By: John Ward
Moving From The Uk To The Republic Of Ireland: The Tax Consequences
INTRODUCTION
This article provides an outline of the some of the main tax issues for individuals relocating from Ireland to the UK. It is not intended to be comprehensive and specific expert advice should be taken in all circumstances.
BECOMING IRISH RESIDENT
Residence Status
The Irish tax year runs to 31 December. An individual will be Irish resident for a Tax Year if he is either:
(a) present in Ireland for 183 days in that year (the "current year" test); or
(b) present in Ireland for 280 days or more in that tax year plus the previous year (the "lookback" test).
From 2009 onwards, an individual is treated as being present in Ireland for any day if he is physically present there during any part of the day. For the purposes of (b), a total period of presence of 30 days or less in a tax year is disregarded. Therefore, an individual who comes to live in Ireland will generally not be resident there for the year of arrival, so long as present there for less than 183 days. If he does meet the current year test, then he is regarded as resident for the entire tax year of arrival, although there is an exemption for pre-arrival earnings from employments. However, an individual relocating from the UK should normally be able to rely on the UK-Ireland Double Tax Treaty to shelter all pre-arrival income from Irish taxation.
Ordinary Residence Status
An individual will be regarded as becoming ordinarily resident in Ireland once he has been resident in Ireland for three consecutive tax years. He will retain his Irish ordinary residence status until he establishes a history of three consecutive tax years of non-residence.
THE REMITTANCE BASIS
Income Tax
Individuals resident in Ireland are generally liable to tax on their worldwide income However, non-domiciled individuals are liable only on the remittance basis in respect of non-Irish income, including, since 2008, UK income. In general, pre-arrival income may be subsequently remitted free of tax.
An employment will normally qualify as non-Irish where it is with a non-resident employer and the salary is paid from outside Ireland. However, with very limited exceptions, the remittance basis only applies to such employments to the extent that their duties are performed outside Ireland.
Capital Gains
Individuals who are resident or ordinarily resident in Ireland are generally liable to tax on their worldwide capital gains. However, non-domiciled individuals are liable only on the remittance basis in respect of non-Irish gains, including, from 2009 onwards, UK gains. In general, pre-arrival capital gains accumulated prior to becoming resident in Ireland may be subsequently remitted there free of tax.
ESTATE TAXES
Capital Acquisitions Tax
Individuals relocating to Ireland should note that they will be potentially exposed to Irish Capital Acquisitions Tax (CAT) on lifetime gifts and the passing of assets on death (inheritances) in respect of all their assets once either they or their beneficiaries are regarded as Irish resident or ordinarily resident. Otherwise the tax generally applies only to the extent they hold Irish assets. Special, exceedingly complex, rules apply to trusts.
As a rule, non-domiciliaries will only be regarded as resident or ordinarily resident for CAT purposes once they have been resident in Ireland for five consecutive tax years. There is accordingly a period of grace during which some advance planning may take place.
SOME TAX PLANNING IMPLICATIONS OF RELOCATING TO IRELAND
An individual who is resident in the UK and owns assets with large capital gains could cease residence in the UK on say 3 April 2009 and relocate to Ireland, spending less than 183 days in Ireland between 3 April 2009 and 31 December 2009. Thus, neither UK or Irish tax should apply to gains made during this period. If the individual returns to the UK after realising a capital gain, anti-avoidance rules will need to be considered.
The same individual could also receive a dividend or other distribution from a UK resident company free of UK and Irish tax. Once he becomes resident in Ireland, such dividends will be taxed on the remittance basis, enabling them potentially to continue enjoying tax-free treatment.
Article Source: ABC Article Directory
John Ward BA FCA FITI is a UK and Irish tax specialist , with extensive experience of advising on cross-border transactions for individuals and companies. Further details can be found on uk-irishtaxservices.co.uk
Tuesday, March 3, 2009
Here's What You Need to Know about the New Tax Law
By: Tom Wheelwright
The recently enacted "American Recovery and Reinvestment Act of 2009" (2009 Economic Stimulus Act) includes a wide-range of tax incentives, many of which are retroactive to the beginning of the year. This week I'll share the changes impacting individuals. Then, be sure to look for email next week when I share the changes impacting businesses.
