Leaving Canada for the UK: What's the Tax Picture?

The same departure tax that applies to any Canadian emigrant applies when you leave for the UK: CRA deems you to have sold most of your capital property at fair market value on the day you go. The distinctive feature of the UK corridor is the pension article in the Canada-UK tax treaty (signed September 8, 1978, last amended by Protocol in 2014): periodic Canadian pension payments to a UK resident are taxable only in the UK, so Canada withholds nothing on them. That is more favorable than most of Canada’s other treaties. The three decisions that shape your transition: making a clean break from Canadian residency, what to do with your RRSP and TFSA, and how to time the departure relative to the UK’s Statutory Residence Test.

Who’s this page for, exactly?

Canadian tax residents moving to the United Kingdom permanently or long-term: a Skilled Worker visa, Global Talent visa, Ancestry visa, spousal visa, or UK settlement. Not for short business trips or conference travel, and not for Brits moving to Canada. If you are leaving Canada for the US, the treaty is different, so start with the leaving-Canada tax checklist. If you are heading for Australia instead, the pension and capital gains treatment differs, and the comparison is in leaving Canada for Australia.

The decision map: what happens, in what order?

One table covering both sides of the move. The full Canadian-departure process is in the leaving-Canada tax checklist; this is the UK-corridor version.

Step	What happens	Deadline or trigger	Form(s)
1. Sever Canadian residential ties	Sell or vacate your home, cancel provincial health, close the ties CRA weighs	Months before the move	Document everything
2. Pick your departure date and keep proof	The latest of: the day you leave, the day your family leaves, or the day you become UK-resident under the SRT	Moving day	One-way tickets, visa activation, UK tenancy
3. Value everything you own at FMV on departure day	The deemed disposition inventory for the departure tax	Departure date	T1161 (if reportable property exceeds $25,000), T1243
4. File your final Canadian return	Worldwide income up to the departure date, plus the deemed gains	April 30 following departure (June 15 if self-employed)	T1 with departure date, T1161, T1243
5. Register with HMRC and get a National Insurance number	Required for employment, self-assessment, and accessing credits	On arrival	HMRC online, Jobcentre Plus for NI number
6. Notify Canadian payers: no withholding on periodic pensions under the treaty	Banks, RRSP custodians, pension plans, Service Canada	After departure confirmed	NR301 (treaty eligibility declaration)
7. Decide on RRSP, TFSA, and rental property	Keep the RRSP and convert it to a RRIF before you draw on it (RRIF payments within the periodic limit carry no withholding; RRSP withdrawals before maturity take 25%), collapse the TFSA (UK does not recognize it), NR6 if renting out Canadian property	Before or immediately after departure	NR6 (rental), Section 216 return annually
8. File your first UK Self-Assessment return	Worldwide income from the date you become UK-resident under the SRT	January 31 following the end of the UK tax year (April 5)	SA100 and supplementary pages

What triggers departure tax when you leave for the UK?

Section 128.1 of the Income Tax Act deems you to have disposed of most property you own at fair market value on the day you stop being a Canadian resident: investments, private corporation shares and most other capital property. Real property situated in Canada (your home or a Canadian rental) is one of the exceptions in section 128.1(4)(b); when you sell it later, the principal residence exemption rules still matter. The gain is reported on your final Canadian return at your marginal rate. The mechanics are identical regardless of destination: T1161 if reportable property exceeds $25,000, T1243 for the deemed dispositions, both filed with the final T1.

• The arrival-side rule. The Canada-UK treaty has its own version of a step-up. Under Article 13(10), when Canada taxes you on a deemed disposition as you leave and you then become UK-resident, the UK may tax gains on that property “only to the extent that such gains had not accrued” while you were a Canadian resident. (The Australia treaty gets to a similar place through an election in Article 13(6).) The rule doesn’t cover property the UK could have taxed anyway, such as UK real estate you owned before the move.
• Relief through credits as a backstop. Where double tax remains, the foreign tax credit article (Article 21 of the treaty) applies. Either way, you need a record of each asset’s fair market value on departure day, because that value marks where Canada’s gain ends and the UK’s begins.
• For the departure mechanics themselves, see what a deemed disposition is and the PRE on departure.

