Home A-ZWorking from home (Frontier Workers)

Working from home (Frontier Workers)

Taxation when working from home is a really tricky issue and it’s a good idea to have a conversation with an accredited accountant or financial advisor to keep yourself on the right path.

Paying tax at work and at home

Usually frontier workers pay income tax via their employer but they also need to declare their cross-border income at home. Double taxation agreements in place between the UK and Ireland will ensure that tax credits and reliefs can be used at home to keep reduce your tax bill, hopefully to zero! But working from home complicates this situation…

Living south, and working from home

Unfortunately frontier workers (living south), who work from home, have always been hit by extra Irish taxation, if they declared their home working. For those unaware of the need to declare those days at home the issue remained under the radar, until Covid working from home rules kicked in! In response to the pandemic the Irish Government temporarily paused that extra taxation during 2020 and 2021, and until March 2022 when the public health advice recommendation to work from home ended. Further information: Revenue; Tax and Duty Manual, Part 34-00-06, March 2022

Living north, and working from home

Frontiers workers living in Northern Ireland sometimes have a little bit of flexibility but this relies on their employer to coming to an agreement with HMRC and the decisions are often on a case by case basis.

Employers

Broadly speaking when work duties are carried out at home the employer usually needs to set up a payroll in that jurisdiction so that tax and social insurance can be paid to the authorities there. It worth noting that the Irish Revenue and HMRC may also take into consideration the size of an organisation and the working patterns of employees. The position of employees and high-level managers or directors may also be relevant. These an other issues may place the company at risk of being regarded as Permanently Established in the other jurisdiction which may result in corporate taxation obligations. As a result some employers choose not to set up payrolls across the border so working from home is often not an option for their cross-border workers.

As a compromise some workers are using remote working hubs across the border so they are carrying out their duties in the same jurisdiction as their employer.

Social insurance

Social security coordination rules protect the rights of citizens should they move between the jurisdictions for work. The jurisdiction responsible for a person, often called the Competent State, is usually the place where they are employed or self-employed. As workers they will pay social insurance contributions (e.g. PRSI or National Insurance Contributions) in the Competent State, and that jurisdiction is then responsible for payment of relevant social security benefits. The rules state that workers are only liable to pay social insurance contributions to one jurisdiction at a time.

Working from home full time, or more than one day per week will mean the worker will pay social insurance where they live instead of where their employer is based.

The switch in social insurance payments (PRSI and National Insurance) can have huge implications for the cross-border worker and their dependent family members:

Social security entitlements could switch to jurisdiction of residence
Social security payments from jurisdiction of their employer will probably be affected, and entitlement could end e.g. Child Benefit, Illness Benefit, Maternity Benefit, future State Pensions
Entitlement to healthcare where they work and where they live could be affected and entitlement in both jurisdictions could end

Other issues

Working from home can also impact a wide range of other areas for example

Financial impacts on loans from credit unions and banks that are linked to employment/payroll and mortgage offers restricted by hybrid working and dual payrolls!
Redundancy implications for workers moved to a payroll / new branch across the border.
Income Protection policies found to be unsuitable for incomes earned via two payrolls different jurisdictions.
Private Medical Insurance schemes excluding existing conditions when policies are switched from one jurisdiction to the other.
Employment law implications if working from home creates changes to term of a contract with minimal or no consultation.

Please use this information as general guidance only. Cross-border tax issues can be complex and every situation is different. A quick conversation with a trained tax expert or accountant will keep you on the right path.

Page last checked: 18 July 2024

This webpage is for general information purposes only and while we endeavour to keep it up-to-date, errors may occur. It is very important that you check with the relevant body to ensure the information is current and is applicable to your situation.

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