Irish Tax for UK Expats : Income Tax, 33% CGT & Inheritance Rules Explained

Irish Income Tax: Rates, Bands, and Credits for 2026

Irish income tax is a progressive tax applied to employment income, self-employment income, pension income, rental income, and other sources. Understanding the rates and how tax credits work is essential for planning your move.

Income Tax Rates and Bands for 2026

Ireland has two income tax rates:

• Standard rate: 20% on income up to a threshold
• Higher rate: 40% on income above the threshold

The threshold depends on your family status:

• Single/widowed/divorced: first €44,000 at 20%, remainder at 40%
• Married (one income): first €53,000 at 20%, remainder at 40%
• Married (two incomes): combined threshold of €88,000 can be split between spouses (typically €44,000 each, but can be adjusted)

These bands have remained unchanged from 2025 and are modest compared to many European countries. However, as discussed below, total tax (including USC and PRSI) adds substantially to the headline rate.

Tax Credits: How Ireland Reduces Your Tax Bill

Unlike the UK, which uses a personal allowance (first £11,500 tax-free), Ireland uses a tax credit system. A tax credit is a direct reduction in your tax liability, not an amount of income excluded from tax.

For 2026, the personal tax credit is approximately €1,830 per year (€365 per month). This credit directly reduces your income tax bill. If you owe €2,000 in income tax, your credit of €1,830 reduces this to €170.

Example: A €50,000 Salary in Ireland

Let us calculate the income tax on a €50,000 salary for a single person:

• Income tax: (€44,000 × 20%) + (€6,000 × 40%) = €8,800 + €2,400 = €11,200
• Tax credit: −€1,830
• Net income tax: €9,370

This is approximately 18.7% of gross salary just for income tax. Add USC (approximately 2-2.5%) and PRSI (4.35% from October 2026), and total tax reaches approximately 25% of gross salary.

Comparison to UK Rates

For the same €50,000 salary (approximately £41,700):

• UK: income tax on (£41,700 − £11,500 allowance) = £30,200 × 20% = £6,040; National Insurance (8%) = £3,336; total approximately 22.6%
• Ireland: income tax (as above) 18.7% + USC 2.3% + PRSI 4.35% = approximately 25.4%

Ireland's total effective tax is slightly higher on a €50,000 salary. However, at higher incomes (over €44,000), the comparison changes because more income is taxed at 40% in Ireland.

Married Couples and Income Splitting

If you are married with one spouse earning and one not, you can use the single-earner married band of €53,000 at 20% (instead of €44,000). If both spouses earn, you can split the €88,000 combined band flexibly. This allows couples to optimise their tax position.

Example: Married couple, one earner: - Spouse 1 earns €60,000: (€53,000 × 20%) + (€7,000 × 40%) − €1,830 credit = €8,970 - Spouse 2 earns €0 and receives a spousal tax credit of approximately €1,830 - Combined tax: €8,970 - €0 (spousal credit applied) = €8,970

This is more efficient than treating both spouses as single (which would give €8,800 + €2,400 = €11,200 before credits).

Tax Reliefs and Allowances

Irish tax law provides reliefs beyond the standard credit:

• Age allowance: additional credit for those aged 65+ (approximately €245/year)
• Widow/widower allowance: additional relief for surviving spouses (€1,830 × 2 = €3,660 for first year)
• Dependent relative relief: relief if you support a dependent relative
• Pension contributions relief: contributions to registered pension schemes reduce your taxable income (up to annual limits)
• Trade allowance: self-employed persons with turnover under €50,000 can claim flat rate relief

These reliefs can significantly reduce your actual tax bill if you qualify.

Capital Gains Tax (CGT): 33% on Gains

Capital Gains Tax (CGT) in Ireland is charged at a flat rate of 33% on the net gain (profit) when you dispose of an asset. This is higher than the UK rate of 20% and applies to investments, second homes, business assets, and other property.

The 33% CGT Rate and €1,270 Exemption

When you sell an asset for a gain in Ireland, the gain (sale price minus cost) is subject to 33% CGT. However, you receive an annual exemption of €1,270, meaning only gains above this are taxed.

Example: Selling shares: - Sale price: €10,000 - Original cost: €6,000 - Gain: €4,000 - Less exemption: €1,270 - Taxable gain: €2,730 - CGT at 33%: €901

If you have multiple disposals in a year, the exemption applies to your net gain across all disposals (not per disposal). Once you use your annual exemption, all subsequent gains in that year are taxed at the full 33%.

Comparison to UK CGT

The UK charges CGT at 20% on most assets (or 10% on qualifying business assets). The UK also has an annual exemption of £3,000 per person (2026), which is higher than Ireland's €1,270.

