Tax in Canada: What Brits Need to Know in Their First Year
Canada taxes at two levels, federal and provincial, which is the biggest structural difference from the UK's single national system. Here's the practical version of what changes in your first year.
The tax year matches the calendar year
Unlike the UK's 6 April to 5 April tax year, Canada's tax year is simply the calendar year, 1 January to 31 December. The Canada Revenue Agency (CRA) is the equivalent of HMRC.
Federal income tax brackets for 2026
How Canadian tax residency gets decided
Canada's test is based on significant residential ties to Canada, not a simple day count or visa status. A home in Canada, a spouse or common-law partner living there, and dependants living there are the main ties CRA looks at. CRA's own guidance notes that once you obtain permanent residence and provincial health coverage, these ties will usually constitute significant residential ties, making you tax-resident from that point, except in unusual circumstances.
If you're genuinely unsure of your status, you can file Form NR74 (Determination of Residency Status, Entering Canada) with CRA to get a formal read on your situation.
Key Takeaways
- Canada's tax year is the calendar year, simpler than the UK's April-to-April year.
- You pay two layers of tax, federal and provincial. The federal Basic Personal Amount for 2026 is $16,452.
- Residency is based on significant residential ties, not a visa type or day count alone.
- Permanent residence plus provincial health coverage usually establishes tax residency from that point.
Frequently Asked Questions
Do I need to file a tax return in Canada?
Almost everyone earning income in Canada files an annual return, unlike the UK's PAYE-only system for most employees. It's also how you access benefits and credits, so it's worth filing even in a year with minimal income.
Do I need to tell HMRC I've left the UK?
Generally yes, if you're leaving the UK to live abroad. HMRC has its own process for this (form P85 for most PAYE employees), which can also affect any UK tax refund you might be owed for a partial year. Check gov.uk directly for your specific situation.
Planning your move from the UK to Canada?
Our free relocation toolkit covers your visa, banking, tax and moving checklist in the order you'll actually need them.
Sorting out the money side of the move is just one piece of it. If you'd like the whole thing planned out, visas, housing, healthcare and your first 90 days, Ultimate Relocation Guide is a paid, step-by-step guide (from AUD $59) that covers it end to end.
Related Reading
Moving from the UK to Canada: The Complete Guide
Getting Your Canadian Social Insurance Number
Tax is just one part of settling in. Our Moving to Canada hub covers the full picture: visas, banking, healthcare and cost of living, organised by origin country.