Border People provides case studies and frequently asked questions (FAQs) illustrating the dilemmas facing people who cross the border and suggest ways to resolve these.
These are real genuine problems identified by users of the website coupled with advice from staff of the Borderwise project, a cross-border initiative developed in partnership between Citizens Advice (Northern Ireland) and Citizens Information Board (Ireland).
Q1: I came to Newry from Poland last year and got a job in north Dublin. I filled in a self-assessment tax form and last week I received a letter saying that I owe almost £2000. How is it possible?
A: As a Northern Ireland/UK resident with earnings that arise outside of the UK you are obliged to complete a return of that income to Revenue in the north under self-assessment rules. You should be given a credit or relief in respect of any Irish income tax you paid because of the double taxation agreement between the two jurisdictions. There may be a balance of income tax to pay to Revenue in the north if the UK tax liability on equivalent earnings is greater. You may wish to contact an accountant/tax specialist if you want to query the amount you have been billed by Revenue in N. Ireland. [Last updated 2008]
Q2: I work in Belfast and I want to know if I return home to Monaghan but continue working in Belfast will I also be liable for Irish tax? I am a PAYE worker with no other income.
A: If you are resident in the Republic you are obliged to declare your earnings from N. Ireland/UK to Irish Revenue under self-assessment rules. However if those earnings are your only source of income and you are paying NI/UK income tax then you will not have any additional Irish income tax to pay. This is because of the operation of 'trans-border worker's relief''
. The obligation to declare the income remains. [Last updated 2008]
Q3: I got married last year and moved to Ireland but still work in Northern Ireland. My employer still has me down as living in Northern Ireland. If this was changed do I get taxed less or what do I need to do? I’m on a low income so every bit helps.
A: Unlike the Republic, everyone working in N. Ireland/UK is taxed individually regardless of their marital status (with the exception of couples at least one of whom was born before 06 April 1935 who can still avail of a married couple's allowance). For how you are treated by Irish Revenue when resident in the Republic and working in N. Ireland see 'trans-border worker's relief'' [Last updated 2008]
Q4: I live in NI and work in Ireland – do I haveto fill out taxation self assessment in NI? -I want to know is there anyway of avoiding the paperwork.
A: As a UK resident with earnings that arise outside of the UK you are obliged to complete a return of that income to Revenue in NI under self-assessment rules.
You should be given a credit or relief in respect of any Irish income tax you are paying because of the double taxation agreement between Ireland and the UK. There may or may not be a balance of income tax to pay to Revenue in NI. [Last updated 2008]
Q5: My partner works as a public servant in Ireland. She lives in Newry. Does she have to summit a NI Tax Return or is she exempt as she is a Civil Servant? Is there any document to confirm this exemption?
A: Generally your partner will have to make a return of her income from Ireland to Revenue in Northern Ireland (NI) under self-assessment rules.
She will be given relief or a credit in respect of the Irish income tax she pays because of the double taxation agreement between Ireland and the UK but may still have some tax to pay to Revenue and Customs in NI. Contact Revenue and Customs in NI on 08453021481 for clarification. [Last updated 2008]
Q6: I am a resident in Ireland and working in Northern Ireland. Am I entitled to a tax rebate from the government in Ireland?
A: You are not entitled to a tax rebate from The Revenue Commissioners in Ireland to whom you must declare your Northern Ireland income.
You will be given 'trans-border worker's relief' by Revenue. [Last updated 2008]
Q7: I live in Northern Ireland and work in Ireland – commuting daily. What are my general entitlement regarding work and taxation?
A: As you are resident in Northern Ireland you do need to declare your income from Ireland to Revenue in Northern Ireland. You will be given a credit or relief in respect of the income tax that you pay in Ireland in accordance with the double taxation agreement between the UK and Ireland
You may wish to pay voluntary national insurance contributions in Northern Ireland but you do not have to. You cannot claim any tax in Ireland back unless you are eligible to do so under the various tax relief schemes administered by the Revenue Commissioners in Ireland, e.g. relief for private medical expenses, refuse charges.
You cannot claim PRSI back although your contributions may help you to qualify for benefits or a state pension from Ireland in the future.
Social Welfare in Ireland will pay you Illness Benefit if you fall sick and have sufficient PRSI paid. [Last updated 2008]
Q8. Where do I pay income tax if I am a frontier worker living in Northern Ireland and employed in Ireland?
A: You have a potential income tax liability both where you live and where you work. In this instance, like any other employee, you will pay income tax in Ireland through the PAYE system. In relation to your income tax liability as a resident of Northern Ireland, it is important to be aware there is double taxation agreement between the UK and Ireland. This agreement basically provides you with income tax relief in Northern Ireland based on the income tax you have already paid in Ireland.
