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bigduckontax
bigduckontax, Accountant
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We are a small limited company and we have 6 employees - all

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Hi guys. We are a small limited company and we have 6 employees - all based in our offices in London. However, one of our employees is moving back home to Ireland. Our accountant doesn't know what we need to do in terms of tax and/or payroll. Can anyone advise?
Customer: replied 3 months ago.
The employee in question is also a shareholder of the company (1% of shares). Do we continue to pay dividends as we usually do? How does the tax work on this?

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

You continue to pay him as you do at present deducting Income Tax (IT) and National Insurance (NI) contributions as normal. You should encourage them to send a Form P85 yo their tax office on leaving the UK. HMRC will probably issue a new tax code for you to operate. NI contributions are a minefield. The whole matter is set out here:

https://www.gov.uk/guidance/paying-employees-working-abroa

but frankly I would be inclined to ask your local Job Centre for advice on NI deductions.

Any IT deducted will be allowed as a tax credit against any Irish tax liability.

If you declare a dividend of say 100 quid you only pay the shareholder 90 leaving him a tax credit to reclaim in Ireland.

I do hope that you have found my reply of assistance..

Customer: replied 3 months ago.
Hi - thanks for the reply. I think I get what you mean. So he can remain an employee but based in the republic of ireland? - and he pays Income Tax and NI to HMRC and none to the Irish taxman?

Well he may have a liability in Ireland, but under the Double Taxation Convention between the two countries the same income stream may only be taxed in one, in this case the UK, so the UK tax deducted is allowed as a tax credit against the Irish liability. In any event the standard rate of IT is the same in both jurisdictions, 20%.

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