Here's What Individual Taxpayers Need to Know about the New Tax Law:
Expanded First-Time Credit for First-Time Home Buyers
Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10% of the purchase of a home (up to $75,000) by first-time home buyers. It applied to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit were required to repay any amount received under this law back to the government over 15 years in equal installments or earlier if the home was sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).
The new tax law enhances the credit by eliminating the repayment obligation for taxpayers that purchase homes on or after January 1, 2009. It also extends the credit through the end of November 2009, and bumps up the maximum value of the credit from $7,500 to $8,000.
Expanded and Revised Higher Education Tax Credit
The new law creates a $2,500 higher education tax credit that is available for the first four years of college. The credit is based on 100% of the first $2,000 of tuition and related expenses, including books, paid during the tax year and 25% of the next $2,000 of tuition and related expenses paid during the tax year.
The credit is subject to a phase-out for AGI in excess of $80,000 ($160,000 for married couples filing jointly). Forty percent of the credit is refundable.
This new credit temporarily replaces the Hope credit.
Computers as an Education Expense
The new law permits computers and computer technology, including internet access, to qualify as qualified education expenses in 529 education plans for tax years beginning in 2009 and 2010.
Tax Break for New Car Purchasers
The new law allows taxpayers to deduct state and local sales taxes paid on the purchase of a new automobile, including light trucks, SUVs, motorcycles, and motor homes. The tax break phases out starting with taxpayers earning $125,000 per year ($250,000 for joint returns).
The deduction is allowed to both those who itemize their deductions as well as to those who do not. The deduction cannot be taken by a taxpayer who elects to deduct state and local sales taxes in lieu of state and local income taxes.
Alternative Minimum Tax(AMT)Patch
To hold the number of taxpayers subject to the AMT at bay, the new law increases the AMT exemption amounts for 2009 to $46,700 for individuals and $70,950 for joint returns, and allows the personal credits against the AMT.
Making Work Pay Credit
The new law provides an individual tax credit in the amount of 6.2 percent of earned income not to exceed $400 for single returns and $800 for joint returns in 2009 and 2010.
The credit is phased out at adjusted gross income (AGI) in excess of $75,000 ($150,000 for married couples filing jointly). The credit can be claimed as a reduction in the amount of income tax that is withheld from a paycheck, or through a credit on a tax return. Under the credit, workers can expect to see perhaps $13 a week less withheld from their paychecks starting around June. Next year, the extra take-home pay will go down to around $9 per week
Economic Recovery Payment
The new law provides for a one-time payment of $250 to retirees, disabled individuals and Social Security beneficiaries and SSI recipients receiving benefits from the Social Security Administration and Railroad Retirement beneficiaries, and to veterans receiving disability compensation and pension benefits from the U.S. Department of Veterans' Affairs. The one-time payment is a reduction to any allowable Making Work Pay credit.
Refundable Credit for Certain Federal and State Pensioners
The new law provides a one-time refundable tax credit of $250 in 2009 to certain government retirees who are not eligible for Social Security benefits. This one-time credit is a reduction to any allowable Making Work Pay credit.
Unemployment Compensation Exclusion
The new tax law temporarily suspends federal income tax on the first $2,400 of unemployment benefits received by a recipient in 2009.
Expanded Earned Income Tax Credit
The new law provides tax relief to families with three or more children and increases marriage penalty relief. The changes apply for 2009 and 2010.
Expanded Child Tax Credit
The new tax law increases the refundable portion of the child tax credit for 2009 and 2010 by lowering the income threshold to $3,000 (from $8,500 in 2008).
Qualified Transportation Fringe Benefits
Qualified transportation fringe benefits, such as transit passes, qualified parking and van pooling are not included in an employee's income up to a specified dollar amount. The new tax law increases the monthly amount to $230 per month from $120 per month starting in March 2009 and continuing through 2010.
Energy Incentives
The new tax law enhances several energy tax incentives that reward taxpayers for installing energy-efficient property and alternative sources of energy in their homes.
Article Source: ABC Article Directory
The recently enacted "American Recovery and Reinvestment Act of 2009" (2009 Economic Stimulus Act) includes a wide-range of tax incentives, many of which are retroactive to the beginning of the year. www.provisionwealth.com/wealthUDetails.asp?ID=14&pID=2
The recently enacted "American Recovery and Reinvestment Act of 2009" (2009 Economic Stimulus Act) includes a wide-range of tax incentives, many of which are retroactive to the beginning of the year. This week I'll share the changes impacting individuals. Then, be sure to look for email next week when I share the changes impacting businesses.
