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Posted Wed, 01 May 2024 11:18:00 GMT by Andy
Hi there, I am originally from Canada, and recently moved to the UK permanently to work and live. Now that I'm settled in, I am looking into the possibility of doing freelance work as a Sole Trader with a client I used to work for in Canada. I have since closed my Canadian business and tax accounts in Canada, but would ideally like to continue working with this Canadian client if it's possible to do so. When it comes to getting paid by an international client, I'm wondering if it would be ideal for the client to pay me in GBP directly to my UK bank account and pay the conversions themselves, or would it be acceptable for them to pay me in CAD to a Canadian bank account and then I can transfer the funds (and pay any conversion) into my UK bank account? The only issue I foresee, is the final amount that will arrive in my UK bank account will be slightly less than the total amount on the original invoices because of conversion and global transfer costs. Would this discrepancy cause an issue in future tax filings or am I will I just need to claim the actual amount (after conversion) and not the original amount charged on the invoice? One last question: if the Canadian client prefers to pay me in CAD, as long as I convert and exchange the funds into GBP and add that amount to my year end totals, would that be an appropriate way of doing business with a Canadian client as a UK Sole Trader? This wouldn't be grounds for double taxation, would it? As I am now considered a non-resident of Canada for tax purposes since moving over to the UK. Thank you in advance for any help or insight you can provide!
Posted Thu, 09 May 2024 10:47:45 GMT by HMRC Admin 25 Response
Hi Andy,
You would need to regiser as self employed here:
https://www.gov.uk/set-up-self-employed (even if you are registere for self assessment).
It is up to you which way you want to be paid for your services.
The conversion and global transfer costs of converting your income to pounds sterling, is not an expense you can claim for.
Your gross turnover is the amount originally invoiced in Canadian dollars and converted using a just and reasonable exchange rate and not the pound sterling amount after the conversion costs are deducted.
The UK / Canada tax treaty can be found ahere:
CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF CANADA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS
Article 15 is suggesting that your self employed income is taxable only in the UK, but there are some circumstances where your self employed income can be taxed in Canada.
If you had to pay tax in Canada, because of the tax treaty rules, you would claim a Foreign Tax Credit in your Self Assessment Tax Return, so that you are not taxed twice and so avoid double taxation.
Thank you. 

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