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Case Study 6

A single woman living in Newry and working in Dublin wants to know the rules relating to cross-border tax and what her entitlements are with regards to benefits.

Does she have to pay tax in Northern Ireland as well as the Republic?

If you have income from employment in one country and are resident in another, you may be liable to pay tax both where you live and also where you work under each country’s tax laws.  To avoid a double taxation situation, the UK and Ireland have negotiated a double taxation agreement. In effect this gives a cross border worker a credit or relief in respect for the income tax that is paid in their country of employment.

UK residents are obliged to declare all earnings that arise from any activities undertaken outside of the UK.  Therefore, anyone living in Northern Ireland and working in the Republic of Ireland is required to submit an annual self assessment tax return to HMRC (Her Majesty’s Revenue and Customs) identifying these earnings.  The double taxation agreement between the UK and Ireland obliges HMRC to give a Cross Border worker a credit in respect of the actual income tax they have paid to the Revenue Commissioners in the Republic of Ireland. Depending on whether UK income tax liability is greater than the Irish tax paid there may be a balance to pay to HRMC.

Simply put, a Northern Ireland resident working in the Republic of Ireland will pay his/her taxes to Revenue in the South. However, they are obliged to declare earnings as foreign income to the UK HMRC through the annual self-assessment return. If their UK income tax liability on equivalent earnings is greater than what they have actually paid in the Republic of Ireland they owe the difference.

She has been informed by her employer that they do not pay sick pay and as a consequence she would have to make a claim to the Department of Social and Family Affairs in the South?

The client was advised that there is no Statutory Sick Pay Scheme in the Republic of Ireland.  However, subject to her social insurance record she may qualify for Illness benefit if she is unable to work because of illness.  The current rate for 2017 is €193.00 per week.

Updated August 2017