Home Economics
Email your questions to siryan@independent.ie
QSince lockdown, I have been working at home in Ireland for a UK employer. My income tax is deducted at source and I also file a self-assessment tax return in the UK each year on the sterling rental income from a flat I own. I have always wanted to return to Ireland to live so I plan to apply to become a full-time home-worker. Should my application be successful, I would spend four days per month in the UK. My salary will remain in sterling, and I would be grateful if you could tell me what my liability would be.
AMany people will be asking similar questions about working from home long into the future. While that’s no problem when it comes to an Irish office Vs an Irish home, it does of course present different issues when cross-border home/office and remuneration applies, particularly in a post-Brexit environment, never mind post-Covid-19. I asked Joanna Murphy, CEO of Taxback. com, for her take.
“As an Irish domicile, once you become an Irish resident, you will be taxed on your worldwide income from all sources. It means you will be taxed in Ireland on your UK employment and UK rental incomes. An individual is deemed resident in Ireland when he/she spends at least 183 days in a tax year in the country, or 280 days over two consecutive years and at least 30 days in the second tax year.
“An exemption may be claimed on your UK return in respect of your UK employment income, based on the fact that all of your employment duties will be exercised in Ireland. However, if no such an exemption is granted by HMRC, you would be allowed a foreign tax credit in Ireland to avoid a double taxation on your income.
“In respect of your UK rental income, you should note that the UK has the primary rights to tax that income and no exemption could be granted.
However, a foreign tax credit will be allowed in Ireland, based on the double taxation agreement between Ireland and UK. You will continue to be required to file a return in the UK. You will also be required to register for income tax in Ireland, and file a self-assessed tax return in the State.”
QMy mother has recently entered a nursing home. We are yet to make a decision on taking the Fair Deal scheme as she went there quite quickly before lockdown and we could only arrange it by paying privately at €4,750 per month. This is unsustainable for us, but we are finding the application documentation quite unwieldy, delaying everything.
Our confusion is whether it would be preferable to pay the asset portion of the bill as it arises or defer it by loan (and interest presumably)? Which is best? Mum is 83, medically well and her house is worth €340,000. She is on the old age pension, plus a small occupational pension (€5,850 p.a.) from my late father.
AThe sums are fairly straightforward if you haven’t already done them. Firstly though, whoever is paying the nursing home bill is entitled to full tax relief at their marginal rate (for a higher-rate taxpayer, this reduces the monthly bill to €2,850, which is an immediate help — contact Revenue to claim it; they’ll allow this monthly, rather than at year end).
Your mother’s bill under Fair Deal is 80pc of her income (I’ve assumed full State pension, so about €15,072 p.a.) plus 7.5pc of the asset (assuming no other savings); so, €22,800 less some specific allowances, for three years. That’s €37,872 p.a. against a bill of €57,000 with the HSE picking up the difference.
She (not you) may be allowed tax relief, but it looks like she doesn’t earn enough to be in the tax net. The figures are rough, but essentially, if you defer the asset, the loan is repaid (with interest at the Consumer Price Index only) on her death or sale of the property.
So it’s the net figure of a private bill versus the Fair Deal contribution. Do your sums carefully, and yes, I agree about the application. It’s not fun. There are brokers who can help though, so check them out.