• Ireland: 33% on gains, €1,270 exemption = 33% tax on all gains above €1,270
• UK: 20% on gains, £3,000 exemption = 20% tax on all gains above £3,000

For the same €10,000 gain, Ireland taxes approximately €901 (after exemption), whilst the UK would tax approximately £1,400 (after exemption). Ireland is actually more expensive for larger gains due to the higher rate.

Principal Private Residence Relief (PPR)

One significant relief: your main residence is exempt from CGT when you sell it. This relief applies if:

• You lived in the property as your only or main residence for the entire period of ownership (or substantially all of it)
• You have not used the property for trade or business purposes (except as a home)

If you owned an Irish home for 10 years and lived there as your main residence, you can sell it tax-free (no CGT). This relief applies even if you no longer own the property at the time of sale (e.g. you moved abroad and later sell).

However, if you owned multiple homes, PPR relief only applies to one designated residence. If you own a main home and a holiday home, only the main home gets relief; the holiday home is subject to CGT.

Entrepreneur Relief: 10% CGT on Business Assets

A significant relief for business owners: if you sell a qualifying business or business asset, you may qualify for Revised Entrepreneur Relief, which taxes the gain at only 10% (not 33%).

To qualify:

• You must own the business (or shares in the company) for at least one year
• The business must be your own (not an employee shareholding)
• The relief applies to gains up to a lifetime limit of €1.5 million (increased from €1 million in 2026)

Example: Selling a business: - Sale price: €500,000 - Original cost: €200,000 - Gain: €300,000 - CGT at 10% (Entrepreneur Relief): €30,000 - vs 33% rate: €99,000 - Tax saving: €69,000

This relief is transformational for business owners selling their company or a significant stake.

Exit Tax on Irish-Domiciled Investments

A related charge (not standard CGT but exit tax) applies when you leave Ireland. Unrealised gains on Irish-domiciled investment funds and life insurance policies are taxed at 38% (reduced from 41% in 2026) when you cease Irish tax residency. This is covered in detail in Article 47 but is important to understand as part of your overall CGT exposure in Ireland.

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Capital Acquisitions Tax (CAT): Inheritance and Gift Tax

Capital Acquisitions Tax (CAT), known as inheritance tax or gift tax, is charged on gifts and inheritances received. The rate is 33% but with generous thresholds that are substantially higher than UK Inheritance Tax.

The 33% CAT Rate

CAT is charged on gifts and inheritances received at a flat rate of 33%. However, the tax is only due if the value received exceeds a threshold (called a 'group threshold'), and it is charged only on the excess.

CAT Groups and Thresholds for 2026

Thresholds depend on the relationship between the giver and receiver:

Group A: Children (including stepchildren and adopted children) - Threshold: €400,000 per child, cumulative from parent or grandparent - Tax: 33% on any inheritance/gift above €400,000 - Duration: cumulative lifetime threshold (applies across all gifts and inheritances from the same parent)

Group B: Siblings, nieces, nephews, and grandparents - Threshold: €32,500 per person, cumulative - Tax: 33% on any gift/inheritance above €32,500

Group C: All other beneficiaries (including unrelated persons) - Threshold: €16,250 per person, cumulative - Tax: 33% on any gift/inheritance above €16,250

Why Group A Is Dramatically Generous for Children

The most significant difference between Irish and UK inheritance tax is the Group A threshold. In Ireland, a child can inherit €400,000 from a parent tax-free. In the UK, the nil-rate band is £325,000 (approximately €395,000), and tax at 40% is due on anything above. However, the UK also allows transfers between spouses (unlimited) and provides relief for business assets.

Example: Passing wealth to children:

• Ireland: each child can receive €400,000 tax-free from parents. A married couple with two children can pass €1.6 million tax-free (€400,000 each child from mother, €400,000 each from father = €800,000 per child). Above €400,000, 33% CAT is due.
• UK: each child can receive up to £325,000 tax-free (the nil-rate band). Above £325,000, 40% IHT is due. A married couple can pass £650,000 combined (both nil-rate bands) tax-free. Above this, 40% tax applies.

For substantial estates (over €400,000 per child), Ireland offers significant tax advantages.

Calculating CAT on an Inheritance

Example: A mother leaves €500,000 to a child: - Inheritance received: €500,000 - Less Group A threshold: −€400,000 - Taxable amount: €100,000 - CAT at 33%: €33,000 - Net inheritance: €467,000

Comparison to UK IHT (same £500,000 in GBP): - Inheritance: £500,000 - Less nil-rate band: −£325,000 - Taxable: £175,000 - IHT at 40%: £70,000 - Net inheritance: £430,000

The Irish treatment is more generous, saving the child approximately £40,000 (€48,000) on the same inheritance.

