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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

A Canadian heading to these shores asks about opening a private pension
Thursday 28 Apr 2022 Author: Tom Selby

My wife and I will be retiring and moving to the UK from Canada this year (we hold dual citizenship due to our UK parents). We are in our early/mid 50s and will be receiving pension income.

Once residents of UK are we able to open a SIPP, contribute and obtain tax relief?


Tom Selby, AJ Bell Head of Retirement Policy says:

UK pensions benefit from generous upfront tax relief at your marginal rate. This means that contributions to a SIPP are given an automatic 25% uplift.

So, if you contribute £80 into a SIPP, it will automatically be boosted to £100 via basic-rate tax relief. A higher-rate taxpayer would be able to reclaim an extra £20 from HMRC, while an additional-rate taxpayer could reclaim an additional £25.

There are certain rules which govern who can pay into a UK pension and how much they can be contribute. You need to be under age 75 and a ‘relevant UK individual’ to receive pension tax relief on your contributions.

An individual is a ‘relevant UK individual’ if they:

– have ‘relevant UK earnings’ chargeable to income tax for that tax year,

– are resident in the United Kingdom at some time during that tax year,

– were resident in the UK at some time during the five tax years immediately before the tax year in question and they were also resident in the UK when they joined the pension scheme, or

– have for that tax year general earnings from overseas Crown employment subject to UK tax (as defined by section 28 of the Income Tax (Earnings and Pensions) Act 2003), or

– are the spouse or civil partner of an individual who has for the tax year general earnings from overseas Crown employment subject to UK tax (as defined by section 28 of the Income Tax (Earnings and Pensions) Act 2003).

An additional consideration for you is your dual citizenship.  Many pension providers do not allow Canadian citizens to open accounts as, under Canadian law, they would have to register with the relevant province as an investment provider.  If you were to give up your Canadian citizenship once you were UK resident then, as you and your partner are under 75 you should qualify for pension tax relief.

The amount you can contribute to a pension each year is limited by your ‘relevant UK earnings’.

This includes things like taxable earnings and bonuses but not pension income, dividends or buy-to-let income.

If you only have pension income, then as a relevant UK individual with no relevant UK earnings you will still be able to make total pension contributions (inclusive of tax relief) of up to £3,600 in 2022/23.

There is also an overall annual allowance for contributions which for most people is £40,000. Any contributions above your annual limit will have the tax relief clawed back via an annual allowance charge.

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