Canada is known for its strong public services, free-at-the-point-of-use healthcare and good quality of life. Those things come at a cost, of course, and understanding how the tax system works before you relocate is an important part of planning your move.
The good news is that Canada’s tax rates are more competitive than many people assume. Here’s what you need to know as a British expat or prospective buyer.
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Contents
How the system works
Taxes in Canada are collected by both federal and provincial governments, and administered by the Canada Revenue Agency (CRA). The tax year follows the calendar year, with returns due by the end of April. Unlike in the UK, where your employer typically handles tax deductions, Canada operates a self-assessed system – you’re responsible for filing your own return each year.
As a British expat or retiree in Canada, the taxes most likely to affect you are federal and provincial income tax, goods and services tax (GST), provincial sales tax (PST) and, if you’re buying property, land transfer tax.
Federal income tax
Like the UK, Canada uses a progressive income tax system. You pay a higher rate only on the portion of income that falls within each band – not on your entire income. The federal rates for 2026 are:
- 14% on the first C$58,523 of taxable income
- 20.5% on income between C$58,523 and C$117,045
- 26% on income between C$117,045 and C$181,440
- 29% on income between C$181,440 and C$258,482
- 33% on income above C$258,482
These thresholds are adjusted for inflation each year by the CRA. The lowest rate was also recently reduced – it stood at 15% for many years before being cut to 14% for 2026 – so the direction of travel has been broadly favourable for lower and middle earners.
It’s worth knowing that the federal rate is only part of the picture. Each province also levies its own income tax on top, at rates that vary quite widely. Ontario’s provincial rates, for example, range from 5.05% to 13.16%, while Quebec’s run from 14% to 25.75% at the top end. Your overall tax bill will depend on where in Canada you settle.
When you combine federal and provincial income tax, the effective rates for most middle-income earners are broadly comparable with the UK – though this varies significantly by province. Speaking with a tax adviser who understands both systems is the best way to model your own position accurately.
Goods and services tax (GST)
GST is charged at 5% and applies to most goods and services purchased in Canada. Certain essential items are exempt, including most basic groceries, healthcare services, legal aid and used residential housing. New property construction, however, does attract GST – something to factor in if you’re considering a newly built home.
Depending on which province you live in, you may pay GST separately or as part of a combined Harmonised Sales Tax (HST). Ontario, for example, charges HST at 13% (combining the 5% federal GST with an 8% provincial element). Alberta and the three northern territories charge only the 5% federal GST, with no provincial addition.
Provincial sales tax (PST)
Provinces that haven’t adopted HST charge their own provincial sales tax separately. British Columbia, Saskatchewan and Manitoba all have their own PST rates, applied on top of the federal GST. Quebec operates a similar system under its own name – the Quebec Sales Tax (QST) – at just under 10%.
As a consumer, the practical difference between a province using HST and one using separate GST and PST is relatively minor. What matters is the combined rate you’ll pay on everyday purchases, which differs noticeably between provinces.
Land transfer tax
When you buy property in Canada, you’ll typically pay a land transfer tax (sometimes called property transfer tax) as part of your closing costs. This is paid by the buyer, not the seller. Almost every province has some form of this tax, with the exception of Alberta and Saskatchewan, which charge a smaller administrative fee instead.
Rates are calculated as a percentage of the purchase price and vary by province. In Ontario, for instance, a C$750,000 property would attract roughly C$11,475 in provincial land transfer tax, with an additional municipal charge on top if you’re buying within the City of Toronto.
If you’re a non-resident purchasing in certain provinces, be aware that significant additional surcharges apply. Ontario levies a 25% Non-Resident Speculation Tax (NRST) on residential purchases by foreign nationals, and Toronto adds a further 10% municipal surcharge on top of that. British Columbia charges a 20% Additional Property Transfer Tax for foreign buyers in designated areas including Metro Vancouver and the Fraser Valley. Nova Scotia raised its non-resident deed transfer tax to 10% in April 2025.
It’s essential to take legal advice before committing to a purchase, as the rules and exemptions vary considerably by province and individual circumstances.
The foreign buyer ban
One critical development that any British buyer considering Canada should be aware of: the Canadian federal government introduced a ban on foreign nationals purchasing residential property, which came into effect in January 2023 and has been extended to January 2027. The restrictions are broad, but there are exemptions worth knowing about.
Permanent residents are not affected. Temporary residents on a valid work permit can also purchase one residential property, provided they have at least 183 days remaining on their permit at the time of buying. The ban also applies only to properties within Census Metropolitan Areas and Census Agglomerations – which means many rural properties, cottages and vacation homes fall entirely outside its scope. Commercial property and most vacant land are also exempt.
Your residency status at the time of purchase will be a deciding factor, so it’s important to take legal and financial advice early in the process – before you’ve set your heart on a particular property.
Taxes as a non-resident
If you retain property or income sources in Canada without being a tax resident, you may still have Canadian tax obligations. Non-residents are generally liable for tax on Canadian-sourced income, and the distinction between resident and non-resident for tax purposes isn’t always straightforward.
If you plan to work in Canada, run a business or own property there, speaking with a tax professional who understands both the Canadian and UK systems is strongly recommended. The two countries do have a tax treaty in place to prevent double taxation, but navigating it correctly requires expertise.
Summary
Canada’s tax system is more straightforward than its reputation suggests, and for most British expats the overall burden is broadly comparable with what you’d pay at home. The key is understanding how federal and provincial taxes combine in the province you’re moving to, getting your residency status right before you buy property and taking advice early – particularly given the restrictions currently in place for foreign buyers. Do that groundwork and you’ll be well placed to make the move without nasty surprises.
