Help Tax Issues!

Hiya. I've been living in the UK for just about a year. I've filed a Canadian Tax Return and I'm on PAYE here, so apparently I don't need to file here in the UK. My problem is that back in Canada I had Tuition Tax Credits that basically meant I would get all the tax I've paid in my first year of working back. On my Canadian Tax Return, it does say that I'm owed all my UK tax back, but I have no idea what I do now to get the UK tax. Can anyone help me?

I am not sure I understand.are you saying that you paid income tax in Canada and UK for the same income (that you received in the UK )?

No I've just paid tax in the UK. Oh why do I have a feeling that I've totally screwed this up! I went to a professional back in Canada and everything when I filed my taxes.

I am not an expert but how can you claim Tuition Tax Credits which is a Canadian tax credit on your UK income tax? I would not have though that would be possible.

I think you should try to find an accountant in the UK who also knows about the Canadian tax system to find out if you can effectively claim something back from your UK tax.

I think also it can make a difference if you are here just for a year (I think some people claim it back once they are back in Canada) or if you are here for longer.

Katy,

Keep us updated as I would be very interested to hear the outcome of this

Ian

I'm not quite sure what you're on about either, but if you've filed taxes in Canada and you need to claim tax credits in Canada, it sounds as though your tax home is Canada.

In that case you need to file for a tax treaty exemption to exempt you from paying UK income taxes altogether.

http://www.hmrc.gov.uk/cnr/form_canada.htm

You can use that form to claim back any UK income tax withheld under PAYE already.

You can also file HMRC Form R105 with your bank so they do not do withholding on your bank interest as well.

If you haven't done this before I suggest you give them a call at the office in Nottingham, as the NI exemption is a bit tricky. I can't remember but I think you may need to get some CPP paperwork.

I am a UK chartered accountant and Canadian CGA offering UK and Canadian tax services to expats. Check out my website at lynch.pro

Many of my Canadian clients who have worked in the UK have found that their employers have deducted too much tax through the PAYE system. It may be worth your while to file a UK tax return and apply for a refund. My fees are reasonable.

Give me a call if I can be of help.

Kieran

In that case you need to file for a tax treaty exemption to exempt you from paying UK income taxes altogether.

I'm wrong about this bit, I was confused with my pension claim, you are subject to PAYE but at a lower rate, and you can claim a foreign tax credit in Canada to cover any tax you paid in the UK (up to a point, the higher rate of 40% kicks in around $72,000 which is a much lower level than the higher rates in Canada).

But anyway, calling the non-residents dept. in Notts. is the place to start in any event.

Dont stress - it's easier than you think. You get a form that you fill out showing that you are permanently leaving the UK (Sorry, I am assuming this is the case, if not ignore me). You include your address in Canada. A few months later you get a cheque.

You then file your taxes in Canada for the next year and include your tuition credits and you use them up.

I did the same thing as you - but I was in London for three years. I was freaking out that everyone kept saying "it's fine." but in Canada it is much more difficult (ie, you had someone else do your taxes you said). It's all quite simple in the end, as long as you fill in the correct forms - sorry I can't remember the name of the form - I can dig it up if you want it. I have it filed away somewhere.

Cheers
Victoria

You can avoid NI withholding if you keep your tax home as Canada and tax rates in Canada are usually lower too depending on where you live so it can be better to do it that way. Plus it saves telling the CRA that you left the country and cutting residential ties to Canada.

The form you're on about is a P85. At the end of the day HMRC might determine your tax home was Canada anyway and refund the NI, but there's no point giving them the money if you don't have to.

It's best to have a chat with the non-resident dept. in Notts. as they are actually quite helpful unlike their US equivalent.