As hybrid and remote working become more common, understanding the income tax implications across Northern Ireland and Ireland is essential especially for cross-border workers. The tax systems in both jurisdictions differ significantly, and changes to your work pattern can affect your tax liabilities, pension contributions, and overall take-home pay.
Full-Time Remote Working: Simpler Tax, New Considerations
If you switch to a full-time work-from-home contract, your tax liability will generally fall under your country of residence.
- PAYE (Pay As You Earn) usually handles your taxes automatically.
- A tax return may only be needed if you have additional income.
- You’ll need to agree on a new gross salary, factoring in currency conversion between Euro and Sterling.
- Employers focus on gross pay; employees must claim any tax reliefs themselves.
Tip: Seek professional advice to calculate your net pay and understand how social insurance and tax deductions may change.
Loss of Valuable Tax Reliefs When Changing Jurisdiction
If you live in Northern Ireland and commute to work in the Republic of Ireland, you may currently benefit from generous tax reliefs. These could be lost if you switch to a UK-based contract.
Reliefs that may be affected:
- Non-Resident Aggregation Relief (for married couples)
- Single Parent Tax Credit
- Incapacitated Child Tax Credit
- Widow/Widower Tax Relief
These reliefs can significantly improve your net pay. Losing them may result in lower take-home income—even if your gross salary increases due to currency adjustments.
Changing Payroll Jurisdiction: A Potential Pay Cut
If you’re employed in Northern Ireland but live in the Republic of Ireland, switching to an ROI payroll could mean:
- Paying 40% tax instead of 20% (UK rate)
- Taking home less pay, despite a higher gross salary
Before changing your contract, calculate the difference in net pay. Your employer may not be able to increase your salary enough to offset the additional tax burden.
Hybrid Working: The Most Complex Tax Scenario
Hybrid working—splitting duties between jurisdictions—can lead to dual taxation and complex payroll arrangements.
Key challenges:
- Two payroll systems
- Two tax authorities
- Reduced tax credits due to worldwide income
- Real-time tax adjustments
Under Irish Revenue rules, if less than 75% of your worldwide income is earned in Ireland, your tax credits may be reduced proportionally.
Transborder Workers Relief: Limited Availability
If you work in Northern Ireland and live in the Republic of Ireland, you may be eligible for Transborder Workers Relief—but only if all work is performed outside Ireland.
Hybrid working disqualifies you from this relief if any duties are carried out in the Republic.
Joint Assessment and Spousal Tax Complications
If you’re jointly assessed with your spouse in Ireland, hybrid working can complicate your tax situation:
- Tax credits and allowances are shared
- Calculating liabilities becomes difficult
- Employer-funded tax liabilities may affect your assessment
Different Tax Years Add Complexity
- Irish Revenue: January to December
- UK HMRC: 6 April to 5 April
This mismatch can make tax planning and reporting more challenging for cross-border workers.
Pension Contributions and Tax Relief
Hybrid working can affect tax relief on pension contributions, especially if your income is split between jurisdictions.
Example:
- Before hybrid working:
€70,000 salary in ROI, 10% pension = €7,000 contribution 40% tax relief = €2,800 - After hybrid working:
€28,000 ROI salary, same 10% pension = €2,800 contribution 20% tax relief = €560
Upcoming Pension Changes: My Future Fund
The My Future Fund auto-enrolment scheme launches in ROI on January 1, 2026. With auto-enrolment on both sides of the border, cross-border pension planning will become more complex.
Advice: Consult a cross-border pension adviser to:
- Choose the right pension scheme
- Ensure compliance with both jurisdictions
- Plan for retirement tax liabilities
Final Considerations for Employers and Employees
The tax situation will vary depending on:
- Number of days worked in each jurisdiction
- Total earnings and bonuses
- Employee benefits
Both jurisdictions have the right to tax income earned within their borders. Employees may face dual taxation, and employers must ensure compliance with shadow payrolls and Permanent Establishment rules.
The 60-Day Rule: Limited Application
Some tax treaties allow exemptions for short-term work (under 60 days). However:
- This rule does not apply if the employee is resident in the country where they work.
- If working from home, payroll obligations begin on day one.
Conclusion
Hybrid working offers flexibility but introduces significant tax and payroll complexities for cross-border employees. Before making changes to your work arrangement:
- Calculate your net pay
- Assess tax reliefs and pension impacts
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Article published by the InterTradeIreland Trade Hub Team: October 2025