What if I am a cross border worker?

Updated on 3 January 2018

Cross-border workers are individuals who regularly travel from one country to another to work. For example, someone who lives in the Republic of Ireland but travels to work in Northern Ireland (part of the UK). We explain what this means with regards to your tax obligations.

What if I am a cross-border worker?

Cross-border workers are individuals who regularly travel from one country to another to work. For example, someone who lives in the Republic of Ireland but travels to work in Northern Ireland.

If this applies to you, you will need to consider the rules for residence in each country you either live or work in.

You may have to pay tax in both the UK and the other country. As such, you will probably have to look at the double taxation agreement between the two countries, if there is one (there is between the UK and Ireland).

One of the functions of these treaties is to prevent double taxation by ultimately allowing only one country to tax your earnings or by allowing a credit for the foreign tax paid.

The method of double taxation ‘relief’ will depend on your exact circumstances, the nature of the income and the specific wording of the treaty between the countries involved. Unfortunately there are no hard and fast rules and you will probably need to seek some professional advice if you find yourself in a ‘double taxation’ situation.

Looking at UK/Ireland, cross-border workers, are typically obliged to pay income tax in the country where they earn their employment income, but their ultimate tax responsibility is with the country where they live, so they must submit an annual self assessment return each year.

Republic of Ireland residents working in Northern Ireland, for example, have income tax deducted automatically from their salary under PAYE and paid directly to HMRC. They are also obliged to submit an annual self assessment income tax return declaring their foreign income to the Republic of Ireland.

While a credit will be given for UK taxes, Republic of Ireland resident cross-border workers may have a balance of Irish tax to pay to the Irish tax authorities if they are taxed less in the UK than they would have been if they had paid tax on the Euro equivalent of this income in Ireland. However, cross-border workers resident in the Republic of Ireland can make use of Trans-border Workers Relief which ensures that they do not pay any additional tax to the Irish authorities, unless they have income earned from other Irish sources, such as rental or investment income, or they are jointly assessed for Irish Tax with a spouse.

There is no such relief for cross-border workers resident in Northern Ireland, who work in the Republic of Ireland, so their annual self assessment tax return to HMRC may result in a top-up UK tax liability.

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Example

David has his main family home in the Republic of Ireland, but during the week he lives in a rented flat in Northern Ireland, where he works for a large company. He carries out all his employment duties in Northern Ireland. He also has savings income from a bank account in the Republic of Ireland.

David has income from sources in the Republic of Ireland and Northern Ireland. As he lives in Northern Ireland during the week for work, but lives in the Republic of Ireland the rest of the time he will have to consider where he is resident for tax purposes – he could be resident in either country or both. He will also need to look at the double taxation agreement between the countries, as this may tell him where he should pay tax on the different sources of income.

He will probably have to complete a tax return for each country, that is a UK self assessment tax return and an Irish tax return.

When he is looking at these issues, he will also have to be aware of the tax years and deadlines of each country. The UK tax year runs from 6 April to 5 April, and tax returns must be submitted by the following 31 January. In the Republic of Ireland, however, the tax year is the same as the calendar year (1 January to 31 December), and the deadline for tax returns is the following 31 October.

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What about social security?

The rules are complicated regarding the social security position when individuals are working both in the UK and another country within the European Economic Area (EEA), for example when someone lives in the Republic of Ireland but works in Northern Ireland.

There is information on the social security rules in the 'National Insurance for migrants' section.

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Where can I find more information?

If you are crossing the UK/Irish border regularly, you may find the Border People website useful – a one-stop guide on cross border taxation, social security and job seeking, to health, education and banking and more.

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