Consider becoming non-resident in Ireland
If you are domiciled and resident in the Republic of Ireland for a tax year you are liable for Irish income tax on your earnings from all sources around the world.
Your residence status for Irish tax purposes is determined by the number of days you are present in Ireland during a given tax year.
You are resident in Ireland for tax purposes if either:
- you spend 183 or more days in Ireland in a tax year, or
- you spend a total of 280 or more days in Ireland spread over the current and previous tax year.
A “day” for residence purposes is one for which you are present in Ireland at any time during that day. All visits, including holidays and weekends, are included when computing the days spent in Ireland but in the case of the 280 day test, visits amounting to not more than 30 days in a full tax year are ignored.
In order to avoid Irish tax, you would also need to shed your “ordinary residence'‘. If you come to Ireland for the first time and remain resident for three consecutive years you will become ordinarily resident from the beginning of the fourth tax year. Conversely you will cease to be ordinary resident in Ireland having been non resident for three consecutive tax years.Consider becoming non-resident in the UK
A Statutory Residence Test was introduced from 6 April 2013. It may be possible to cease UK tax residence by spending less than 183 days in the UK in a given tax year. In order to acheive non-resident status it will also be necessary to not have a UK home for more than 90 days during the year and not to be deemed resident as a result of the number of days that you work in the UK.
A “day” for residence purposes is one for which you are present in the UK at midnight.
Tax reliefs to consider in Ireland:
Invest in tax-free savings
The interest from certain savings are exempt from tax such as savings bonds, savings certificates and National Instalment Savings Schemes with An Post.
Renovate your home
The home renovation incentive scheme effective from 1 January 2014 provides tax relief for homeowners by way of a tax credit for qualifying expenditure on repair, renovation or improvement work carried out on a principal private residence.
Invest in a pension
Tax relief is available for qualifying contributions to a pension scheme. The rules allow the fund to grow in a tax efficient manner and tax relief is also available for qualifying withdrawals on retirement.
Claim tax relief for medical expenses
Tax relief is available in respect of the cost of certain medical expenses paid by you.
Claim rent-a-room relief
Income from letting rooms in your home is exempt if the income does not exceed an annual threshold amount. For example, rent from foreign students lodging in your home during the summer may be tax exempt. The relevant capital gains tax and stamp duty provisions are not affected. Tax relief at source on your mortgage will also not be affected
Tax reliefs to consider in the UK:
Ensure all family members receive income
Transfer income generating assets to ensure each family member’s personal allowance and lower income tax rates are used.
Invest wherever possible in tax-free investments
Tax-free investments include National Savings Certificates, Premium Bonds and Individual Savings Accounts (ISAs).
Donohue & Co. can provide advice on the most appropriate UK and Irish tax reliefs applicable to your circumstances.