St Patrick counts his blessings

Irish people living in the UK have financial reasons to celebrate, says Jane Suiter
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The Independent Online
ST PATRICK'S DAY today is a celebration of all things Irish. And when the Guinness haze wears off, the one million-plus Irish-born people living in mainland UK will still have cause for some celebration.

Irish people over here get a good deal in many financial areas: they benefit from lower taxes than in the Republic of Ireland and retain a number of choices over how to organise their finances both while here and if they return to Ireland.

Although Irish taxes have come down in recent years they are still far higher than in the UK - the higher rate of 48 per cent kicks in at around pounds 12,000 for single people.

A double taxation agreement between Ireland and the UK means that nobody has to pay taxes in both jurisdictions. Where you pay tax depends on the country of residence. The rules governing this are quite complex and if you are in any doubt you should consult a tax adviser or your local tax office. But in general, you are considered a tax resident of whichever country you inhabit for 183 days or more.

More people are living in Ireland and commuting to the UK for a week's work. If possible, it is sensible to try and claim UK residency in this situation to benefit from the lower tax rates. If you are not subject to UK tax you should reclaim tax deducted on interest on savings in the UK (ask the bank or building society or a tax office).

Irish people coming to the UK can benefit from immediately electing to be tax residents in the UK. If, for example, you have freelance income for work done previously in Ireland and this is paid after you have elected to be UK tax-resident, it is subject to the UK's lower tax rates.

In the past many Irish people emigrated to the UK because of the better social security payments. However, in recent years this comparison has changed. An unemployed person in Ireland now receives pounds 60.40 a week while only pounds 46.45 is payable in the UK. Irish people in the UK can still claim Irish unemployment benefit if they do not work when they first come to the UK. And when they return to Ireland they qualify for Irish benefit if they do one week's work there.

Property can be more of a problem. If you are returning to Ireland and you have a property to sell in the UK you should do so before you become a tax resident of Ireland, otherwise you may be liable for capital gains tax. It is straightforward - and legal - to elect to remain non-resident for tax purposes when you initially return to Ireland.

Fixed-rate mortgages can be a headache for anyone thinking of moving. Banks and building societies charge a penalty if a fixed-rate loan is redeemed within a certain period. This is normally waived if you take out another loan when you move. However, even with Bank of Ireland Home Mortgages - one of the few Irish lenders to sell home loans in the UK - this does not apply if you move country.

State pensions can be built up with and claimed from both countries. Pensions are related to contributions and are not reduced by dint of what the other country pays you. In addition, a spokesman for the Irish Department of Social Welfare says that it will apply to the UK DSS for any British pension owed if the pensioner is not eligible for the full Irish pension, thus helping out on the paperwork. However, many people are entitled to the full Irish pension as well as a small British one. "In that case you must apply yourself," the spokesman says.

However, anyone thinking of taking out a personal pension in the UK - generally cheaper than their Irish equivalents - and who may return to Ireland could face problems. John Housden, life and pensions director at Hill Samuel Life, says he has had many people kicking up "merry hell" when they have realised they can no longer contribute to their UK personal pension.