[der.dev]

In a few months I will be moving to UK for work, and expect to be back in 2+ years.

SAVINGS:
I have TFSA (maxed), RRSP (maxed for home buyers program), and rest in HISA.

GOAL:
I want to continue saving while in UK, so that when I come back I am in a good position to purchase a home.

QUESTIONS:
How should I organize my banking here and in the UK to better achieve these goals?

Should I invest my future UK savings in UK? Or should I save them in Canada?

Should I open one of those HSBC Passport accounts to be able to move funds?

I hope there are some current or former expats on this forum willing to share some of their wisdom with me!

 

[humble_pie]

in baby steps ...

first, félicitations & best wishes for 2016 & 2017. Basing in the UK, even if it's not london, will give you great low-cost access to most vacation spots on the planet. Air fares out of london are significantly cheaper than fares out of north america. Morocco, greece, paris for a weekend, here you come!

it sounds as if you will be remaining a canadian taxpayer. Will you also be paying income taxes in the UK? if so your TFSA may be at risk, from GB's Inland Revenue point of view - ie IL may tax it after all, in line with the harsh view that the IRS takes of US taxpayers who happen to have TFSA accounts.

HSBC is a good idea but keep in mind that all 5 chartered canadian banks have large & active UK offices. These can probably cater to all of your needs. If your existing registered accounts are at a canadian bank, won't you please first check out the services they can offer you out of london or edinburgh.

 

[fraser]

When we banked in the UK some time ago we found that the banks were more oriented inward than they were to their clients. We dealt with RBC in the UK. Not such a great experience.

CAD is weak. You may want to consider this prior to moving funds to the UK. It is actually a good time to move money from the UK to Canada given our low dollar.

Not certain what your arrangements are but we both, and our son have what was know as patriality status. Essentially you can apply if you have grandparent or parents born in the UK. You get this from the UK High Commission.

In my son's case he was able to get off the plane, find and start work immediately. This status allowed him to obtain a NI number for work and entitled him to a host of other benefits that he never had to take advantage of.

 

[der.dev]

Thanks for the wishes!

I will be there on one of the worker visas, so I will pay UK taxes. It's odd UK does not recognize TFSA, considering they have a similar program called ISA.

What are the major implications (good and bad) of losing the Canadian residence status, say after 2+ years outside. I am concerned about losing access to my funds and/or banking services.

Healthcare is not an issue as the UK NHS seems to be similar to what we have here.

I hear that a non-resident can pull RRSP funds at a nominal tax rate of 25%. Would these funds be taxed in UK, thus negating the benefit?

The idea of moving my future UK savings into Canada does not sound bad to me considering the historically favourable exchange rate. And it looks like it will take a while (years) for the Canadian dollar to recover.

Unfortunately I am not banking with any of the big-five banks: a smaller mostly-Quebec and some credit unions. So it looks I will need some arrangements in this sense.

I looked at what banks have branches in the town where I will live (close to London). I see: Santander, Lloyds, NatWest, HSBC, Barclays. Any opinions on these?

I am interested in HSBC as a potential bridge between UK and Canada. Are there more efficient ways to achieve this?

 

[Eclectic12]

As a Canadian NR, I don't believe you would have any problems with losing access to the funds and most services. The bigger issue IMO is that CRA uses having banking/investment accounts as one of the secondary indicators that one *is* a tax resident.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

I can see where one likely can leave the TFSA and RRSP as-is (in your case, you'd want to drain the TFSA before going to the UK) but beyond that, it gets murky as to how taxable accounts would be viewed or how much weight it have in deciding if you really were a NR.

If it does make sense for you to give up Canadian tax residency while leaving the RRSP intact - one will not be earning any RRSP contribution room until one is a Canadian resident again. The annual TFSA contribution room also goes away and where one left the TFSA intact, as a NR one can withdraw but can't put any money back into the TFSA.


If there's anything in a taxable account for investments, those will be deemed to have been sold at FMV on the date of departure.
http://www.mondaq.com/canada/x/217034/Income+Tax/Goodbye+Canada+HelloTax+Implications

Though if you plan on coming back anyway, I believe I've read where the owing taxes can be deferred and then when back in Canada - the departure reversed (unless one sells the investment first).


As for the "pull RRSP funds at a nominal tax rate of 25%. Would it be taxed in UK, thus negating the benefit?" question ...
This link seems to say where one's UK income is under $25K, the Canadian 25% withholding tax is the end of it. Over that amount, means it won't be worthwhile.
http://www.centa.com/article.php/20060727153645968

The HM Revenue & Customs bulletin at the links listed below seems to be saying the tax treaty sections to avoid double taxation are useless for the RRSP. The issue is that Canada taxes the RRSP withdrawal where there is no UK tax generated by a withdrawal. UK tax is generated when the assets are sold, which Canada does not tax.

It seems tax charges by both are required for the same event before there can be tax relief.
http://www.hmrc.gov.uk/manuals/dtmanual/dt4617.htm


I'd want to check with a qualified expert before making a decision.

Even when it seems simple (ex. the US), the more I read the more I'd prefer an expert. In the case of the US, I've heard for years that the RRSP is US tax exempt but then a more recent article advised a guy moving to the US to sell the investments in his RRSP then re-buy them. It seems that only the cost of the RRSP held investment is US tax free. The individual in question has a cost of $120K for what was worth $250K so that the sell/re-buy would bump the cost up to $250K (keeping it US tax free).


Cheers

 

[mike_302]

Hey der.dev.,

I am doing the same thing as you actually, starting in August this year. I have been exploring banks already and I would recommend the TSB bank. They used to be part of a much larger bank (Lloyd's) up until a few years ago, and now they appear (to me) to be similar to, say Tangerine in Canada -- I mean that in the sense that they have roots in a large national bank, but they are clearly catering to younger customers than their parent bank. I am particularly interested in their account that costs 10 GBP / mth, since it gives 5% interest for the first 2K GBP in your chequing (called "Current") account, 5% cashback on the first 100GBP in debit tap purchases per month, and both travel insurance in the EU, and mobile phone insurance... There's no equivalent in Canada! It's a bit exciting.

Keep in touch as you continue exploring this move. I have come to some of my own conclusions on the move, including staying a tax resident until all my tuition tax credits are used up at the least... I also understand that the TFSA is recognized by a Canada-UK tax treaty? Or at least it might be with some Canadian institutions? It's really been a nightmare to figure all that out, with any knowledgeable tax specialist charging $500/hour to do research.....

Cheers