Canada → UK

Canadians moving to the UK face the Statutory Residence Test, a new Foreign Income and Gains regime replacing the non-dom basis, and a 2025 withholding change that affects every RRSP withdrawal.

Last reviewed: May 23, 2026

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TaxKiln framework

Five-Stage Emigration Tax Lifecycle

TaxKiln's lifecycle framework for Canadian emigration tax: (1) pre-departure planning — asset reorganisation, CDA extraction, LCGE crystallisation, RRSP/TFSA timing, provincial residency strategy; (2) departure tax crystallisation — s.128.1(4) deemed disposition, T1243/T1161, T1244 security; (3) treaty positioning — Article IV tie-breaker, destination pension/RRSP treatment, withholding reduction; (4) post-departure compliance — Section 116 on TCP, Part XIII on passive income, provincial trailing tax; (5) return — s.128.1(7) basis reset, foreign retirement account elections, TFSA/RRSP room recalculation.

1. UK Statutory Residence Test

The SRT (FA 2013 Schedule 45) is a three-step decision tree: automatic overseas tests→ automatic UK tests → sufficient-ties test. Day-counting and "ties" (family, accommodation, work, 90-day, country tie) determine residency. Split-year treatment is available in eight cases including arriving with a home in the UK or starting full-time work.

2. The new Foreign Income & Gains (FIG) regime — April 2025

The remittance basis was abolished from 6 April 2025 (UK tax year start). The new FIG regimegives qualifying new UK residents (10-year prior non-residence) a 4-year exclusion from UK tax on foreign income and gains, with full relief regardless of remittance. After year 4, worldwide taxation applies.

3. RRSP / RRIF withholding — October 2025 change

Treaty Article XVII: periodic pension payments (including RRIF minimums) are subject to 15% Canadian withholding; lump sums 25%. From 1 October 2025, CRA implemented a mandatory 25% withholding on all RRSP/RRIF distributions to non-residents unless the payer holds documentation supporting the lower 15% periodic rate. Document the periodic election with the payer ahead of any distribution.

4. CPP / OAS

The Canada–UK Social Security Agreement (1995) coordinates contribution periods. Under treaty Article XVII, CPP and OAS received by a UK resident are typically taxable only in the UK; OAS recovery tax (T1136) may still claw back high-income receipts.

5. CCPC under UK CFC rules

A UK-resident shareholder of a Canadian CCPC may bring the company within CTA 2010 Part 9A (UK CFC rules). The chargeable-profits gateway, finance-company exemption, and excluded-territory exemption are tested annually. Salary vs dividend strategy and timing of dividends around the FIG window can be material.

6. NICs — Class 2 and Class 4

Self-employed Canadians becoming UK-resident pay UK Class 2 (where applicable) and Class 4 on self-employment profits. Voluntary Class 3 contributions can preserve UK State Pension entitlement.

Worked example — BC freelance IT contractor relocating to London

Persona: Marcus, age 39, BC sole-prop converted to CCPC two years before move; CCPC holds $400k in passive investments. Departure tax under s. 128.1(4) triggers on shares; the LCGE is not available (passive-investment CCPC fails QSBC tests). He elects T1244 deferral on shares, files T1161 (FMV > $25k), times a pre-departure eligible dividend to extract the GRIP balance at Canadian rates, then claims the FIG 4-year exclusion on post-arrival foreign investment income. He documents his RRSP periodic-payment status with the payer to retain the 15% Article XVII rate after October 2025.