The UK ISA and Rental Property Tax Guide for UK Physicians in Canada

In short: A UK ISA is not tax-free once its owner becomes a Canadian resident: income and gains inside it are taxable on the Canadian return, although assets are valued at fair market value on arrival so pre-arrival growth is not taxed in Canada. UK rental income is reported in Canada in Canadian dollars with a foreign tax credit for UK tax paid, and the landlord should register under HMRC's Non-Resident Landlord Scheme. Foreign property costing more than CAD 100,000 must be reported on Form T1135, with penalties of up to $2,500 a year for missing it. ZAI Wealth Management coordinates this with the physician's accountant.

Your ISA isn't tax-free in Canada

Canada doesn't recognize the tax-free status of a UK ISA. Once you're a Canadian resident, income and gains inside it are taxable on your Canadian return.

Your assets are generally treated as acquired at their value on the day you become resident, so growth before you arrive isn't taxed in Canada. Many doctors cash in their ISA before or soon after moving and bring the money into their Canadian plan.

Keeping a UK rental property

• UK side: register under HMRC's Non-Resident Landlord Scheme. Without approval, your letting agent must withhold basic-rate tax from the rent.
• Canadian side: report the rental income and expenses in Canadian dollars. Tax paid in the UK can usually be claimed as a foreign tax credit.

The T1135 form

If the total cost of your foreign property, such as UK accounts, investments and rental property, is more than $100,000 CAD at any time in the year, you must file form T1135. Late filing penalties are up to $2,500 per year, and more if it's intentional.

Run your own numbers with our Physician Tax Savings Calculator.

For illustration and general information only. Tax rules change and every situation is different, so speak with your advisor and accountant before acting on anything here.

Common questions

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