40% pension tax relief if working in UK?

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Kellus

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Both my husband and I live in the south but work in northern ireland where we pay our income tax.
We earn over the €40,000 tax threshold so I'm wondering if we pay into an Irish pension can we avail of the 40% tax relief?
 
From listening to different podcasts on pensions, this 40% tax relief on pension only existed in ireland and no where else in the world, but from reading the link above in the UK an additional 20% is available on income you've paid 40% tax on.
Making it the same unless I'm missing something?
 
If you pay no tax in ireland then there is no tax relief available, you only get the relief against irish tax paid.
You might get relief against your UK tax
 
Kellus said:
Both my husband and I live in the south but work in northern ireland where we pay our income tax.
We earn over the €40,000 tax threshold so I'm wondering if we pay into an Irish pension can we avail of the 40% tax relief?
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You really need to pose this question either to a broker or to the pension company which you're considering opening a pension with.
 
cloughy said:
If you pay no tax in ireland then there is no tax relief available, you only get the relief against irish tax paid.
You might get relief against your UK tax
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Thanks, this is what I suspected. We can't avail of the ISA's either since we're not resident in the UK.
Almost seems like the bad end of both jurisdictions since we fall between the two.
 
Kellus said:
Thanks, this is what I suspected. We can't avail of the ISA's either since we're not resident in the UK.
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If you could tell us for both of you:
1) when you first worked in UK or Republic
2) How long in total you’ve worked in both UK and Republic
3) Whether you intend to stay working on the other side of the border until retirement
4) roughly your ages

I ask as it may be possible to make voluntary PRSI or NI contributions which would get you closer to both UK and Irish state pensions.
 
Kellus said:
Thanks, this is what I suspected. We can't avail of the ISA's either since we're not resident in the UK.
Almost seems like the bad end of both jurisdictions since we fall between the two.
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Is what I posted earlier of any relevance?
ClubMan said:
Any use?
www.gov.uk

Tax on your private pension contributions

Tax you pay and tax relief you get on contributions to your private pension - annual allowance, lifetime allowance, apply for individual protection
www.gov.uk www.gov.uk
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Dr Strangelove said:
If you could tell us for both of you:
1) when you first worked in UK or Republic
2) How long in total you’ve worked in both UK and Republic
3) Whether you intend to stay working on the other side of the border until retirement
4) roughly your ages

I ask as it may be possible to make voluntary PRSI or NI contributions which would get you closer to both UK and Irish state pensions.
Click to expand...
I was born and grew up in the republic and have a few years of PRSI from working as a student but have worked in Northern Ireland since I left uni. I must have over 20 years of contributions there and have a defined benefit pension of £31,000/annum if I work until I'm 68. I can't see me getting a job in the south in my area as any that come are temporary contracts and I'm not willing to leave a permanent job at this stage. I'm 44 years old.
I'm assuming I will get no southern state pension although I ready something about pensions could be combined from the north.

My husband grew up in the north and has only 2-3 years of working in the republic, he has at least 25 years paying national insurance in north. His work pension is very low as he's only being paying the minimum, which he needs to increase, hence why I'm now trying to look into this. His employers have said they could pay him in euro and he could start contributing to his PRSI, he's over 20 years left of work. But they said this won't be until auto enrolment is in place in the south.

There will be a lot for us to weigh up if he was to move to euro pay. On the plus side he'd make PRSI contributions and could potentially have 2 full state pensions if he made up the years. On the downside his pay will get converted to euro using current exchange rate which isn't great, he might be taxed as a single person, plus we'd lose the medical card for the full family in south that we have now (not means tested as we work in NI). He's 45.

I know we'll need to go to a financial adviser on this but I'm just trying to get a better understanding of our options before we do.
 
ClubMan said:
Is what I posted earlier of any relevance?
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Potentially, I don't understand it all, but it does mention that for a 40% tax payer the additional 20% relief could be sought through self assessment. So I definately look into this more.
 
