UK income Irish tax resident

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DeeKie

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I am resident and tax resident in Ireland, and I earn UK self-employed income, on which I pay UK tax and file a Self Assessment return. I’m interested in reducing my tax liability and found out you can through a UK SIPP.

Contributions to a UK SIPP seem eligible for 20% tax relief at source, and higher-rate taxpayers can claim an extra 20–25% through Self Assessment. From my research 25% can be taken tax-free on retirement, with the rest taxed under the UK–Ireland double tax agreement
I came across MyExpatSIPP and I wondered had anyone ever used them or similar
 
I don't think this is going to work. As an Irish resident you are liable to Irish tax on your worldwide income, but you get a full credit against your Irish tax liablity for the UK income tax that you pay on your UK employment.

If you reduce your UK income tax by contributing to a UK SIPP, you'll also reduce the credit you can claim against your Irish tax, so unless I'm missing something every €1 of UK income tax that you save will be matched by an additional €1 of Irish income tax that you will pay. A contribution to a non-Irish pension scheme is generally not tax-deductible in Ireland. (It can be deductible in limited circumstances but I don't think you will come within them.)
 
Thanks — I agree there’s no double tax benefit. I’m not looking for Irish tax relief, but wouldn’t it reduce my UK income tax on UK earnings. Iit still seems worthwhile for that UK-taxed income? I’m easily confused though.
 
OK, to illustrate how this works, let's suppose your UK income from your UK employment is the equivalent of €50,000. (To keep things simple, we'll express all figures in euros and we'll just look at income tax, ignoring national insurance, etc.)

UK income tax on that will be the equivalent of about €7,000.

But, you're also liable to Irish tax on your UK income, against which you get a credit for the UK tax paid. Your Irish income tax liablity on a salary of €50k is about €7,850 . You get a credit for the €7,000 UK income tax you paid, leaving you with an Irish tax bill of €850.

Your total tax bill is (€7,000 paid in UK plus €850 paid in IRL =) €7,850.

Now, you start to pay contributions of €10,000/year to a UK SIPP. These are tax deductible in the UK, so your UK taxable income is now just €40k. UK tax on that is about €4,300. Great! You've saved €2,700 in UK tax!

But your Irish taxable income from your UK employment is still €50,000 — I don't think you'll get a deduction in Ireland for contributions paid to a UK pension scheme. Irish income tax on €50k is still €7,850. You get a credit for the UK tax you paid, so your Irish tax bill is now (€7,850 - €4,300 =) €3,550.

The total of Irish and UK tax that you pay is now (€4,300 paid in UK plus €3,550 paid in IRL =) €7,850. In other words, you haven't saved any tax at all. You pay less tax in the UK and more tax in IRL and it all comes out in the wash.
 
TomEdison said:
OK, to illustrate how this works, let's suppose your UK income from your UK employment is the equivalent of €50,000. (To keep things simple, we'll express all figures in euros and we'll just look at income tax, ignoring national insurance, etc.)

UK income tax on that will be the equivalent of about €7,000.

But, you're also liable to Irish tax on your UK income, against which you get a credit for the UK tax paid. Your Irish income tax liablity on a salary of €50k is about €7,850 . You get a credit for the €7,000 UK income tax you paid, leaving you with an Irish tax bill of €850.

Your total tax bill is (€7,000 paid in UK plus €850 paid in IRL =) €7,850.

Now, you start to pay contributions of €10,000/year to a UK SIPP. These are tax deductible in the UK, so your UK taxable income is now just €40k. UK tax on that is about €4,300. Great! You've saved €2,700 in UK tax!

But your Irish taxable income from your UK employment is still €50,000 — I don't think you'll get a deduction in Ireland for contributions paid to a UK pension scheme. Irish income tax on €50k is still €7,850. You get a credit for the UK tax you paid, so your Irish tax bill is now (€7,850 - €4,300 =) €3,550.

The total of Irish and UK tax that you pay is now (€4,300 paid in UK plus €3,550 paid in IRL =) €7,850. In other words, you haven't saved any tax at all. You pay less tax in the UK and more tax in IRL and it all comes out in the was
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Thank you. That makes sense. You are very kind to offer this advice. Much appreciated. I was convinced by some of the marketing. You saved me a lot of time. Thanks again.
 
DeeKie, I am fairly sure TomEdison is incorrect about the following
TomEdison said:
I don't think you'll get a deduction in Ireland for contributions paid to a UK pension scheme
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It's not a deduction, it's just lowering your taxable income just like it would if you contributed to a PRSA in Ireland. Search for "Overseas Employers, Overseas Employees and Employees Seconded from Overseas Pensions Manual - Chapter 17" (sorry, I can't link)

But I am confused, DeeKie. If you are a tax resident in Ireland why are you paying tax in the UK? Even if you are paid into a UK bank account by a UK client, you should be paying tax to Revenue. Did you just move to Ireland, perhaps?
 
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