PERSONAL FINANCE: Cross-border working from home
QUESTION: At the start of the coronavirus pandemic, my Irish employer required me to work from home and since has made the decision to cut back on their Dublin office space, so I have continued to work from home. After years of living and working in Dublin, my husband and I have recently moved home to Co Antrim. Our main motivations were to be near our extended family, for my husband to shorten his daily commute to work in Belfast and reduce our outgoings, given it is significantly cheaper to live outside of Dublin. What are the tax implications of my recent move?
ANSWER: Lockdowns in recent years caused a major shift in working practices, moving a lot of the workforce to home offices. As life has got back to some form of normality, a hybrid model has emerged, with business having both an office presence and employees working from home. With the improvements in technology and of video conferencing platforms, this was probably always going to be the case, but it has definitely been accelerated by the coronavirus pandemic.
With employers embracing the remote workforce, for many smaller employers it will trigger unexpected compliance issues, whether it’s from an employment law, health & safety, cyber security, data privacy or tax point of view. You will need to make your employer aware that you intend to continue to perform your duties from outside Republic of Ireland so they can plan accordingly.
For employers, the tax treatment largely depends on where you as an employee are located when you are performing your employment duties. Each country’s domestic tax law is different, and it may be easier to trigger payroll in one country than another. Where employees are routinely working across multiple jurisdictions, e.g. digital nomads, this can be a compliance nightmare for their employers keeping track of where and how long their employees are carrying out their duties in different tax jurisdictions.
However, in your case, you plan to permanently be based and carrying out your duties in the United Kingdom (UK), which simplifies matters. Your employer will be required to register as a UK employer and make UK Pay As You Earn (PAYE) tax and social security deductions before paying over to HM Revenue & Customs (HMRC). This might be new ground for your employer if they have no other employees working in the UK, they may need to initially engage PAYE advisors until they become familiar.
Employers also need to be concerned that the activities of employees working overseas does not trigger a permanent establishment and a taxable presence for the employer. Provided your activities as an overseas employee, are limited to support services, and excludes decision making activities, there should be no further UK Tax implication on your employer.
As a result of your house move, you will be moving your tax residency from Republic of Ireland to the UK and therefore, the UK has primary taxing rights on your worldwide income. On the understanding your employer correctly operates a UK payroll for you and you have no other worldwide income you will not need to do anything further.
However, if you have other sources of income, such as a rental property, you will need to register for UK Self-Assessment and complete a UK tax return each year to declare your worldwide income to HMRC. If you have been taxed on any source of income in another
jurisdiction you may be entitled to double tax relief, this ensures you are not taxed on the same income twice.
Operating a payroll in a new jurisdiction and changing your tax residency can be complex depending on your exact circumstances and we would advise that you seek advice from UK tax advisers.
:: KellyAnne Murtagh (email@example.com) is senior tax manager at FPM Accountants Ltd (www.fpmaab.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.