RRSPs, TFSAs and your UK pensions in Canada

Canada has two excellent tax shelters, but they're built for Canadian residents, and your UK ISA and pensions don't get the same easy ride once you live here.

The short version

A TFSA lets you save and invest tax-free in Canada. The yearly limit is CAD 7,000 (about £3,710) in both 2025 and 2026, and room only builds up for years you're resident here, 18 or over [1][2].
An RRSP gives you a tax deduction now and taxes the money when it comes out. The 2026 limit is CAD 33,810 (about £17,930), but your own room depends on your Canadian earnings the year before, so most newcomers start with little or none [1][3].
Under the UK–Canada tax treaty, regular payments from a UK workplace or private pension are generally taxed only in Canada once you live here [4].
Canada doesn't treat a UK ISA as tax-free. Interest, dividends and gains inside it go on your Canadian return, and you can't pay into it once you've left the UK.
Moving a UK pension to Canada is a big, often irreversible step. We never recommend a transfer: it needs regulated financial advice [5].

Pound conversions use the Bank of England spot rate of 5 November 2026 (£1 = CAD 1.8858).

The TFSA: Canada's answer to the ISA

The Tax-Free Savings Account is the closest thing Canada has to an ISA. Money goes in from income you've already paid tax on, and interest, dividends and growth come out tax-free. You can hold cash, GICs (Canada's fixed-term deposits), shares and funds, much like a stocks and shares ISA.

To open one you need to be resident in Canada, 18 or over, and have a valid Social Insurance Number [2]. That's one reason to get your SIN sorted in your first week (see your first month in Canada).

The catch for newcomers is how room is worked out. Canadians who've been here since 2009 have a big bank of unused room. You don't. The CRA's rule is that for any year you're non-resident throughout, "no TFSA contribution room will accrue" [2]. The good news is that the limit isn't cut back for a part year, so if you arrive in Toronto in November, you still get the full year's CAD 7,000 [2].

Three rules worth sticking on the fridge:

Withdrawals come back next year, not now. Take money out and that amount is added back to your room on 1 January the following year. Pay it back in the same year and you can overshoot [2].
Overpaying costs 1% a month. The tax is 1% of your highest excess in each month it stays in the account [2].
Your bank's figure isn't gospel. Check your room in your CRA My Account, as the bank only sees its own accounts.

If you might go back to Blighty one day, remember the UK doesn't recognise a TFSA either. Once you're UK resident again, HMRC would tax its income like any other foreign account. A TFSA works best while you're here.

The RRSP: tax relief now, tax later

The Registered Retirement Savings Plan works more like a UK personal pension. You get a deduction against your income for what you pay in, the money grows without tax, and it's taxed as income when you take it out.

	TFSA	RRSP
Tax relief on money in	No	Yes, deducted from income
Tax on money out	None	Taxed as income
Annual limit	CAD 7,000 (2025 and 2026) [1]	18% of last year's earned income, capped at CAD 32,490 (2025), CAD 33,810 (2026), CAD 35,390 (2027) [1]
Newcomer room	Full limit from your first resident year [2]	Usually little or none in year one [3]
Overpaying	1% a month on the excess [2]	1% a month above your limit plus a CAD 2,000 buffer [3]
UK view if you move back	Taxable foreign account	Treated as a foreign pension

The RRSP deduction limit is based on your earned income in the previous year [3]. Arrive in 2026 and your 2026 room is likely to be nil or close to it, because you had no Canadian earned income in 2025. Your room builds from your first Canadian tax return onwards, and the figure appears on your notice of assessment [3]. Unused room carries forward, so there's no need to panic if you can't fill it straight away.

RRSP contributions made in the first 60 days of a year can count for the previous year. For 2025, the deadline was 2 March 2026 [3]. If you're on a good salary in Toronto, an RRSP deduction can be worth a lot, because Ontario's combined federal and provincial rates climb quickly. The workplace version is a group RRSP, often with an employer match. Take the match if you're offered it, just as you would with auto-enrolment back home.

