Self employed income in Ireland and PAYE income in the UK. Do I pay Class S PRSI in Ireland?

[bell81]

Hi,

I am Irish emigrant, resident in the UK and am a PAYE worker for my employment here.

I plan to do some self employed work in Ireland over the coming years, in large part motivated by the hope this will allow me to top up my Irish PRSI (pension).

Could someone please advise if
a) I can choose to pay my self employed income arising from work in Ireland in Ireland.
b) If I can also choose to pay Class S PRSI contributions on this income.

Thanks for the help.

 

[Dr Strangelove]

I plan to do some self employed work in Ireland over the coming years, in large part motivated by the hope this will allow me to top up my Irish PRSI (pension).

Will you be living in Ireland when doing this work?

How much do you expect it will make you in a year?

Will you still be a UK PAYE earner at the same time.

How many PRSI credits do you have already? When did you start paying?

Sorry for the questions but this should help with a better answer

 

[bell81]

Thanks for getting back to me.

a) I would be living in the UK
b) and still working in the UK paying PAYE.
c) I am awaiting my PRSI contribution statement, and am likely hovering around the 520 mark but may very well be under. Certainly over 460. Started paying in 2005.

My main goal is to ensure I cross the 520 mark, just in case I'm under, but ideally would like to continue to increase contributions gradually over time.


ETA: I left Ireland at the start of 2015

 

[Dr Strangelove]

My interpretation:

You will be resident and ordinarily resident in the UK but Irish domiciled. So:

1) you are liable for income tax on Irish-sourced income. If this is €5,000 or more in a year you pay €500 Class S PRSI or 4% whichever is higher. This will get you 52 Class S credits for the year. The income tax part is complicated and you may get credit in the UK for any tax paid in Ireland - maybe someone else can advise.

2) the bilateral social security treaty means that you can accumulate rights to pension in both jurisdictions if paying compulsory NI in the UK and compulsory NI in Ireland in same period. Scenario above matches this. However you cannot simultaneously generate rights to something like unemployment benefit though - you can only ever claim that in one jurisdiction.


Once you are over the 520 PRSI contributions mark it might be simpler just to make voluntary PRSI payments in Ireland.


Take professional advice if you are unsure!

 

[bell81]

That's extremely helpful, thanks very much for taking the time for such a detailed reply.

 

[Dr Strangelove]

You’re welcome!

Maybe change title of thread to “Self employed income in Ireland and PAYE income in the UK. Do I pay Class S PRSI in Ireland?”

Will help with anyone else doing a search.

 

[bell81]

Done!

 

[T McGibney]

My interpretation:

You will be resident and ordinarily resident in the UK but Irish domiciled. So:

1) you are liable for income tax on Irish-sourced income. If this is €5,000 or more in a year you pay €500 Class S PRSI or 4% whichever is higher. This will get you 52 Class S credits for the year.

Won't the OP be disqualified from both paying PRSI and accumulating PRSI credits as long as they remain non-resident here?

 

[bell81]

Won't the OP be disqualified from both paying PRSI and accumulating PRSI credits as long as they remain non-resident here?

I wondered about this myself and did a bit more reading. Revenue guidance (from assets.gov.ie/38671/0aa2cf3d831a4076b1b6208e1287d9f9.pdf) states that "People classified by the Office of the Revenue Commissioners as non-residents who hold
solely unearned income" do not have to pay Class S PRSI.

I imagine a reasonable implication from this is that Class S contributions should be paid on earned income from non residents, and this would fit the case of someone like me doing self employed work in Ireland, while living and PAYE working in the UK.