However, you may still have to pay income tax in Northern Ireland if the assessed income tax payable on equivalent earnings in Northern Ireland is greater than the actual income tax you have paid through PAYE in Ireland. As a Northern Ireland resident you are obliged to declare all income earned in Ireland (“foreign income”) to the Inland Revenue for the purposes of assessment and any resulting tax liabilities as outlined above. [Last updated 2008]
Q9. I am a single person living in Ireland but my only work is in Northern Ireland as an employee and I pay income tax in Northern Ireland, I have been told that I will have no tax to pay to Revenue in Ireland. Is this correct and do I need to do anything?
A: As a result of the operation of 'trans-border worker's relief' you will not have any additional income tax to pay to the Revenue Commissioners in Ireland in those circumstances. However you remain responsible for declaring all of your earnings from Northern Ireland to the Revenue in Ireland under self-assessment rules. [Last updated 2008]
Q10: I live in Dublin and recently started a small business which will operate both in Ireland and also in Northern Ireland. I have appointed a manager in Northern Ireland (NI) to run that part of the business for me. In which jurisdiction should I be submitting a tax return and where do I pay my tax?
A: As you live in Ireland you will be “resident” there for tax purposes and as such will be liable to tax on your worldwide income in Ireland. This means you will pay tax in Ireland on any income earned from both your NI and Ireland trades. The tax you pay will be based on the profits of the businesses once the accounts for each business are prepared in accordance with NI and Ireland requirements.
You will be required to complete an income tax return in Ireland. This should be prepared on a calendar year basis (ie from January 1 to December 31). Any tax payable is due by October 31 following the end of any given calendar year. The tax return is prepared on a self-assessment basis. Any other income you have such as P60 income, rental income, deposit interest, foreign income or dividend income should also be declared on this return.
Because you also carry on your business in the UK you will be charged to tax on your UK business profits, in the same way as if you were a UK resident individual. You will be entitled to claim the full UK personal allowances. Tax in the UK is payable on the January 31 following the end of the tax year, which is the preceding April 5.
In working out your Ireland tax liability you will be entitled to tax relief for any tax suffered in the UK on your UK trade. This is known as double taxation relief and is given under the rules of the double taxation treaty which exists between the UK and Ireland. You may also need to recalculate your UK taxable profits in accordance with the rules of taxation in Ireland to determine the appropriate tax relief available.
Carrying out two trades in two tax jurisdictions is a difficult predicament for any businesses not only from a tax and VAT perspective but also from a commercial and administrative perspective and specialist advice should be taken.
■ Paddy Harty (p.harty@fpmca.com) is senior partner at FPM Chartered Accountants (www.fpmca.com) [From The Irish News 20/11/2007]
Q11: I live in Northern Ireland and work in the Republic of Ireland and I pay tax in both jurisdictions. Is it possible to reclaim my tax from the south and only pay tax in the north or do I have to pay tax to both governments?
A: You cannot generally claim exemption from the payment of Irish income tax if you are a PAYE worker in the Republic simply because you reside in the North (UK). As a UK resident with earnings that arise outside of the UK you are obliged to complete a tax return of that income to Revenue in the North under self-assessment rules. You should be given a credit or relief in respect of any Irish income tax you are paying because of the double taxation agreement between the Republic and the UK. There may or may not be a balance of income tax to pay to Revenue in the north. This means that there may be tax payable to Revenue in the north as well as to Revenue in the south. [Last updated 2008]
Q12: I live in Northern Ireland and work in the South. Do I need to declare my earnings to the Northern Ireland tax office and can I apply for tax credits in the North even though I work in the south?
A: As a UK resident with earnings that arise outside of the UK you are obliged to complete a return of that income to Revenue in the north under self-assessment rules. You should be given a credit or relief in respect of any Irish income tax you are paying because of the double taxation agreement between the Republic and the UK. There may or may not be a balance of income tax to pay to Revenue in the north. You are potentially entitled to tax credits in the north the basis of your residence in the north/UK. Whether you qualify will dependent on your gross family income and the rate of any Irish family benefits you might receive. [Last updated 2008]
Q13: I live in the North and I have recently started to work in the South. Am I liable to pay tax in both states?
A: As a UK resident with earnings that arise outside of the UK you are obliged to complete a return of that income to Revenue in the north under self-assessment rules. You should be given a credit or relief in respect of any Irish income tax you are paying because of the double taxation agreement between the Republic and the UK. There may or may not be a balance of income tax to pay to Revenue in the north. [Last updated 2008]
Q14: I work in Northern Ireland and I live in the Republic of Ireland. I am single with no children. Am I entitled to income tax relief and if so, how can I avail of this and what other entitlements can I avail of?
