Two major Irish and UK financial events of the year occurred last Wednesday 9th December…..In Ireland the budget report was presented by Minister Brian Lenihane …..while UK Chancellor Alastair Darling announced the UK’s final pre-budget report. Whilst both countries have similar economic problems, albeit on a different scale….Ireland made € 4bn cuts to public service spending with the aim of reducing our deficit to below 3% of GDP by 2014…this will be achieved over a succession of budgets….the UK’s government borrowing is expected to fall from £ 178bn (12.6% of GDP) this year to £82bn (5.5% of GDP) by 2014.
There has been pressure for Ireland to make significant changes to our system following the commission on taxation report recently… to provide further equity in our tax system….which they did in some key areas such as the new minimum tax on certain non Irish resident, Irish domiciled individuals.
However, Ireland continues to favour the remittance basis of taxation for Irish resident, non– domiciled individuals…a key difference between Ireland and the UK, who have a minimum tax on their UK resident non domiciled individuals of £ 30,000 per annum. This has resulted in several UK expatriates to re-locate to Ireland making substantial savings in personal income tax.
If their tax affairs and finances are structured in the correct way many can benefit to the tune of several thousands of pounds.
Further proposed increases in UK Income tax from 06/04/2010…an additional tax rate of 50% on Income over £ 150,000 may act as the ‘straw that broke the camel’s back’ for many…and will increase the gap between the UK and Ireland’s personal taxation of non-domiciled individuals, re-affirming Ireland’s position as a location of choice .
With the UK’s minimum tax charge of £ 30,000 per annum coupled with a marginal tax rate of 50% on UK earnings over £ 150,000, it is easy to see why UK resident non domiciled individuals may be looking to head west for a solution to their mounting UK tax burden.
We advise several Irish resident non-domiciled clients on how these issues work in practice and would be delighted to assist with any queries or issues you have.
