As Brexit negotiations rumble on, the UK is currently facing an unprecedented amount of economic uncertainty. However, with the Irish economy experiencing strong growth, booming daily exchange rates and a continuously improving job market across multiple sectors, some UK contractors are being tempted to explore the possibility of contracting over in Ireland.
In today’s world, Ireland is reaping the rewards of the contracting model – the Irish economy, alike that of the UK, is heavily regulated from an employment law perspective and so the flexibility that contracting offers can be highly attractive.
Want to know more about the benefits of contracting and why more people are choosing to be contractors? Click here for more information.
Ireland has in recent years experienced skills shortages in areas such as IT, engineering and construction. Significant economic growth, exemplified by the construction sector in particular seeing an employment growth of 9.2 per cent between 2015-2016, is driving employment opportunities and encouraging more contractors from European countries to choose Ireland as the location for their next contract.
So, what are the primary benefits for UK contractors who use their UK companies for contracts in Ireland? And do these opportunities help to explain why Ireland is so appealing to UK contractors?
5 benefits for UK contractors using their UK companies for contracts in Ireland:
1. No need to set up an Irish Company:
Contractors can use their existing UK Company for the Irish contract. This can be incredibly appealing to contractors. Taking up a contract in Ireland while continuing to use a UK Limited Company can be convenient, keep costs low and even maximise tax efficiencies. Are you an Irish recruitment agency or business, or perhaps you’re a UK contractor? Fenero have solutions available to make this work for you while simplifying tax issues.
2. Make use of the UK dividend regime:
UK contractors using their UK companies for contracts in Ireland can continue to make use of the hugely beneficial dividend regime in the UK. In the UK, as a shareholder entitled to dividend payments, the tax rate payable on dividends up to your dividend allowance in the tax year is significantly lower than the tax rate payable on salaries. The dividend regime in the UK is significantly better from a contractor’s perspective than in Ireland. This can result in much higher overall retention rates compared to Irish contractors.
3. Ability to claim for tax free accommodation and travel:
Expenses accrued through contracting such as travel (by train, plane or bus for instance) and subsistence allowances can all work as relief against your taxable income. Quite often UK contractors using their UK companies in Ireland can claim much more than their Irish counterparts.
4. Irish taxes should not be a cause for concern:
Irish income and corporate taxes, if applicable, get offset against the contractors UK tax liability. Under the UK/Ireland Double Taxation Agreement, income and corporate taxes paid in Ireland are available to offset against their UK tax liabilities. The tax paid in Ireland, if any at all, should not actually be a cost overall to the contractor. Want to know more? Click here to read our overview of Irish Tax for UK Limited Companies.
5. It's easy:
Setting up is easy, and with guidance from tax experts like Fenero, being compliant is easy too – we ensure our contractors meet legal standards, and generally the start up process doesn’t cost anything extra in terms of additional tax liabilities. Don't hesitate to get in touch to find out just how simple sorting out your taxes can be.
Fear of the unknown, largely caused by the uncertainty of the UK economy during Brexit negotiations and beyond is enough for some to consider the leap into the Irish market.
The benefits of the contracting industry structure can be highly profitable for UK contractors. Attractive contracting roles with prestigious companies are becoming increasingly available in Ireland, with the possibility for contractors to earn good hourly and daily rates while still benefiting from the more favourable UK tax system. With the right guidance and know how, it’s a win-win situation for both economies.
UK Contractors should not let tax be a deterrent from taking up Irish contracts. For some it’s possible to get an exemption from Irish taxes and for those that must pay some Irish taxes, Fenero can offer advice on how to reclaim this from HMRC.
Click here for our post on how Irish tax laws apply to UK limited companies contracting in Ireland.