A: You are entitled to the same income tax reliefs as a N. Ireland resident worker although these are not in any way as extensive as Irish income tax reliefs. You cannot of course avail of Irish income tax reliefs on a N. Ireland/UK income tax liability. However as a ROI resident you would be entitled to Mortgage Interest Relief from Irish Revenue even though you are working in the north. You can get more detail from HM Revenue website, www.hmrc.gov.uk. [Last updated 2008]
Q15: I am moving jobs and have the choice of being based in the south (working from home) or being based in Belfast and commuting across the border. If I work from home in the south is there a limit to this or a minimum number of days I need to work in UK? If I commute and work under trans-border worker is there a restriction on the amount of time I work at home?
A: You are potentially entitled to 'trans-border worker's relief' from Irish Revenue in both of the scenarios you describe. For who qualifies for this and how it operates see 'trans-border worker's relief' [Last updated May 2009
Q16: To register to become a cross-border worker, I think the process is to complete a FS305 for UK tax becoming cross-border worker and complete a TR1 form for Irish tax. Is that correct?
A: I'm afraid I have never heard of a Form FS305 and would suggest you contact HM Revenue re how you register for tax, see www.hmrc.gov.uk. This will depend on whether you are employed are self-employed. Form TR1 is the correct one for you to register for Irish income tax. For the Irish self-assessment rules see, www.revenue.ie .[Lst updated June 2008]
Q17: My partner and I have been living and working in Belfast and are about to purchase a house over the border in Co. Monaghan and commute daily. Will we have to declare to the Revenue Commissioner what we will be earning in NI and if so, does Ireland and the UK have a double taxation agreement whereby we cannot be taxed twice on the same income? At the minute we have no income from the Republic at all. Also our mortgage provider has advised about "Mortgage Interest Relief at Source". Will our status as residents working in NI prevent us from claiming this relief?
A: There is a double taxation agreement between the Republic and the UK which obliges Irish Revenue to give you a credit or relief in respect of any NI/UK income tax you are paying. In addition to this in the late 90s the Irish government brought in 'trans-border worker's relief'' which effectively removes a N. Ireland income from any potential balance of Irish income tax in circumstances were this is the only income and the person resides in the Republic. The obligation to declare your earnings under Irish self-assessment rules on the basis of your residence in the Republic remains You can qualify for mortgage interest relief at source from Irish Revenue when resident in the Republic, it does not matter that you are employed in NI, see www.revenue.ie for how to claim. [Last updated 2008]
Q18: I have started to work in Omeath and have been told I have to pay tax to both governments. Is this true? I am paying tax to the Irish government at the moment. I receive working tax from the UK.
A: As a N. Ireland/UK resident with earnings that arise outside of the UK you are obliged to complete a return of that income to Revenue in the north under self-assessment rules. You should be given a credit or relief in respect of any Irish income tax you are paying because of the double taxation agreement between the Republic and the UK. There may or may not be a balance of income tax to pay to Revenue in the north. [Last updated 2008]
Q19: I have been working in the ROI since 2001. I pay tax in the South and the North. Although my tax bill in the North is reduced because of the Double Taxaion Agreement. My wife discovered that I am taxed as a single man (I am married and have 2 children, another baby due in October) and we wondering why this is.
A: As a married person you can opt for the single or the married tax allowance in ROI, residence is irrelevant. This is known as the 'married person's tax credit' and would increase your take home pay. Of course it would also increase any balance of tax payable to HM Revenue in NI as you would then be paying less Irish income tax. However, your Irish social insurance PRSI may allow you to qualify for Irish contributory benefits and/or may be combined with national insurance to allow you to qualify for NI/UK contributory benefits under EU rules. [Last updated 2008]
Q20: I live in Northern Ireland and have worked in Ireland for several years. I am required to submit a self-assessment tax form to the Inland Revenue in NI each year for tax assessment on what my foreign income from Ireland. I haven't been required to pay the Inland Revenue any money to date as I pay more tax in Ireland than if I was earning the same amount in NI. Is there any exemption in place that would save me from having to complete these forms annually?
You are doing the right thing. This is because NI residents are obliged to declare earnings that arise outside of NI under self-assessment rules. Your colleagues who reside in NI and work in Ireland are not tax compliant if they fail to do this. The fact that the tax years, north and south, are different does add some complexity to your self-assessment return. You may be entitled to Irish income tax reliefs including mortgage interest relief at source if you have a mortgage on your home in NI. [Last updated 2008]
Q21: I live in Northern Ireland but am employed as a PAYE worker in Ireland. I have been told that I am exempt from the Health Contribution of PRSI (Pay-Related Social Insurance). Is this correct?
A: No, you are not exempt from the Health Contribution unless your income is at a sufficiently low level that you would be able to qualify for a Medical Card in Ireland and be exempt from the Health Contribution as the holder of the Medical Card.
© Northern Ireland Association of Citizens Advice Bureaux (NIACAB) 2008