How does the UK decide you’re a tax resident?

The UK uses the Statutory Residence Test (SRT), a rules-based framework in force since April 6, 2013 (HMRC guidance RDR3). It applies per UK tax year (April 6 to April 5) and runs three stages in order. First, the automatic overseas tests: if you meet any one, you are non-resident. Second, the automatic UK tests: if you meet any one, you are UK-resident. Third, if neither set is decisive, the sufficient ties test weighs your UK connections against the number of days you spent in the country.

• The 183-day rule. The automatic UK test most arrivers trigger: spend 183 or more days in the UK in the tax year and you are UK-resident. For someone arriving mid-year on a work visa, the split-year treatment may apply, meaning you are treated as UK-resident only from the date of arrival rather than for the full April-to-April year.
• Dual claims. If the timing of your move means both Canada and the UK claim you, the treaty tie-breaker in Article 4(2) resolves it. The Canada-UK version follows the full OECD model with four steps: permanent home, centre of vital interests, habitual abode, and nationality. Once the tie-breaker assigns you to the UK, section 250(5) of the Canadian ITA deems you non-resident in Canada.
• The Canadian side. For more on how Canada determines whether you have actually left, see am I still a Canadian tax resident.

What happens to your RRSP and TFSA in the UK?

The RRSP is where the Canada-UK treaty can produce its biggest advantage, if you draw on it the right way. Under Article 17(1), “periodic pension payments” from Canada to a UK resident are taxable only in the UK, so Canada withholds nothing on RRIF payments within the periodic limit or on RRSP annuity payments after maturity. An RRSP withdrawal before maturity never counts as periodic, so it takes the full 25% Part XIII withholding, whether you take it in one hit or in instalments. The UK taxes pension payments as pension income. The TFSA gets no UK recognition and should be collapsed.

• Compared with other corridors. For RRIF payments within the periodic limit, this is more favorable than the 15% cap under the Australia treaty or the US-Canada treaty.
• The catch is the word “periodic.” Article 17(1) covers only “periodic pension payments,” and section 5 of Canada’s Income Tax Conventions Interpretation Act defines that term for every treaty. It excludes any RRSP payment before maturity, so an RRSP withdrawal falls outside Article 17(1) and takes the full 25% Part XIII withholding under Canadian domestic law (the treaty’s other-income article, 20A(3), sets no cap). A RRIF payment counts as periodic only until the year’s withdrawals pass the greater of twice the minimum or 10% of the fund’s January 1 value; payments above that also take 25%. (Article 17(3) has no lump-sum exclusion; it simply defines “pension” broadly.) The planning consequence: convert the RRSP to a RRIF before you draw on it, and keep each year’s withdrawals within the periodic limit. For more on the mechanics, see RRSP for non-residents after leaving Canada.
• The TFSA. The same problem as in any non-US, non-treaty-protected corridor. The UK does not recognize the TFSA as a tax-sheltered vehicle. HMRC taxes the investment income and realized gains inside it. Any contribution you make while non-resident is taxed by the CRA at 1% per month for as long as it stays in the account. Collapse it before or shortly after departure.
• For context on Part XIII withholding mechanics generally, the linked guide covers the rates by income type.

How are Canadian pensions taxed in the UK?

Canadian pension income paid to a UK resident is taxable only in the UK under Article 17(1). That includes CPP, OAS, employer pensions, RRIF payments within the periodic limit and RRSP annuity payments after maturity, but not RRSP withdrawals before maturity, which take 25%. Article 17(3) includes “any payment made under the social security legislation in a Contracting State” in the definition of pension. The result: Service Canada pays your CPP and OAS in full (no withholding), HMRC taxes them as pension income on your UK Self-Assessment return, and you owe nothing to Canada on them.

• OAS portability still applies. Service Canada pays OAS to UK residents the same as to anyone else.
• The recovery tax. The “clawback” under ITA 180.2 applies if your worldwide net income exceeds the threshold ($93,454 for 2025, indexed annually). For non-residents, Service Canada says the recovery tax applies only if you live in a country where the non-resident tax on Canadian pensions is 25% or more. Under the UK treaty that tax is 0%, so a UK resident doesn’t pay it and doesn’t need to file the Old Age Security Return of Income.

