Getting tax back when you leave
You may be entitled to claim tax back from the country you are moving from, which can come in very handy if you have to pay a deposit on accommodation or are still looking for work. It’s important to educate yourself about the tax laws before you leave and be very clear about the process of claiming tax back – this will be harder to do when you’re home in Ireland. If you’re intimidated by the process it might be worthwhile speaking to a third-party provider who can do it for you. Taxback.com charges a small fee for providing this service and can give you an estimate refund amount before you commit. The average refund is $904 from Canada, $550 from New Zealand, AU$2,600 from Australia and £963 from the UK (not including the fee).
Income tax in Ireland
Income tax is broken into the following brackets at the moment – Pay As You Earn (PAYE), Pay-Related Social Insurance (PRSI) and a Universal Social Charge (USC) with rates based on your circumstances. PRSI entitles you to claim benefits from the Department of Social Protection, such as illness benefit and state pensions. USC is the tax that replaced both the income levy and the healthy levy (known as the health contribution) in January 2011.
The amount of income tax you pay will depend on how much you earn. A single person will take home €2,071 per month if they’re on €30,000 or €2,951 per month if they’re making €50,000. A married couple with a total income of €80,000 will take home €5,086 or €3,239 if they’re on €50,000. If you are self-employed, you pay tax on the profits your business makes and any other income you have. You can work out your take-home pay using this Irish Times calculator.
Find out more about what tax credits you might be available to apply for here.
Recent changes in tax rates
Rates of USC tax were reduced in Budget 2016 for salaries under €70,044.01. Medical card holders and people over the age of 70 will pay 1% on their first €12,012 and then 3% over that amount. These changes mean that some employees will see an increase in net income of up to €900 per annum. The recent Budget also saw the introduction of an income tax credit for the self-employed and proprietary directors. People within this category will be entitled to a maximum of €550 in tax credits, if they have sufficient taxable income.
Avoiding emergency tax
When you return to Ireland, it’s important that you take all the required steps to ensure you are on the right tax band and the correct amount is deducted from your pay each month. If you fail to do so you will be put on the emergency tax band. After four weeks no tax credits will be given and you will have to pay a very high amount of tax each month – up to 42%. Not what you want when you return home!
If you haven’t worked in Ireland since the start of the current tax year, you will need to fill out Form 12A to ensure you get your tax credits. Your tax credit certificate will need to be presented to your employer, as well as your P45 from your last job. If you are unsure about whether you have fulfilled the criteria the best thing to do is to ring your local tax office. They will ask you for your PPS number so have this to hand if you can. You will also need to give them your new employer’s registration number.
If you are continuing to make money overseas through a business, you may also be liable to pay tax on your foreign income. Ireland has double taxation agreements with 34 countries, designed to ensure you don’t pay tax twice on one income.
Income tax in Northern Ireland
In Northern Ireland, 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. Tax is payable at the basic rate of 20% on taxable income up to £31,785. If you have taxable income of more than £31,785, you will have to pay the higher rate of 4% tax on the amount above £31,785 up to £150,000. If you have taxable income of more than £150,000, you will have to pay the additional rate of 45% tax on the amount above this level. You can find out more about how much income tax you should pay in Northern Ireland by visiting citizensadvice.org.uk.
You probably already have, and are quite familiar with, your PPS (personal public service) number. If not, old payslips, P45s or P60s are a good place to start before contacting your local Social Welfare office. If you or your partner need to apply for a PPS number you will need to bring the following documentation with you:
• Current valid passport or national identity card
• Evidence of Birth / Work / Unemployment / Residency /Tax Liability / Education from your country of origin.
• Evidence of address in Ireland
The process usually takes about two weeks so if you can, try to get this completed before you start employment. If you start new employment without a PPS number, you will be taxed on an emergency rate until your tax details are confirmed. The rate of emergency tax is generally equivalent to the highest tax rate – currently 42%.
If your children were born outside of Ireland they will not be automatically assigned a PPS number. In this case you will need to apply at a PPS Number allocation centre. One of the parents/guardians will need a PPS number for this.
National Insurance Number
If you are returning to Northern Ireland you are probable already familiar with the National Insurance system and know your number. However if you’ve lost it, you will need to fill in form CA5403 or call the National Insurance numbers helpline.
If you don’t have a National Insurance number and are over the age of 20 or you are moving to the UK for the first time, you will need to apply for one. If you are moving from England, Wales or Scotland to Northern Ireland you keep the same National Insurance number.
After you have applied, you can start work before your number arrives if you can prove you can work in the UK. You should inform your employer that you have applied and give them the number when you get it.
You may be invited to come to an interview where you’ll be asked about your circumstances and why you need a National Insurance number.
At the interview, you will need to prove your identity with one of the following:
• Passport or identity card
• Residence permit
• Birth or adoption certificate
• Marriage or civil partnership certificate
• Driving license
You’ll also find out how long it will take to get your National Insurance number at the interview.