The full list of exclusions are below for reference

The following people do not pay PRSI at Class S:
• Prescribed relatives such as a son, daughter, parent, brother or sister, who help a
self-employed person with their business but who are not partners in the business,
• People whose total income from self-employment, earned and unearned, and employment is
below a certain amount, currently €5,000 a year,
• People classified by the Office of the Revenue Commissioners as non-residents who hold
solely unearned income,
• People classified by the Revenue Commissioners as non-resident directors of Irish
Companies,
• People insured as employees whose only other income is unearned such as share dividend
payments or rent. They may be liable for PRSI contributions at Class K on this income,
• People who are under pensionable age and in receipt of a pension arising from a previous
employment of theirs or of their spouse, or civil partner and whose only other income
is unearned. They may be liable for PRSI contributions at Class K on this income,

 

[T McGibney]

I imagine a reasonable implication from this is that Class S contributions should be paid on earned income from non residents, and this would fit the case of someone like me doing self employed work in Ireland, while living and PAYE working in the UK.

If I were you, I'd frankly be relying on much more than "a reasonable implication" here.

I also struggle to understand how you can be "doing self employed work in Ireland" while living in the UK.

 

[Dr Strangelove]

I also struggle to understand how you can be "doing self employed work in Ireland" while living in the UK.

A carpenter flies from London to Knock and fits a kitchen, gets paid, and flies back to London a week later. That is self employment carried out wholly in Ireland by someone resident in the UK. There are infinite scenarios.

My reading of the Revenue guidance is also that only unearned income by non-residents is exempt from Class S PRSI. OP is talking very clearly about employment income.

 

[T McGibney]

A carpenter flies from London to Knock and fits a kitchen, gets paid, and flies back to London a week later. That is self employment carried out wholly in Ireland by someone resident in the UK. There are infinite scenarios.

Yes there are infinite scenarios but if they're in London and fly to Knock to do a job and they then fly back, the trip to Mayo may well remain part of a self employment enterprise carried out in the UK.

I think they would struggle either way to have the Mayo job recognised as Irish self-employment income, unless they have a fixed place of business here.

Anyway, it makes no sense for a business in London to take on a carpentry job in Mayo.

My reading of the Revenue guidance is also that only unearned income by non-residents is exempt from Class S PRSI. OP is talking very clearly about employment income.

I wouldn't be relying on Revenue guidance alone here.

 

[Dr Strangelove]

Anyway, it makes no sense for a business in London to take on a carpentry job in Mayo.

Maybe so. Imagine a teacher who lives and works in Enniskillen and spends his holidays farming on his land near Ballyconnell. He is resident and a PAYE employee in the UK and engaged in self-employment in Ireland. There are many scenarios - OP hasn’t given us any idea what his line of business is.

I wouldn't be relying on Revenue guidance alone here.

What else is there to rely on besides Revenue and DSP guidance?

 

[bell81]

Dr Strangelove has kindly addressed some of the the issues raised.

As far as I can tell I would be required to pay tax on my Irish generated income.

Non-ordinarily resident and not domiciled in Ireland​

You might be non-resident, non-ordinarily resident and not domiciled in Ireland for a tax year. In this case you will pay Irish tax on:

• your Irish income and your income from a trade, profession or employment performed in Ireland
• any gains on Irish specified assets only (land, buildings, minerals and assets of a trade carried on in Ireland).

revenue.ie/en/jobs-and-pensions/tax-residence/tax-tax-credits-non-residents.aspx

and PRSI is generally expected from self employed income

Do you need to pay 'Pay Related Social Insurance (PRSI)'?​

You must pay PRSI if you are self-employed and:

• you have a minimum annual income of €5,000
• and
• you are aged between 16 and 66.

revenue.ie/en/self-assessment-and-self-employment/guide-to-self-assessment/prsi-need-pay.aspx

The exclusions to Class S PRSI are listed in my previous post, and on my reading do not apply to someone self-employed in Ireland and resident and working in the PAYE system in the UK.

I understand there is are separate restrictions on paying voluntary PRSI contributions when paying into another system, but these would not be voluntary.

I also struggle to understand how you can be "doing self employed work in Ireland" while living in the UK.