Kellus said:
Potentially, I don't understand it all, but it does mention that for a 40% tax payer the additional 20% relief could be sought through self assessment. So I definately look into this more.
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They're living here but neither earning nor paying income tax here and as such are in a different position to 99% of taxpayers.

A phone call to any of the major pension provider companies should help clarify their options.
 
Kellus said:
I was born and grew up in the republic and have a few years of PRSI from working as a student but have worked in Northern Ireland since I left uni.
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For you in that case you don't qualify to make voluntary PRSI contributions right now as you don't have the minimum 520 needed to do so.

But if you have the potential to earn over €5,000 a year from a rental property in Ireland or carry out self-employment in Ireland you may be able to accumulate 52 PRSI credits a year to get you closer to the Irish state pension. My reading of the post-Brexit arrangements is as follows:
  1. You can be employed in the UK and pay NI and income tax there; but
  2. If you have self-employment or have other unearned income in the Republic you are liable for PRSI at €500 or 4%, whichever is higher
  3. This €500 gets you 52 PRSI credits a year which get you state pension eligibility
  4. There is a thread here on this but I would also take professional tax advice
Also, if you get to 520 PRSI credits via unearned income or self employment you can just make voluntary PRSI contributions either, usually the same €500 a year. Above plan would work for your husband either.

Kellus said:
My husband grew up in the north and has only 2-3 years of working in the republic, he has at least 25 years paying national insurance in north. His work pension is very low as he's only being paying the minimum, which he needs to increase, hence why I'm now trying to look into this. His employers have said they could pay him in euro and he could start contributing to his PRSI,
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I doubt it's legal for his employer to do this. If his place of employment and work is carried out in the North then he is taxable in the UK. The currency is not relevant.

Kellus said:
he's over 20 years left of work. But they said this won't be until auto enrolment is in place in the south.
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I don't see what auto-enrolment really has to do with it.

Kellus said:
plus we'd lose the medical card for the full family in south that we have now (not means tested as we work in NI). He's 45.
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You are obliged you report pretty much all income for the medical card assessment no matter what country you work in. It's pretty serious if you are purposely misrepresenting your income to qualify for a state benefit and I would strongly advise against it.

Kellus said:
I know we'll need to go to a financial adviser on this but I'm just trying to get a better understanding of our options before we do.
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Some financial advisors are great, but all of you are trying to sell you a product. But there are a few big questions about your situation that need to be answered first. I would look to speak to someone who is qualified in tax advice with experience of cross-border workers. It's quite common so there is sure to be someone out there and it's worth paying for specialist advice.

Finally - it looks like you're both on track to get the full UK State Pension which needs 35 years of NI contributions. If one of you does opt to work full-time in the Republic make sure to pay Class 2 voluntary NI contributions every year.
 
Thank you for the info @Dr Strangelove.
For my husband's employers this was when he was working remotely from home so his place of work would have in the south, he's since gone back to the office but we may revisit this in the future.
For the medical card, we submit our incomes but we fall under the 'Who qualifies without a means test....people with EU entitlement' category.
Our next steps are to speak to a tax advisor as our situation is unique and we want to make the best of it, better now 20 years out from retirement than in 10 years time.
 
Kellus said:
or the medical card, we submit our incomes but we fall under the 'Who qualifies without a means test....people with EU entitlement' category.
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I wasn't aware of this. It's a big benefit of your current set-up. Although if one of you was employed in the Republic you could claim 20% tax relief on most medical and prescription expenses.

Kellus said:
our situation is unique
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It's not! There are about 7,000 RoI to NI cross-border workers, see here. There must be tax advisers based around Derry or Newry/Dundalk who deal with this kind of situation.
 
Dr Strangelove said:
But if you have the potential to earn over €5,000 a year from a rental property in Ireland or carry out self-employment in Ireland you may be able to accumulate 52 PRSI credits a year to get you closer to the Irish state pension.
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Is their a similar ruling for the UK Pension? i.e. a resident in the South, with a rental in N.I. accumulating towards a UK pension each year?
 
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