How Canada taxes your UK pensions

Once you're resident in Canada, Canada taxes your worldwide income, including UK pensions. The UK–Canada double taxation convention decides who gets first bite [4].

Regular payments from UK workplace and private pensions. Article 17 says periodic pension payments arising in one country and paid to a resident of the other are taxable only where you live [4]. So a UK annuity-style income or drawdown paid regularly is usually taxed in Canada, not the UK. To stop your UK provider deducting PAYE, you apply to HMRC with the treaty relief form for Canadian residents. Our guide to double taxation agreements and reliefs covers the forms.
The UK State Pension. The treaty's definition of pension includes payments under social security legislation, so the State Pension is generally taxed in Canada too [4]. It's also frozen in Canada, which is a separate headache: see the frozen UK State Pension in Canada.
Government service pensions. Civil service, NHS, armed forces and teachers' pensions follow different treaty rules and are often taxed in the UK. Check yours individually.
Lump sums. Article 17 doesn't mention lump sums [4]. Canada has no equivalent of the UK's 25% tax-free cash, so a UK "tax-free" lump sum can be taxable income here. Get it checked before you take one.

Canada gives a foreign tax credit where both countries have taxed the same income. A tax adviser who knows both countries can check your case, especially in the year you arrive, when you'll be part-year resident.

Your ISAs once you live in Toronto

You can keep your ISAs, but once you're non-resident you can't pay in, and you must tell your provider you've left. Our guide to ISAs when you move abroad explains the UK rules. On the Canadian side there's no rule that shelters an ISA, so the interest, dividends and any gains you make after arriving go on your Canadian return.

Two practical points:

Your starting point for gains. Canada generally treats you as acquiring your existing investments at their market value on the day you become resident. Note the values on your arrival date, as it'll save a faff later.
Foreign property reporting. If the total cost of your foreign investments, including UK bank accounts, ISAs and shares, goes above CAD 100,000 (about £53,000) at any time in the year, you'll usually need to file form T1135 with your return [6]. There's an exception for the year you first become resident, and some foreign pension plans are excluded, so check the form's instructions.

Some Brits keep their ISAs simply because the paperwork of selling isn't worth it. Others move the money into a TFSA, accepting a tax bill on any gains made since arrival. There's no single right answer.

UK pensions and transfers: the warnings

You'll hear people at the club or online talk about moving UK pensions to Canada. Treat it with real care.

A transfer must go to a QROPS (a qualifying recognised overseas pension scheme). If the scheme isn't one, you'll face at least 40% tax on the transfer [5].
The 25% overseas transfer charge applies unless an exclusion fits, such as living in the same country as the QROPS and staying within your overseas transfer allowance, usually £1,073,100 [5]. Move away within five years and the charge can come back (form APSS 241) [5].
Paperwork deadline. Your UK scheme needs form APSS 263; miss the 60-day window and the transfer is taxed at 25% [5].
Final salary pensions worth more than £30,000 legally require regulated advice before a transfer. Giving up a guaranteed, inflation-linked income is rarely a good swap.

We never recommend a pension transfer. Any transfer needs regulated financial advice, and you should check an adviser yourself on the FCA register. The FCA and MoneyHelper both warn that cold calls and "free pension reviews" are classic scam openers. For most Brits in Toronto, the simplest plan is to leave UK pensions where they are and draw them when the time comes. Our guide to UK workplace and private pensions abroad sets out the options in more detail.

The FCDO's Living in Canada guide also reminds you that the UK has a double taxation agreement with Canada and points you to the Canada Revenue Agency for questions about relief [7]. If you'd like to compare notes with others who've been through it, our community group for Brits in Canada is a friendly place to ask.

RRSPs, TFSAs and your UK pensions: saving in Canada without tripping up