This may be beside the point but to ease your struggles, I am a medical professional working in routine clinical practice in the UK. I would offer a medico-legal assessment practice in Ireland, travelling over and spending a few days as required. Income generated would be from "a trade, profession or employment performed in Ireland".

As an overall point, given your post history I appreciate you will be more knowledgeable than me on these matters, so it would be good to pointed toward the material that underlies your reasoning and scepticism.

 

[T McGibney]

Maybe so. Imagine a teacher who lives and works in Enniskillen and spends his holidays farming on his land near Ballyconnell. He is resident and a PAYE employee in the UK and engaged in self-employment in Ireland. There are many scenarios - OP hasn’t given us any idea what his line of business is.

In fairness, that's a totally different situation to your carpenter jetting off from Stansted to fix a wonky cupboard in Swinford.

What else is there to rely on besides Revenue and DSP guidance?

A determination from DSP Scope Section would be the most obvious one.

 

[T McGibney]

As an overall point, given your post history I appreciate you will be more knowledgeable than me on these matters, so it would be good to pointed toward the material that underlies your reasoning and scepticism.

No, I've already given my thoughts and the logic underlying them. No way am I going to spend valuable time and energy researching the topic for you. That's for you to do.

This may be beside the point but to ease your struggles, I am a medical professional working in routine clinical practice in the UK. I would offer a medico-legal assessment practice in Ireland, travelling over and spending a few days as required. Income generated would be from "a trade, profession or employment performed in Ireland".

Your profession is in the UK, not in Ireland.

 

[Dr Strangelove]

Your profession is in the UK, not in Ireland.

The activity is performed in Ireland which is the relevant criterion. Even if it was relevant, the OP plans to carry self out self-employment of a type which is materially different from their UK employment.

A determination from DSP Scope Section would be the most obvious one.

The Scope section of the DSP website speaks of:

The types of case that Scope Section deal with include the PRSI insurability of:

• company directors
• family employments
• partnerships
• civil and public servants
• office holders including specified ‘public office holders’
• employment status (whether a worker is an employee or self-employed for PRSI purposes)
• miscellaneous cases including part-time, casual or voluntary work, unearned income and so on

There is no ambiguity about the above in the case of the OP or my hypothetical carpenter.

It also says:

Employers and employees or former employees, or their representatives, may apply to have an employment investigated to make sure that the correct class of PRSI is applied.

OP will be neither an employer nor an employee. It says nothing about self-employed persons like @bell81

No way am I going to spend valuable time and energy researching the topic for you.

Yet you’ve spent your time trying to cast doubt on a topic where there is none.

 

[T McGibney]

Yet you’ve spent your time trying to cast doubt on a topic where there is none.

OK if you say so.

I'm still pretty sure the OP will find differently when they do their research.

 

[ronaldo]

Is it not the case that working in the UK will subject you to National Insurance contributions which will preclude you from being able to pay PRSI contributions, even if you did have Republic of Ireland employment, investment or rental income?

From the link below:

"When working in the CTA, you pay into only one state’s social security scheme at a time and are entitled, when in the other state, to the same social security rights, and are under the same obligations, as citizens of that state."

The Common Travel Area and social security benefits

There is a social security agreement between the UK and Ireland allowing existing reciprocal social security rights for UK and Irish citizens (and for certain family members and surviving family members) under the Common Travel Area (CTA) arrangements and law of the European Union to be...

www.nidirect.gov.uk

 

[Dr Strangelove]

From the link below:

"When working in the CTA, you pay into only one state’s social security scheme at a time and are entitled, when in the other state, to the same social security rights, and are under the same obligations, as citizens of that state."

The full Bilateral Social Security Treaty is 44 pages long and here.

I see nothing in it to prevent the OP’s plan as outlined above.

As per Article 12 if NI and PRSI are both compulsory in the same year then simultaneous build-up of pension rights can happen.