.
The UK and Canada has a double-taxation agreement in place, meaning Canadian residents are protected from paying income tax in both countries.
Depending on your individual tax status and code held with HMRC, you can elect to pay tax on the income in Canada - alternatively taxation can be deducted at source in the UK from your UK pension provider.
To learn more about obtaining an NT code for your UK pensions, see our guide here.
Be sure to speak to an adviser to ensure your tax codes are correct, as claiming money back from HMRC in the UK can take several months.
What Happens To My UK Pension If I Move To Canada?
Nothing will change with your UK pension funds when you relocate abroad.
The first step would be to inform your existing pension plans of your new address, to ensure you can still access important policy information.
The next step would be to ask what your options are as a Non-UK resident.
Post Brexit, the overwhelming majority of UK pension funds will not allow flexible access to policy holders outside of the UK.
This means that you may not be able to access benefits as and when you want, and often the alternative is one of the following:
Take 100% of the pension at once (undesirable as this will likely trigger a large tax bill)
Purchase an annuity from your UK provider
Transfer your UK pension to an international provider that offers full flexible access and management
Do I Need To Transfer My UK Pension To Canada?
If your existing UK pension plans will offer you full-flexible access draw-down in retirement, then in theory there is no pressing need to transfer your UK pensions at all.
In this case, it would also be prudent to check that you can still manage your investments as a Non-UK resident, allowing you to structure your pension portfolio in line with your retirement goals.
We would also encourage clients to consider the impact of currency risk, as UK pensions can only be held in Pounds Sterling, which could lead to conversion risk when drawing down your pension fund.
Transferring UK Pension To Canada RRSP
In certain cases, you may be able to transfer your UK pensions directly into a Canadian RRSP, the local retirement plan. Be sure to understand the implications of doing so. See this article here which outlines the benefits and potential disadvantages associated with this transfer.
In many instances, you may be better off considering an International SIPP.
International SIPP Canada
The International SIPP is a purpose built pension pot specifically designed for British Expats abroad. Unlike UK pension providers, the SIPP for Canadian residents will allow you the following:
Full flexibility in retirement to take money when you want and how you want.
Ability to pay pension benefits into international or Canadian bank accounts.
Invest and hold funds in all major currencies, including CAD$.
Ongoing professional management in line with your risk profile and long-term planning.
Expat Financial Advice Canada
The Wealth Genesis is fully independent and regulated to provide financial advice to British Expats in Canada.
We charge a flat-fee for all our UK pension transfers and advice services, with zero commissions or hidden fees. Our fiduciary status ensures no conflicts of interest at any stage during the advice process.
To understand how we can help you plan for a fulfilling retirement in Canada, schedule an initial consultation with our expert team of professional advisers using the button below.
