Canadian taxes for Brits: the UK link and pensions

Once you settle in Toronto, Canada taxes everything you earn worldwide, and the job is to leave the UK system cleanly so the two taxmen don't both take a bite.

The short version

Canada taxes residents on worldwide income. For most newcomers, Canadian tax residence starts on the first day you live in Canada [1].
You pay two layers: federal tax from 14% and Ontario tax from 5.05% in 2026, both rising with income [2].
The tax year is the calendar year, and returns are due by 30 April (15 June if you or your partner are self-employed, though any tax owed is still due earlier) [1].
The UK–Canada tax treaty stops most double taxation. Regular pension payments, including the UK State Pension, are generally taxable only where you live [5].
Your State Pension is paid but frozen in Canada: you get the rate you started on, with no yearly increase [6].

Pound conversions use the Bank of England spot rate of 5 November 2026 (£1 = CAD 1.8858).

How Canada taxes you

Canada, like the UK, taxes by residence, not citizenship. The CRA says you become resident for tax purposes when you have enough residential ties, and for most newcomers that starts on the first day you live in Canada [1]. The big ties are a home, a spouse or common-law partner, and dependants in Canada. Unlike the UK, there's no day-counting test you can read off a chart, though the 183-day rule can catch people who are around for long enough.

From that day on, Canada taxes your worldwide income: your Toronto salary, but also UK rent, interest, dividends and pensions. Income you earned abroad before you became resident isn't taxed in Canada [1]. Someone arriving in August files a part-year return covering August to December.

Federal and Ontario rates for 2026

You pay federal tax and provincial tax, both worked out on the same return. These are the 2026 rates [2]:

Taxable income (CAD)	Federal rate	In pounds (roughly)
Up to 58,523	14%	up to about £31,030
58,523 to 117,045	20.5%	up to about £62,070
117,045 to 181,440	26%	up to about £96,210
181,440 to 258,482	29%	up to about £137,070
Over 258,482	33%	over about £137,070

Taxable income (CAD)	Ontario rate	In pounds (roughly)
Up to 53,891	5.05%	up to about £28,580
53,891 to 107,785	9.15%	up to about £57,160
107,785 to 150,000	11.16%	up to about £79,540
150,000 to 220,000	12.16%	up to about £116,660
Over 220,000	13.16%	over about £116,660

Add the two together and a middle earner in Toronto pays a combined marginal rate in the high twenties to low thirties, and top earners over 50%. On top of the rates, Ontario charges a surtax on higher provincial tax bills and the Ontario Health Premium, collected through tax, which helps fund OHIP. Your pay will also have Canada Pension Plan (CPP) and Employment Insurance (EI) contributions taken off, the rough equivalent of National Insurance.

Instead of a UK-style Personal Allowance, Canada gives non-refundable tax credits, the main one being the basic personal amount. The effect is similar: the first slice of income is effectively tax-free.

Filing and benefits

Returns: due 30 April for the previous calendar year; 15 June if you or your partner are self-employed [1]. Your first return is due the year after you arrive [1].
No PAYE coding notices. Employers deduct tax at source, but everyone files a return, and most people get a refund or a bill.
Benefits come through the tax system. The CRA pays the Canada Groceries and Essentials Benefit (formerly the GST/HST credit), up to CAD 679 a year (about £360) for a single person, and the Canada child benefit, up to CAD 7,997 (about £4,241) a year for each child under 6 [1]. Temporary residents generally need to have been here 18 months before child benefit starts [1].
Keep records for at least six years [1].

Leaving the UK tax system properly

Getting the UK side right matters as much as filing in Canada. The UK also taxes by residence, so the question is whether you've stopped being UK resident under the Statutory Residence Test.

Tell HMRC you're leaving. Use form P85 if you don't file Self Assessment; if you do, you report it on your return with the SA109 residence pages. Our guide to leaving the UK and the P85 walks through it.
Check split-year treatment. If you leave part way through a UK tax year to work full-time abroad or join a partner, the year can be split so you're taxed as non-resident after you go. See split-year treatment.
Watch your UK days and ties in later years. Frequent long trips home can make you UK resident again.
Keep claiming the UK Personal Allowance. As a British citizen you keep the £12,570 Personal Allowance against UK income even when non-resident (2026/27), and you claim it each year on form R43 if you don't file Self Assessment [7][8].