Here's What Individual Taxpayers Need to Know about the New Tax Law:
Expanded First-Time Credit for First-Time Home Buyers
Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10% of the purchase of a home (up to $75,000) by first-time home buyers. It applied to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit were required to repay any amount received under this law back to the government over 15 years in equal installments or earlier if the home was sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).
The new tax law enhances the credit by eliminating the repayment obligation for taxpayers that purchase homes on or after January 1, 2009. It also extends the credit through the end of November 2009, and bumps up the maximum value of the credit from $7,500 to $8,000.
Expanded and Revised Higher Education Tax Credit
The new law creates a $2,500 higher education tax credit that is available for the first four years of college. The credit is based on 100% of the first $2,000 of tuition and related expenses, including books, paid during the tax year and 25% of the next $2,000 of tuition and related expenses paid during the tax year.
The credit is subject to a phase-out for AGI in excess of $80,000 ($160,000 for married couples filing jointly). Forty percent of the credit is refundable.
This new credit temporarily replaces the Hope credit.
Computers as an Education Expense
The new law permits computers and computer technology, including internet access, to qualify as qualified education expenses in 529 education plans for tax years beginning in 2009 and 2010.
Tax Break for New Car Purchasers
The new law allows taxpayers to deduct state and local sales taxes paid on the purchase of a new automobile, including light trucks, SUVs, motorcycles, and motor homes. The tax break phases out starting with taxpayers earning $125,000 per year ($250,000 for joint returns).
The deduction is allowed to both those who itemize their deductions as well as to those who do not. The deduction cannot be taken by a taxpayer who elects to deduct state and local sales taxes in lieu of state and local income taxes.
Alternative Minimum Tax(AMT)Patch
To hold the number of taxpayers subject to the AMT at bay, the new law increases the AMT exemption amounts for 2009 to $46,700 for individuals and $70,950 for joint returns, and allows the personal credits against the AMT.
Making Work Pay Credit
The new law provides an individual tax credit in the amount of 6.2 percent of earned income not to exceed $400 for single returns and $800 for joint returns in 2009 and 2010.
The credit is phased out at adjusted gross income (AGI) in excess of $75,000 ($150,000 for married couples filing jointly). The credit can be claimed as a reduction in the amount of income tax that is withheld from a paycheck, or through a credit on a tax return. Under the credit, workers can expect to see perhaps $13 a week less withheld from their paychecks starting around June. Next year, the extra take-home pay will go down to around $9 per week
Economic Recovery Payment
The new law provides for a one-time payment of $250 to retirees, disabled individuals and Social Security beneficiaries and SSI recipients receiving benefits from the Social Security Administration and Railroad Retirement beneficiaries, and to veterans receiving disability compensation and pension benefits from the U.S. Department of Veterans' Affairs. The one-time payment is a reduction to any allowable Making Work Pay credit.
Refundable Credit for Certain Federal and State Pensioners
The new law provides a one-time refundable tax credit of $250 in 2009 to certain government retirees who are not eligible for Social Security benefits. This one-time credit is a reduction to any allowable Making Work Pay credit.
Unemployment Compensation Exclusion
The new tax law temporarily suspends federal income tax on the first $2,400 of unemployment benefits received by a recipient in 2009.
Expanded Earned Income Tax Credit
The new law provides tax relief to families with three or more children and increases marriage penalty relief. The changes apply for 2009 and 2010.
Expanded Child Tax Credit
The new tax law increases the refundable portion of the child tax credit for 2009 and 2010 by lowering the income threshold to $3,000 (from $8,500 in 2008).
Qualified Transportation Fringe Benefits
Qualified transportation fringe benefits, such as transit passes, qualified parking and van pooling are not included in an employee's income up to a specified dollar amount. The new tax law increases the monthly amount to $230 per month from $120 per month starting in March 2009 and continuing through 2010.
Energy Incentives
The new tax law enhances several energy tax incentives that reward taxpayers for installing energy-efficient property and alternative sources of energy in their homes.
Article Source: ABC Article Directory
The recently enacted "American Recovery and Reinvestment Act of 2009" (2009 Economic Stimulus Act) includes a wide-range of tax incentives, many of which are retroactive to the beginning of the year. www.provisionwealth.com/wealthUDetails.asp?ID=14&pID=2
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