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FAQs: Taxation

Q1)  Most common tax query:

  • Q:  I live in the North and I have recently started to work in the South. Am I liable to pay tax in both states?
  • Q:  I live in the South and work in Northern Ireland – do I have to fill out taxation self assessment in ROI? -I want to know is there anyway of avoiding the paperwork.
  • Q:  Where do I pay income tax if I am a frontier worker living in Northern Ireland and employed in Ireland?
  • Q:  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 cross border 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 tax return each year declaring your worldwide income. A Double Taxation Agreement is in place between the UK and Ireland so you will be awarded a credit for any tax paid across the border.

Cross border workers resident in the South can also avail of Trans-border Workers Relief which will ensure that they do not pay any additional tax in the South, unless they have income earned from other Irish sources e.g. rental or investment income.  There is no such relief for cross border workers resident in the North so a top-up tax bill may be payable in the North.[Last updated June 2013]

Q2)  How to I register as a cross-border worker?

There is no registration process for cross-border workers.  However you will be required to register for Self Assessment tax returns.  As a cross border worker you will pay Income Tax via your employer’s PAYE system, but you must also declare your foreign earnings annually via Self Assessment in the country where you live.

  • If you live in the South please visit – Revenue – Self Assessment reference page
  • If you live in the North please visit the HMRC Self Assessment index page

Q3)  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:  Cross-border civil servants living in the South and working in the North may request an exemption from Revenue so that they do not need to submit an annual tax return.  There is no comparable rule for Civil Servants resident in the North. There have been instances were exemptions have been made, but these are on a case by case basis so you should contact the HMRC to make a case.  [Last updated Jan 2016]

Q4)  Refund of the Income Levy for frontier workers – QUESTION NOT APPLICABLE ANY MORE

Q5)  I work in the South and live in the North – can the Universal Social Charge be included as Tax when completing a Personal Tax Return to the Inland Revenue?

A:  Yes.  Following correspondence between the International Section of the Revenue Commissioners and HMRC / Inland Revenue they have confirmed that they are treating the Universal Social Charge as a tax for the purposes of Article 2 of the UK/IRL Double Taxation treaty. [Last updated June 2013]

Q6)  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. [Last updated Sept 2011]

Q7)  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: As a cross border 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 tax return each year declaring your foreign income. A Double Taxation Agreement is in place between the UK and Ireland so you will be awarded a credit for any tax paid across the border.

In the South you will be taxed regardless of your marital status, however, cross border workers resident in the South can avail of Trans-border Workers Relief (Revenue) which will ensure that you do not pay any additional tax, unless you have income earned from other Irish sources e.g. rental or investment income. [Last updated Sept 2011]

Q8)  I am a resident in Ireland and working in Northern Ireland.  Am I entitled to a tax rebate from the government in Ireland?

A: No.  You are not entitled to a tax rebate from The Revenue Commissioners in Ireland to whom you must declare your Northern Ireland income.  You can avail of Trans-border Workers Relief (Revenue) which will ensure you do not pay any additional tax, unless you have income earned from other Irish sources. [Last updated Sept 2011]

Q9)  I live in Northern Ireland and work in Ireland – commuting daily.  What are my general entitlements regarding work and taxation?

A:  As a cross border 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 tax return each year declaring your foreign income. A Double Taxation Agreement is in place between the UK and Ireland so you will be awarded a credit for any tax paid across the border.

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.

The Department of Social Protection in Ireland will pay you Illness Benefit if you fall sick and have sufficient PRSI paid. [Last updated 2011]

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.

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 Sept 2011]

Q12)  Can I apply for tax credits in the North even though I work in the south?

A: Cross border claims for UK Tax Credits is very complicated and you should contact the HMRC to confirm your exact circumstances.  The following website provides further information – www.revenuebenefits.org.uk [Last updated 25 Feb 2015]

*Please note that Tax Credits in the Ireland reduce the amount of tax that you have to pay, it is entirely different from UK Tax Credits!

Q13)  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 northern resident worker although these are not in any way as extensive as Irish income tax reliefs.  Please see the following HMRC pages for more detailed information.

You cannot of  avail of Irish  tax reliefs on a Northern income tax liability.   However as a ROI resident you may be entitled to Mortgage Interest Relief from Irish Revenue even though you are working in the North. [Last updated 2011]

Q14)  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 Taxation 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:  Where both spouses are non-resident but one spouse has income chargeable to tax in the state, then if the other spouse has no income and the earnings of the spouse working in the State are the only source of income, the married persons tax credit and increased rate band should be given accordingly.

Where there is non-Irish sourced income received by either spouse, the spouse working in Ireland will be allocated the single persons tax credit throughout the year but can request a review of their tax position at the year end and claim any increased credits which he/she is then entitled to.

It is however important to note that as a resident of N.I. in most cases you are required to submit a UK tax return each year declaring your worldwide income.  The UK does not have an equivalent married couples credit and therefore all UK taxpayers are taxed as single individuals.  Where the married persons tax credit in Ireland is provided to you, lesser tax will obviously be payable in Ireland but once taxed under UK rules, could result in an increased balance of tax due in the UK. [Last updated June 2013]

Answer kindly supplied by PKF – FPM Accountant

Q15)  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 and must continue to submit your annual self assessment forms.  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 2013]

Q16)  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. [The Health Levy was abolished with effect from 1 January 2011]

Q17) ..I am a cross border worker, living North and working South. I was married earlier this year and applied to Irish Revenue for Married Persons Tax Credit, however I was informed that I would continue to be taxed as a Single Person. Why was Married Persons Tax Credit not awarded to me?

A: In the year of marriage for tax purposes, both spouses continue to be treated as two single people and on this basis Revenue will not allocate you with the married persons credit for the 2013 tax year.  However if the tax you pay as two single persons in that year is greater than the tax which would be payable as a couple in a marriage then a refund of the difference can be claimed.  Refund will be apportioned from the date of marriage to the year end.

For subsequent years Revenue guidelines on the tax treatment of non-resident spouses working in Ireland advises that:

  • The married persons tax credit will be allocated where the other spouse has no other source of income; or
  • If the other spouse has a source of income, then the spouse working in Ireland will be taxed as a single person under Separate Treatment and at the year-end can submit an election to Revenue to make a request for aggregation purposes.

See also the following leaflets from Revenue.ie:

It is however important to note that as a resident of N.I. in most cases you are required to submit a UK tax return each year declaring your worldwide income.  The UK does not have an equivalent married couples credit and therefore all UK taxpayers are taxed as single individuals.  Where the married persons tax credit in Ireland is provided to you, lesser tax will obviously be payable in Ireland but once taxed under UK rules, could result in an increased balance of tax due in the UK. [Last updated October 2013]

(Answer kindly supplied by PKF-FPM Chartered Accountants)