Split Tax Year - Returning to Ireland from London

Adam.Hynes250

Hi all,

I am engineer that has just returned to Dublin after working 5 years in London. I have not worked in Ireland since 2015. I am due to start work on the 4th of June halfway through the Irish tax year therefore in my mind I shouldn't be paying much tax in the calendar year. I will only be earning half my salary in 2019 as I have been in the UK for 6 months of this year.

Does anyone know what I am entitled to in terms of claiming back income tax at the end of the year? What do I need to do to get it? Any help would be much appreciated.

I have had a look on the revenue.ie website and I believe I want to apply for split year treatment - See below taken from revenue.ie

Is it as simple as sending an email to them and asking to be treated as such?

Coming or returning to live in Ireland
You may be coming to live in Ireland or returning to Ireland after living abroad for a number of years. If you are going to be resident here for the next calendar year, you can request split-year treatment in the year you arrive. To do this you will need to write to your Revenue office.

Split-year treatment means that you are treated as resident in Ireland from the date you arrive. All your employment income from that date is taxed in the normal way. Generally, full tax credits are allowable on a cumulative basis.

Split-year treatment applies to employment income only.

Mrs OBumble

What were you doing for the last six months though? Earning?

Adam.Hynes250

Yes I was earning in the UK for a UK based company paying tax to HMRC.

IAmTheReign

It's more complicated than that. When you move country in a tax year you have to be considered a tax resident somewhere. The split year ruling means that you would be considered a tax resident in Ireland from that point in time whereas normally it's based on the number of days you've been in the country for the tax year. Being a tax resident in Ireland means you're supposed to pay Irish tax on your total worldwide income for that tax year, whereas a non resident only pays tax on money earned in Ireland.

From Revenue.ie:

What income do you pay tax on?
If you are tax resident in Ireland for a tax year, you pay Irish tax on your worldwide income and any gains you make in that year. Worldwide income is the total income that you earn anywhere in the world in a tax year.

If you work and pay tax abroad, you may be entitled to relief under a Double Taxation Agreement. If so, you may be entitled to a credit for non-refundable tax paid in the other country.

In practice what that means is at the end of the tax year you would have to declare how much you earned up to now in the UK and how much tax you paid and this gets added to what you earned in Ireland and what tax you paid here. Any balance is refunded to you by revenue, or in the event you paid less tax in the UK than you would have here you have to pay Revenue.

Adam.Hynes250

So even though I lived, worked and paid tax in the UK between Jan-June 2019 the Irish revenue will still treat it as if I earned it in Ireland?

My net earnings in Ireland will be 25k this year and it sounds like I will be taxed for 50k?

jimmy456

I thought it would work like this. Correct me if I'm wrong.

Enter in June means you will be here greater than 183 days which means you will be Irish Tax Resident. Presumably you are domiciled here as well.

For Income tax this means tax on worldwide income.

In this case that means tax on Irish Source income from June to Dec and UK income. However double taxation applies as already taxed in UK. DTA gives taxing rights to UK on the UK income so Ireland will give a credit for the tax suffered in the UK against the Irish tax bill.

However split year may apply which will for the purposes of employment income deem you non resident before the date of entry into Ireland. This means the UK income falls out and only taxed in Ireland on the Irish Income? Presume this scenario works out better for your due to tax free allowances and credits.

IAmTheReign

Adam.Hynes250 wrote: »

So even though I lived, worked and paid tax in the UK between Jan-June 2019 the Irish revenue will still treat it as if I earned it in Ireland?

My net earnings in Ireland will be 25k this year and it sounds like I will be taxed for 50k?

Basically yes. Revenue will assess you as having earned all of that based on the Irish tax system. Any tax paid in the UK is treated as a tax credit against money owed to revenue. You would have been better waiting until July to move back as then you would no longer meet the requirements for Irish tax residency for the year. You can still claim non residency if you are not in Ireland for more than 183 days though.

The last time I moved back to Ireland I had to take a 2 month holiday before moving back to avoid being considered a resident and being forced to pay taxes on money earned abroad.