HM Revenue & Customs
(HMRC) collects tax to pay for public services in Northern Ireland. The tax year in Northern Ireland runs from 6th April to 5th April of the following year.
Income tax and National Insurance contributions (NICs) are chargeable on all income earned by individuals in the tax year subject to certain exceptions and exemptions. An employee's tax is deducted by their employer, through the Pay As You Earn (PAYE) system. Self-employed individuals (i.e. people carrying on their own business), are responsible for paying their own tax through the Self Assessment system
Other key taxes that individuals may have to pay include: Capital Gains Tax, Inheritance Tax, Stamp Duty, Value Added Tax, tax on savings and investments and certain other duties.
Income Tax on earnings, pensions and benefits
Income Tax is payable on:
- your wages if you're employed
- the profits from your business if you're self-employed
- your State Pension and any private pensions
- some benefits e.g. Jobseeker's Allowance, Carer's Allowance and Incapacity Benefit
How it works
Once your income tax liability is assessed by HMRC you are issued with a tax code which is used by your employer to determine the amount of income tax deducted directly from your wages (deducted at source).
If you are self-employed you will be responsible for paying your own tax and NICs and submitting annual Self-Assessment tax returns. You can find detailed information in the Self Assessment section on the HM Revenue and Customs website, www.hmrc.gov.uk.
The tax system operates on a sliding scale, similar to Ireland. The more you earn, the higher the amount of tax you pay. The amount of National Insurance contributions you pay also depends on how much you earn.
Frontier workers
As a frontier worker you must pay income tax in the country where you earn your income, but your ultimate tax responsibility is with the country where you live so you must submit an annual self assessment each year.
If you live in one jurisdiction and work in another you may potentially have income tax liability both where you live and where you work.
Irish residents working in Northern Ireland
- Will pay tax directly to HMRC
- Will be required to submit an annual Self Assessment return to the Irish Revenue Commissioner
- Will be eligible for Trans-border Workers Relief. For further information please visit www.revenue.ie – Trans-Border Workers Relief
The Income Levy is treated as a tax paid for the purposes of Article 2 of the UK/IRL Double Taxation treaty.
Northern residents working in Ireland
- Will pay tax directly to the Irish Revenue Commissioners
- Will be required to submit an annual Self Assessment on foreign earnings to HMRC
- Will be eligible for credit/tax relief (based on Irish tax paid) due to the Double Taxation Agreement between the UK and Ireland. For further information please visit www.hmrc.gov.uk – UK Ireland Double Taxation Convention
See Also:
- NI Direct website – Money, Tax and Benefits section
- DirectGov website - Tax for the employed section
- Citizen Advice Bureau, Advice Guide - Tax in Northern Ireland
- www.moneymadeclear.co.uk – Tax and Benefits section
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| Permalink: | Taxation - Income Tax in Northern Ireland |
| Themes: | Commute, Work |
| Categories: | Employment, Tax |
| Life Events: | Starting a new job, Working, Commuting |
| Target Groups: | Self-employed, Workers, Migrant workers, Frontier workers, All |
| Last updated: | 01 September 2010 |
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