Moving to Ireland from UK - tax

Melaina G

Hi

I am a UK citizen. I recently sold my U.K. home (in February 2020) and am looking to move to Ireland sometime in the next 6 months to live with my Irish de facto partner.

For tax purposes should I move in the tax year 2020 or should I move in the 2021 tax year?

Is there anything else from a tax perspective that I should be aware of i.e. sending my savings and sales proceeds from my U.K. bank account to a new Irish bank account?

Thanks

y0ssar1an22

if you move to ireland now you will not be tax resident in 2020.

as you are non {domiciled, resident, ord res}, only irish specified assets are in the scope of irish CGT (mainly irish property).

if it is an interest bearing account, revenue will tax the interest earned in the year. you should wait until 01/01/2021 to transfer any funds, or transfer funds to non interest bearing account account 1st before transferring to irish account.

this may also be relevant if you will be keeping your UK employment:

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/income-and-employment/special-assignee-relief-programme/index.aspx

i am not 100% sure on the remittance basis for cgt. when you become resident, you are liable to CGT previously outside the scope, when remitted to ireland. I'm not sure if that only applies in the year of disposal, or for a period afterwards. i'll look into this later.

ronivek

y0ssar1an22 wrote: »

if you move to ireland now you will not be tax resident in 2020.

This makes some assumptions about how many days she has been in Ireland both this year and last year.

To be clear you're considered resident for tax purposes if you exceed:
1) 183 days in Ireland for any given tax year, or...
2) 280 days in Ireland for the given tax year AND the year previous (with a minimum of 30 days in each year).

The other issue here would be whether or not she intends to seek employment or if she will be receiving any income this year from any Irish sources. In that case she may want to apply to the Revenue for 'split-year treatment' and request to become tax resident.

y0ssar1an22 wrote: »

i am not 100% sure on the remittance basis for cgt. when you become resident, you are liable to CGT previously outside the scope, when remitted to ireland. I'm not sure if that only applies in the year of disposal, or for a period afterwards. i'll look into this later.

My understanding is that the regulations/laws would see CGT paid on any proceeds of the house sale which was transferred to an Irish Bank Account within the year of disposal; assuming she becomes tax resident in that year. I believe the Revenue would not in practice not seek to collect such CGT if the disposal was made before the date of arrival. However I'm not 100% on this point either.

I should also note that the OP mentioned the amount to be transferred (savings plus income from house sale) is quite substantial at approximately 300k sterling.

OP have you considered keeping the bulk of your capital and savings in your UK accounts?

Melaina G

Thank you both for your answers. Very helpful.
I don't intend on working but my Irish partner will be able to support the family while I look after our young children.

I’m intending on purchasing a house with my partner, hence why I want to transfer our sale proceeds and savings over to Ireland.

When you say ‘within the year of disposal’, does this mean within the tax year ?

Do you think it would be better to wait until 2021, to both transfer the money and move over to Ireland just to make sure we avoid tax issues?

ronivek

Melaina G wrote: »

I’m intending on purchasing a house with my partner, hence why I want to transfer our sale proceeds and savings over to Ireland.

Makes sense. Will you be leaving any investments, pension funds etc. in the UK or moving everything?

Melaina G wrote: »

When you say ‘within the year of disposal’, does this mean within the tax year?

Yep; in Ireland this would effectively be the calendar year of 2020 in your case.

Melaina G wrote: »

Do you think it would be better to wait until 2021, to both transfer the money and move over to Ireland just to make sure we avoid tax issues?

That would make things a little simpler; but at the same time you shouldn't have to postpone your life for 5 months if there's no real need to do so.

The other aspect to all this is at some point over the next several months there may be a favourable exchange rate between sterling and euro which you might like to take advantage of; or if for example a house came onto the market that you really liked and you had to move quickly on. For example if you transferred your money earlier this year you may have gotten a high of €1.20 for every pound sterling; or as low as €1.06 for every pound sterling. That's a difference of €42,000 if you're talking about transferring £300,000; which is pretty substantial.

Also a few questions about your house if you're still interested in looking at moving during 2020:

• Was it your primary residence the entire duration you owned the property?
• Was it used only as a residence or was some part of it used for business purposes?
• Was the house situated on an acre or more of land?

Melaina G

Thanks for your reply.

I’ll be leaving my pension funds in the UK. I have no other investments.

Very good point re. the exchange rate.

I am interested in moving in 2020.
To answer your questions:
- I lived in the house for 6 years but for the last yr I did rent the house out from Jan 2019-Jan 2020 and then sold it in Feb 2020.
- It was only used as a residence
- It was not situated on more than an acre of land.

ronivek

In terms of pensions there are a lot of variables and many reasons you may want to keep them in the UK or transfer them to Ireland. Indeed there are a number of types of pension which you can't transfer to Ireland at all. My suggestion would be to get in touch with your UK pension provider(s) and see if they have any information which might be relevant to your specific pensions and funds.

The questions about your house were to try and determine if it would qualify for a Principal Private Residence Exemption. Since this is calculated on a pro rata basis you should be entitled to almost 100% relief even if Capital Gains Tax was deemed to be due on its remittance into Ireland.

However in terms of the remittance of the proceeds from your house sale this document would appear to confirm you would not be liable for any Capital Gains Taxes:

A remittance to the State in respect of a gain accruing on the disposal of an asset situated outside the State, before the disponer comes to take up permanent residence in the State, should be ignored if he or she is not domiciled in the State at the time the disposal was made.

So if your savings consist of only:

• Earnings from employment carried out in the UK before today, and...
• Proceeds from the sale of your house in February 2020.

... then I see no reason you could not apply to the Irish Revenue for 'split-year treatment' and move both yourself and your savings to Ireland at any stage this year without incurring any additional tax liabilities or issues*.

*: There is one slight hiccup as y0ssar1an22 pointed out in terms of any interest earned and paid into your UK account after arriving in Ireland.

And just to be clear this is not professional or legal advice; you may want to discuss any concerns directly with a bona fide tax or financial professional.