Key Post How do the UK and Irish personal tax systems compare?

Brendan Burgess

Brendan Burgess

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I have no experience of UK tax, so would welcome any corrections.

https://www.gov.uk/income-tax-rates/income-tax-rates

UK single person income taxes
Personal allowance{br} £10,000|0%
next £32,000|20%|
£32,000 to £150,000|40%
£150,000 +|45%
National insurance: 12% up to £40,000 - 2% above this

If your income’s over £100,000
Your Personal Allowance goes down by £1 for every £2 that your income’s above £100,000. This means your allowance is zero if your income’s £120,000 or above.

Pensions are the same
You get tax relief at the marginal rate

CGT https://www.gov.uk/capital-gains-tax

£11,000 exemption every year - £22,000 for married couples
After that, CGT at 18% or 28% depending on your marginal tax rate

ISAs
A person can save up to £15,000 a year in an ISA. The income and Capital Gains are free of all taxes.
 
Brendan

Sorry I haven't had time to cover this in detail for you but here are some more high level differences where the UK has a lighter tax regime.

Estate Tax

UK inheritance tax was described by Roy Jenkins MP in a budget debate as "a voluntary tax that is only paid by the foolish and the ill prepared"

Uk estate tax is paid by the estate not the recipient and with very little planning can be legitimately avoided.

Gifts made more than 7 years ago fall out of the account and are tax free. This is a statutory basis rather than the position in Ireland where the date is currently December 1990 and this may move forward if the Minister of Finance feels like it.

Certain qualifying gifts fall out of the account after just 2 years making "death bed" planning possible.

Trusts are extremely efficient in the UK and allow people to gift capital but to retain a benefit such as an income for themselves.

1 nil to the UK on Estate tax

Pensions

The rules in Ireland follow the old UK pensions rules very closely and occupational pension rules are virtually the same as the old UK rules.

However, the introduction of Stakeholder Pensioms in 2001 was a game changer in terms of pension planning.

Everyone under the age of 75 can claim basic rate tax relief at source on contributions of up to £3,600pa even if they have NO EARNINGs or pay NO TAX.

This means that a pension can be set up for a new born child and funded with tax free contributions from say a Grandparent (inheritance tax saving 40%) and the net cost is £2,808. The additional £792pa is added directly to the pension fund by HMRC.

This means that by the time a child starts in the workplace they can already have tens of thousands in their pension fund. THANKS GRANNY!!!

I continued to claim this tax relief for 5 consecutive tax years after leaving the UK under the rules.

This means that people taking career breaks can continue to fund for their retirement with tax relief.

2 nil to the UK I think
 
I have calculated the taxes on Irish and UK single employees using the following calculators

http://www.uktaxcalculators.co.uk/
http://www.deloitte.ie/tc/Results.aspx

Income|Ireland|UK
€10,000/£8,000 |Nil|Nil
€20,000/£16,000|€2,219 (11%)|£2,165(13%)
€30,000/£24,000|€5,319(18%)|£4,725(20%)
€40,000/£32,000|€9,931(25%)|£7,285(23%)
€80,000/£64,000|€30,731(38%)|£19,738(31%)
€100,000/£80,000|€41,131(41%)|£26,458(33%)
€150,000/£120,000|€67,131(45%)|£47,258(39%)
 
As far as I can make out, there is no tax advantage in being married in the UK, whereas in Ireland, it's a huge advantage. Can anyone confirm this?

Married - one earner

Income|Ireland|UK
€10,000/£8,000 |Nil|Nil
€20,000/£16,000|€1,519 (8%)|£2,165(13%)
€30,000/£24,000|€3,669(12%)|£4,725(20%)
€40,000/£32,000|€6,769(17%)|£7,285(23%)
€80,000/£64,000|€27,191(34%)|£19,738(31%)
€100,000/£80,000|€37,591(38%)|£26,458(33%)
€150,000/£120,000|€63,591(42%)|£47,258(39%)
The tax on lower income earners in Ireland is further reduced if they have a child through the Home Carer's Tax Credit.
 
Marc; interesting post on other taxes, Rates etc which affect most people are I believe a lot higher in UK.Since most people struggle on on paye other tax (shelters) seem to favour inherited ie not earned wealth .

Brendan;
Nice comparison, It seems that up to circa 50,000 Uk&Ir personal taxes are broadly even.From what I had heard I had thought that the difference favoured UK much more.
As Marc seems to show those with high UK income seem to have more (shelters) .
Therefore in the round Tax ends up very similar whilst statistically looking very different.
 
The effect of children

In Ireland, there is a tax advantage in getting married, but in the UK, there is no such advantage.

In the UK, there are additional tax allowances for each child - but you don't get them if your income is too high.

In Ireland, a married couple on a low income, can pay less tax by claiming the Home Carer's Tax Credit.

In Ireland a single parent, gets an additional tax credit. In the UK, they get the child credit.


In the UK, parents get £20 a week child benefit for the first child and £13 for additional children, but this is taxable over £50,000.
 
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