Retiring to Canada from the UK – 5 things you need to know

Are you looking to retire to Canada from the UK?

I recently started working with a client who did so. Here are 5 things he told me that he wished he knew before doing so.

1️⃣ It pays to obtain a UK NT (no tax) code before drawing any pension benefits in Canada.

Otherwise, an emergency UK tax code will likely be used, resulting in lots of tax being deducted and held for almost a year.

Once you have an NT code, no UK tax will be deducted.

2️⃣ If tax is deducted, HMRC will eventually reimburse it.

This will be done automatically, but it can take months. You should not have to complete a tax return or apply for this refund.

3️⃣ The tax-free portion of your pension is not tax-free in Canada.

While HMRC will not deduct tax on it, in  Canada, it is 100% taxable income.

If possible, you should look to draw down this portion of your pension before you move to Canada.

4️⃣ Banks in Canada charge around 2-2.5% for converting from GBP to CAD, (this cost is usually hidden in their crappy exchange rates).

By setting up a GBP account with an online platform like Wise, you can make significant savings.

5️⃣ When reporting foreign income in Canada you have to do the conversion in your tax return using the Bank of Canada’s exchange rate.

This means you are likely to pay tax on more money than you actually receive.

Retiring to Canada: Useful Resources

  1. British Expats Guide – moving to Canada from the UK
  2. MoneySense – best places to retire in Canada
  3. – family sponsorship
  4. – parent/grandparent super visa
  5. – immigrate to Canada
  6. WorldFirst – how to retire to Canada
  7. Pension Wise – living abroad
  8. – state pension if you retire abroad

* Sources checked on 13th December 2022

Every week, I send out a short email to British expats who are approaching or considering retirement.

I use it to answer common (and not-so-common) questions that they have about pensions and investments.

To receive it in your inbox, just enter your name and email address below.

*I promise that I won’t send you spam (I hate it too) and you can unsubscribe at any time.

About Ross

▪️Ross has been a financial adviser for the past 26 years.

▪️He specialises in working with British expats over age 50 who are looking to optimise their finances for retirement.

▪️He is qualified as a financial adviser both in the UK, as a Chartered Financial Planner®, and in the EU, as a European Financial Planner®.

▪️Ross has been an expat himself for 22 years and is married with 2 children.