This article explains how UK and Canadian taxes work for British expats moving to or living in Canada. It covers residency rules, the UK–Canada Double Tax Agreement, treatment of income, property and pensions and practical steps to stay compliant.
Moving from the UK to Canada brings a fresh start in lifestyle, culture and opportunity, but it also means navigating two distinct tax systems (as well as the extreme weather).
While both countries have long-standing rules to prevent double taxation, the moment you change residency your reporting obligations shift dramatically.
Understanding when and where you’re considered tax resident, how income is treated under the UK–Canada Double Tax Agreement (DTA) and what remains taxable back in the UK can make the difference between a smooth transition and expensive errors.
The information in this article is for general guidance only and does not constitute personalised tax advice. Tax rules vary depending on individual circumstances. Readers should seek professional support before making financial decisions.
As with most countries, Canada taxes residents on their worldwide income.
You generally become a Canadian tax resident once you establish significant residential ties, such as a home, a spouse or dependants in Canada, rather than on the date you land.
The Canada Revenue Agency (CRA) applies a “factual residency” test, so it’s your real-life circumstances that determine the start of your Canadian tax life.
If you’re moving permanently, your Canadian residency usually starts from the date you arrive to live there full-time. Temporary assignments or extended visits may still count if your personal and economic ties are clearly shifting to Canada.
The UK uses the Statutory Residence Test (SRT) to determine when you stop being UK tax resident.
Your status depends on days spent in the UK, work patterns and ongoing ties such as family or property.
You can normally claim split-year treatment for the tax year you leave, meaning only part of the year remains UK-taxable.
Once you’ve left, you’ll usually submit a Self-Assessment tax return (including form SA109) or a P85 to inform HMRC of your departure and as you are no longer a tax resident, you will need assistance to file this.
Timing matters: for many people, there will be an overlap between the UK and Canadian tax years, which run on different cycles.
The Double Tax Agreement between Canada and the UK is in place to avoid income being taxed twice.
It determines the taxing rights between the UK and Canada depending on the type of income:
In practice, this means you report income in both jurisdictions but claim credit for tax already paid elsewhere. Coordinated tax returns in both jurisdictions prepared by advisors who understand the tax treaty will ensure you don’t overpay or miss potential tax reliefs.
In some cases, they will also help interpret and implement opportunities for you to be more tax efficient if you are able to work and plan with them before you arrive in Canada.
Once Canadian residency begins, your worldwide income becomes reportable in Canada.
That includes UK salaries, rental profits, dividends, interest and capital gains.
Some UK investments lose their tax advantages abroad. ISAs, for example, are fully taxable in Canada and all income and gains must be reported annually. If you hold UK funds, the Canadian tax treatment can differ significantly, so it’s worth reviewing portfolios before or soon after arrival.
Both countries levy Capital Gains Tax, but in Canada only a portion of each gain (the “inclusion rate”) is taxable. Canada also resets your cost base for most non-Canadian assets to their market value on the date you become resident, reducing exposure to gains accrued before arrival.
Pensions are often the largest cross-border asset.
Under the DTA, most UK pension income is taxable only in Canada once you become resident there. You may need to request that your UK pension provider apply a “no tax” (NT) code so that PAYE isn’t withheld unnecessarily.
If you still contribute to UK schemes or are considering transferring to a Canadian plan, financial advice is essential. Transfers between countries can trigger tax consequences or affect access to benefits such as the UK State Pension. Some expats choose to keep contributing voluntarily to UK National Insurance to preserve their record.
Owning property in the UK keeps you within scope of certain UK taxes even after moving abroad. For example, rental income remains taxable in the UK (with the option to claim foreign tax credit in Canada).
If you sell a UK property while non-resident, you must report and pay any UK Capital Gains Tax due within 60 days of completion.
Dual-jurisdiction cases are rarely straightforward. You should seek cross-border tax support if you:
Coordinated advice helps ensure both tax authorities see a consistent picture and that you claim every available relief.
If you’re preparing to move or already living in Canada, the following checklist could help you stay compliant and minimise unnecessary tax and stress:
Whether you’re preparing to leave the UK, have recently arrived in Canada, or need to stay compliant in both countries, we can connect you with trusted, qualified tax specialists in each jurisdiction.
Our partners work together on cross-border cases to ensure all the correct taxes are filed, paid with the most suitable tax reliefs applied.
