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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4424
Experience:  FCCA FCMA CGMA ACIS
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I have a a small Canadian work pension worth about £2,500 annually,

Customer Question

I have a a small Canadian work pension worth about £2,500 annually, which is paid in Canadian dollars into a Canadian savings account. I use it to fund holidays in Canada to visit my daughter and only make withdrawals from an ATM.
Should I declare this in my UK tax return? If so, would the UK tax authority claw back unpaid tax from previous years. I am a UK citizen and resident
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

As an UK citizen resident in the UK your entire income world wide is liable to UK taxation and the Canadian income should be declared on your annual self assessment return. Indeed HMRC might seek to reclaim from earlier periods and could impose penalties and charge interest on unpaid tax. You should make your peace with your tax office as soon a possible.

That was the bad news, now here is the good. Under the double taxation treaty between the UK and Canada any tax deducted by the Canadian authorities is available as a tax credit against any UK tax liability. If, however, the deducted tax exceeds the amount due under UK taxation then the balance of the tax credit is lost. Unused overseas tax credits cannot be claimed through HMRC channels.

Your use of your Canadian source of funds is of no concern to HMRC. However, if your are receiving interest on these moneys, the interest should be declared also.

Sorry to have to convey what might be rather dismal news.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.