5 Nov 2020
Preparing for Brexit – 7 questions answered on immigration, tax and social security

Preparing for Brexit: seven questions answered on immigration, tax and social security

By Simon MacAllister

EY Ireland Strategy and Transactions Partner. Head of Valuation, Modelling and Economics and Brexit Lead

Dad and husband. Corporate finance professional. DIY bodger. Enthusiastic but only modestly talented hockey umpire and triathlete!

5 Nov 2020
Related topics Workforce Tax

Whilst there is much Brexit-related uncertainty, enough clarity exists to take at least some action. There can be no doubt that on 1 January change will happen. It’s key that businesses prepare for this and do not take the same approach of previous deadlines by doing nothing in the hope there will be no change.

With the end of the transitional period on 31 December 2020 fast approaching, and a ‘no deal’ situation still a possibility, time is not on businesses’ side. UK businesses and those with a UK operation need to understand the implications for their people.

In this article we examine the key questions around immigration, tax and social security and recommend some important steps to take.

|  1.  Can workers continue to work and reside freely?

Under the Common Travel Area (CTA) agreement, Irish and British citizens can continue to move freely between Ireland and the UK and can therefore continue to reside and work in either jurisdiction. However, other registration and legal requirements will exist for EU (non-Irish) workers based in the UK.

What do I need to do?

  • Ensure that EU (non-Irish) citizens in the UK have complied with the applicable immigration registration and legal requirements and that UK citizens working in the EU (apart from Ireland) have complied with the applicable registration and legal requirements.
  • Inform your travellers, remote workers and business stakeholders on the vastly different immigration landscape from 1 January 2021 and the impact this will have: personal and corporate risk; permitted activities and operational resilience; speed to deployment and cost. For example, the UK immigration cost will increase for EU arrivals from £0 to £9,500 for a five-year work visa and lead times will change.

| 2. What is the Common Travel Area (CTA)?

The CTA is an agreement between Ireland and the UK, that allows Irish and British citizens to travel freely between Ireland and the UK. This agreement pre-dates both Ireland and the UK joining the EU. The Irish and UK governments showed their commitment to the CTA and signed a Memorandum of Understanding on the Common Travel Area on 8th May 2019 which protects the rights and freedom of movement to each other’s countries. 

The CTA affords British citizens in Ireland or Irish citizens in the UK the right to work, including self-employment, without any requirement to obtain permission.

| 3. What should workers be aware of as Irish or British citizens travelling between jurisdictions?

There is no requirement for passport control for Irish and British nationals travelling between the CTA. However, all air and sea carriers do require some form of identification. People travelling should check with the carrier as to what they require as valid identification (some carriers will only accept valid passports).

There is no requirement for British and Irish citizens to carry travel documents when crossing the land border.

| 4. As an Irish/British citizen, do workers need to complete any registration?

There is no requirement to complete any type of registration.

| 5. What about other family members?

In Ireland, if your family members are Irish or British nationals, there is nothing further to consider. 

However, if you are a British national residing in Ireland, and your family member is a Non-EEA national, then action is required. Up to 31st December 2020, EU Treaty Rights will apply for Non-EEA family members of British nationals. EU Treaty Rights have been liaising with Non-EEA nationals who are residing in Ireland as the spouse of a British national. Domestic arrangements will be put in place for those who are already in Ireland. 

From 1st January 2021, a pre-clearance system will be in place. We are currently awaiting an announcement on this scheme.

In the UK, Irish nationals will not be required to register or take any action under the Settled Status Scheme. However, as EU citizens, Irish citizens can if they wish, apply for Settled Status.

Close family members and/or dependents who are not Irish or British nationals will have to apply for the Settled Status Scheme to maintain their right to live and work in the UK. This deadline for making an application under this scheme is 30th June 2021.

| 6. Will where an employer pays social security be impacted?

Potentially. Employers should identify their mobile employees currently living and working in the UK and Ireland, their nationalities and current countries of residence, and that any A1 certificates extensions for mobile employees working in the UK and UK employees working in Ireland into 2021 are in place before 31 December 2020. Monitor ongoing developments on social security cooperation between the UK and EU.

For new postings to/from the UK from 1 January 2021, if there is no EU/UK agreement on social security by 31 December 2020, there could be significant change in the social security landscape, which may result in consideration of old bilateral totalisation agreements or domestic rules in each country.

Ireland and the UK have agreed on a revised Social Security Agreement which is designed to mirror the current EU Regulations for employees working cross border and this will come into force in the event that no agreement is reached between the EU and the UK.

| 7. Will Brexit impact where my employees pay tax or my payroll withholding tax requirements?

No. Brexit will not impact on either the domestic income tax/employer payroll tax requirements in Ireland or the UK. Nor will it impact upon any Double Tax Agreements that are in place which relieve an employer from the obligation to operate withholding in relation to short-term assignees or business visitors working cross border, both in Ireland and the UK. 

Summary

With the end of the transitional period on 31 December 2020 fast approaching, and a ‘no deal’ situation still a possibility,we examine the key questions around immigration, tax and social security and recommend some important steps to take

About this article

By Simon MacAllister

EY Ireland Strategy and Transactions Partner. Head of Valuation, Modelling and Economics and Brexit Lead

Dad and husband. Corporate finance professional. DIY bodger. Enthusiastic but only modestly talented hockey umpire and triathlete!

Related topics Workforce Tax