Taxation in Northern Ireland
Income tax (PAYE) and National Insurance contributions (NSI) are chargeable by HM Revenue & Customs (HMRC) on all income earned by individuals in the tax year subject to certain exceptions and exemptions. An employee’s tax is deducted by their employer, through the Pay As You Earn (PAYE) system. If you are self-employed, or have income where some or all of the tax cannot be collected under the PAYE scheme you will be responsible for paying your own tax and submitting annual Self-Assessment tax returns.
What does PAYE stand for?
PAYE stands for Pay As You Earn. As the name suggests, this means that every time your employer / pension provider pays you your salary / occupational pension he or she must deduct income tax and NSI where due and pay the amount deducted to HMRC. The PAYE system ensures that the yearly amounts you have to pay are collected on each payday over the tax year.
How is PAYE calculated?
HMRC will issue you with a tax code once your income tax liability is assessed. The code is then used by your employer to determine the amount of income tax to be deducted directly from your salary. The more you earn, the higher the amount of tax you pay. The amount of National Insurance contributions you pay also depends on how much you earn. For further information please visit https://www.gov.uk/income-tax-rates
If you are self-employed you will be responsible for paying your own tax and NICs and submitting annual Self-Assessment tax returns. You can find detailed information in the Self Assessment section at https://www.gov.uk/topic/personal-tax/self-assessment.
What is National Social Insurance (NSI)?
You pay National Insurance contributions to qualify for certain benefits including the State Pension.
You pay National Insurance if you’re:
- 16 or over
- an employee earning above £155 a week
- self-employed and making a profit of £5,965 or more a year
The amount of National Insurance you pay depends on your employment status and how much you earn. Further information relating to NSI is available at https://www.gov.uk/national-insurance/how-much-you-pay
When does the Income Tax year start in Northern Ireland?
The income tax year runs from 6th April to 5th April the following year.
What should I do when I start working in Northern Ireland?
When you start your job you must register with HMRC to avoid paying emergency tax. You will need a National Insurance number.
Your National Insurance number is your own personal account number unique to you. It acts as a reference number when communicating with the Northern Ireland Social Security Agency and HM Revenue & Customs (HMRC). If you don’t already have a National Insurance number you must apply for one when starting work or setting up as self-employed.
To apply you will need to telephone your nearest National Insurance Number Processing Centre to make an appointment. There are three Processing Centres.
- Belfast – 028 9013 8286 (replace 028 with 048 if calling from the Republic of Ireland)
- Portadown – 028 3877 3046 (replace 028 with 048 if calling from the Republic of Ireland)
- Derry – 028 7185 5407 and 028 7185 5406 (replace 028 with 048 if calling from the Republic of Ireland)
Alternatively you can telephone the National Insurance Registrations Helpline on 0345 6000643.
A frontier worker pays income tax in the country where he/she earns their income, but also has a tax responsibility to the Country where they live so they must submit an annual self-assessment each year e.g. If you live in the Republic of Ireland and work in Northern Ireland you pay income tax in Northern Ireland but you must also make a tax return to the Revenue Commissioners in the Republic of Ireland. A double taxation Agreement exists which ensures that you do not pay tax on the same income twice.