Bear in mind the mismatch in calendars: the UK year runs 6 April to 5 April, Canada's is January to December. A tax adviser who knows both countries can check your situation, especially in the year you move.

The UK–Canada tax treaty

The UK and Canada have a double taxation agreement dating from 1978, updated by later protocols, the most recent in 2014, and modified by the Multilateral Instrument from 2020 and 2021 [3][4]. Its job is to decide which country gets first go at each kind of income, and to make the other give credit.

UK income while you live in Toronto	Who taxes it, broadly
Regular pension payments, including the UK State Pension and workplace pensions	Canada only, as your country of residence [5]
UK annuities	Both, with UK tax capped at 10% of the taxable part [5]
Rent from a UK property	The UK first; Canada too, with a credit for the UK tax [5]
UK bank interest and dividends	Mainly Canada; any UK tax is credited
UK government salaries	Usually the UK; check the treaty for your case

Where the UK has taxed the income first, Canada deducts the UK tax from the Canadian tax on the same income [5]. So UK rent is still reported to HMRC, usually under the Non-Resident Landlord Scheme, and then again to the CRA, with a foreign tax credit for what you paid in the UK.

The treaty also deals with capital gains when you move. Canada generally treats you as having acquired most of your assets at their market value on the day you arrive, so it only taxes growth after that point, and the treaty has a matching rule for people who move between the two countries [5]. If you hold UK shares, a buy-to-let or crypto, get advice before you sell. Our guide to double taxation agreements and reliefs explains the HMRC forms for claiming relief.

Your State Pension and other UK pensions

The State Pension

The UK State Pension is paid to you in Canada, but it doesn't get the yearly increase there. GOV.UK says plainly that you can't get increases in Canada or New Zealand [6], even though the UK has a social security agreement with Canada. You stay on the rate you were first paid abroad. The full new State Pension was £230.25 a week in 2025/26 and is £241.30 a week in 2026/27, so a Brit who moved over in 2025/26 is already £11.05 a week behind [9].

For tax, the treaty treats the State Pension as a periodic pension, so it's normally taxed only in Canada while you live there [5]. It's paid without UK tax taken off. You'll declare it on your Canadian return in Canadian dollars. For the full story, including how it interacts with the Canada Pension Plan and Old Age Security, see the frozen UK State Pension in Canada.

Workplace and private pensions

Regular payments from a UK workplace or personal pension are also generally taxed only in Canada under the treaty [5]. You may need to ask HMRC for a no-tax code (via a DT-Individual or the Canada-specific form) so the provider stops deducting UK tax. Lump sums are a different matter: the UK's 25% tax-free cash isn't automatically tax-free in Canada, so take advice before you draw one.

Never transfer a UK pension without regulated financial advice. Transfers to an overseas scheme can trigger the overseas transfer charge, and pension scams target people abroad. Read the FCA and MoneyHelper warnings first, and see our guide to UK workplace and private pensions abroad.

ISAs, RRSPs and the foreign property form

ISAs are tax-free only in the UK. Canada taxes the interest, dividends and gains inside them each year. Many Brits stop paying into them; see ISAs when you move abroad.
Canada's own wrappers are the RRSP (tax relief on the way in, like a pension) and the TFSA (tax-free growth, a bit like an ISA). Our guide to RRSPs, TFSAs and your UK pensions covers them.
Form T1135. Canadian residents whose foreign assets (such as UK bank accounts, shares or a rented-out flat) cost more than CAD 100,000 in total (about £53,030) must file a foreign property statement each year. Personal-use property doesn't count, and there's a break in the year you first become resident. The penalties for forgetting are steep.

If you've got questions about how your own mix of UK and Canadian income works out, our community group for Brits in Canada is a good place to compare notes before you pay for advice: join here.

Canadian taxes for Brits: leaving the UK system, the tax treaty and your State Pension