The Section 217 election, which lets non-residents file a Canadian return to be taxed at graduated rates instead of flat withholding, matters less in the UK corridor: periodic pension payments carry no Canadian withholding to optimize against. It can still help if you take RRSP withdrawals before maturity or RRIF payments above the periodic limit, because those are withheld at 25%. Section 217 matters more in corridors with treaties that allow source-state taxation of periodic pensions (Australia, for example).

Canada and the UK have a social security agreement (Convention on Social Security, in force since April 1, 1998), but it is limited. It coordinates coverage only (preventing dual CPP/NI contributions for temporary workers), not benefit eligibility. Unlike the US or Australian agreements, UK residence periods do not count toward CPP or OAS eligibility in Canada. If you have not accumulated enough Canadian contributory years for CPP or residence years for OAS, moving to the UK does not help fill the gap.

Does the UK tax worldwide gains from day one?

Yes, once you satisfy the Statutory Residence Test, the UK taxes worldwide income and capital gains. The UK tax year runs April 6 to April 5, and the split-year treatment can limit your first year’s exposure to only the post-arrival portion. UK capital gains tax rates for individuals are 18% (basic rate) or 24% (higher rate) on most assets, with an annual exempt amount (currently £3,000).

• The important structural point. The Canada-UK treaty splits the gain at the departure line. Under Article 13(10), after Canada taxes your deemed disposition, the UK may tax only the gain that accrues after you leave (compare the Australia treaty’s Article 13(6) election). You need the records to prove where the line sits, so keep your departure-day valuations, your Canadian departure-year assessment notice and T1243 permanently.
• The treaty language. Article 13(8) says gains on most property (other than real property, business assets of a PE, ships/aircraft, and certain resource rights) are “taxable only in the Contracting State of which the alienator is a resident.” But Article 13(9) carves out an exception: a country can still tax gains under its own law if the seller was resident there at any time during the fiscal year of the sale or at any time in the six years immediately before it. Since Canada’s departure tax deems the disposition to occur while you are still technically a Canadian resident, Article 13(9) confirms Canada’s right to tax the departure-day gains.

What does this cost, honestly?

The departure tax hits at your marginal rate on gains deemed realized. Zero unrealized gains means zero departure tax. The compliance cost sits on top: a final Canadian return with T1161 and T1243, plus your first UK Self-Assessment with worldwide income, foreign tax credits, and careful tracking of every asset’s cost basis in both currencies. The UK side takes care because you need per-asset departure values to apply the treaty’s Article 13(10) split, and because the UK tax year runs April to April rather than calendar year.

The order of operations, condensed?

The sequence mirrors any Canadian departure, with UK-specific items slotted in. The full version is in the leaving-Canada tax checklist; here is the short form for the UK corridor.

1. Months before: inventory residential ties, plan how each one ends, decide on the home (sell, rent with NR6, or keep vacant).
2. Weeks before: collapse the TFSA, notify CPP/OAS of the address change, cancel provincial health, record every asset’s adjusted cost base and departure-day fair market value (you’ll need these permanently to apply the treaty’s capital gains split in the UK).
3. Departure day: note the date, keep proof (one-way ticket, visa activation, UK tenancy agreement). The SRT split-year clock starts here.
4. Arrival in the UK: apply for a National Insurance number, register for a GP (NHS is free for residents), open a UK bank account.
5. Notify Canadian payers: NR301 declaration to stop Part XIII withholding on periodic pension payments (the treaty exempts them entirely; RRSP withdrawals before maturity stay at 25%).
6. April 30 following departure: file the final Canadian T1 with T1161 and T1243.
7. January 31 after the first UK tax year ends (April 5): file the first UK Self-Assessment return with worldwide income and any treaty relief.
8. Ongoing: RRIF withdrawals within the periodic limit taxed only in the UK (no Canadian withholding), no OAS Return of Income to file (the treaty rate on periodic Canadian pensions is 0%), UK Self-Assessment each year.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.