usc on uk earnings

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missthrifty

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Now doing my husband's 2012 self assessment. Last year he worked in the UK and lived in the UK and had his UK earnings taxed under USC. Given the different exchange rates used by revenue.ie on a monthly basis, it is hard to decipher whether he was charged on his gross or net after expenses and UK tax allowance. Any suggestions?
 
Is he working for an Irish or UK company.
Is he taxed under Irish or UK tax.
Is he resident in Ireland or the UK for tax purposes.
 
Hello Joe-90,
My husband was working for a UK company under the CIS scheme where they took 25% at source. He is able to claim back a percentage of this after allowable expenses at the end of the tax year. He is resident in Ireland insofar as he would come home every three weeks for a weekend.

I wrote to Revenue.ie and they said it did not matter how long he was out of Ireland for (ie: days per year) he would still have to pay USC on his gross earnings. Our Accountant agreed it is not a fair system but it is the system.

It seems grossly unfair that a person who has to travel abroad to find work in the UK has to pay USC on those earnings. This is despite the fact that the money was being spent in the Irish economy to support his family on what is left after a huge chunk is spent on living in London.
 
Hello cashier,
I know the system stinks regarding people who work abroad and then get taxed at home in Ireland. There is nothing he can do about it.
 
Lets be clear on this, you only pay National Insurance / PRSI in one country (if done correctly), you may pay Income taxes (incl. USC) in both but you get a deduction in Ireland for those paid in a country with which Ireland has a Double Taxation Agreement (DTA).

The net effect is that you should not be paying anymore than you would pay in Ireland. However, from a cashflow point of view, you may be out of pocket until you do your tax return after the year end.

I presume cross border relief or split year relief does not apply here??
 
Hello Paddy,

He paid NI Class 2 and Tax at source. HMRC retained some of this and he claimed a refund for 2012/13. He pays Irish USC on his gross UK earnings for nine months of the 2012 UK tax year and the remaining three months will go towards the 2013 Irish self assessment next year.
 
So he has to file a tax return in the UK and pay UK Tax and NI? to get a refund of the UK tax withheld by the CIS.

As he is resident in Ireland he also has to file a Tax return in Ireland. As he is resident he has to pay Income Tax, PRSI? and USC on the profit not the gross amount with a credit for the UK tax paid. If he is only coming home every 3rd weekend he won't be resident in Ireland in 2013 so won't have to file a tax return.
 
Hello Joe,
Q. So he has to file a tax return in the UK and pay UK Tax and NI? to get a refund of the UK tax withheld by the CIS.
A. Correct

The answer to your second question:
He only pays USC on his UK earnings (after allowable expenses). He did not pay income tax at 20% as his/our credits equalled out over the amount earned. He paid NI in UK so does not pay PRSI. On our 2012 self assessment he received a double taxation relief in his credits.

He is home now so only the UK's three remaining months of 2013 will be used and added to his/our other earnings for this year.

When I wrote to revenue asking about his time out of Ireland and spent in the UK, they replied saying it made no difference - he still had to pay USC on his earnings.

Thank you for your help Joe.
 
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