Lifetime Gifts and the Cumulative Threshold

CAT applies to both gifts made during a person's lifetime and bequests on death. The thresholds are cumulative, meaning:

• A parent gives a child €200,000 during their lifetime: €200,000 of the €400,000 threshold is used
• The same parent later dies and leaves the child €300,000: the child has €100,000 of remaining threshold (€400,000 - €200,000); the excess €200,000 is subject to 33% CAT = €66,000 CAT due

Understanding cumulative thresholds is critical for large-scale gift planning.

Annual Gift Exemption

Ireland provides an annual gift exemption: the first €3,000 of gifts given to any person in a calendar year is exempt from CAT. This allows annual gifts of €3,000 to each child without using the cumulative threshold. A married couple can give €6,000 per child annually (€3,000 each spouse) tax-free.

Spousal Exemption

Gifts and inheritances between spouses are completely exempt from CAT. A spouse can inherit the entire estate of a deceased spouse without any CAT liability. This mirrors the UK's unlimited spouse exemption and is important for married couples' estate planning.

Reliefs: Business Property and Agricultural Property

Like UK IHT, Irish CAT provides reliefs for certain assets:

• Business property relief: 90% relief on the value of qualifying business property (typically up to 100% relief depending on type)
• Agricultural property relief: 90% relief on the value of agricultural land and farms (typically 100% for active farmers)

These reliefs can substantially reduce CAT exposure for business owners and farmers.

The UK-Ireland Double Taxation Agreement (DTA): Preventing Double Tax

The 1976 UK-Ireland DTA (as amended by the 2020 Multilateral Instrument) is designed to prevent you from paying tax on the same income in both countries.

The DTA Principle

The DTA establishes that income is taxed in one country based on its source or your residence. The key rule: income from employment is taxed where the employment is performed; income from a business is taxed where the business is conducted; pension income is taxed where you are resident.

Specific DTA Provisions for Expats

Employment Income: - If you work in Ireland for an Irish employer, Ireland taxes your employment income - If you work in the UK (even if resident in Ireland), the UK taxes your employment income - The DTA confirms the country of employment has primary taxation rights

Pension Income: - Your country of residence (Ireland) taxes pension income - The UK does not tax pensions for Irish residents - Government service pensions may be an exception (taxed in the UK if certain conditions apply)

Dividend and Investment Income: - Dividends and interest are generally taxed where you are resident - If you own a UK property with rental income, the UK has primary taxation rights; Ireland grants relief for UK tax paid

Permanent Establishments: - If you operate a business in the UK through a branch or permanent establishment, the UK has primary taxation rights

Claiming DTA Relief: Avoiding Double Taxation

If income is taxed in both countries, the DTA allows relief. Typically:

1. File a return in the country where income is earned (e.g. UK employment income)
2. File a return in your country of residence (Ireland) and declare the foreign income
3. Claim double taxation relief in your Irish return for any UK tax paid

Example: UK employment income earned whilst living in Ireland: - UK employer withholds UK income tax and National Insurance: 32% total - Ireland taxes the same income: approximately 25% (income tax + USC + PRSI) - File UK and Irish returns; claim relief in Ireland for UK tax paid - Ireland grants a credit for UK tax (up to the amount of Irish tax due)

MLI Updates (2020)

The Multilateral Instrument (MLI) updated the DTA in 2020. Key changes:

• Modified withholding tax provisions on amounts paid to non-residents
• Updated anti-abuse rules
• Clarified treaty interpretation to align with OECD standards

These changes are technical but do not significantly alter the basic principles for resident expats.

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Practical Tax Planning for UK Expats in Ireland

Understanding the Irish tax rates and DTA is only the first step. Effective planning requires coordination across UK and Irish tax systems.

Tax Residency and Your Tax Bill

Your level of Irish tax depends on your residency status:

• Non-resident: taxed only on Irish-source income (employment, rental property, business income in Ireland)
• Tax resident (1–2 years): taxed on Irish-source income; worldwide income if you have strong ties to Ireland
• Ordinary resident (3+ years): taxed on worldwide income on a broad basis (including overseas pensions, dividends, rental income)

Understanding when you become ordinarily resident is crucial. After three consecutive years of tax residence, you become ordinarily resident, and this status persists for three years after you leave Ireland.

Timing Your Move for Tax Efficiency

When you arrive in Ireland mid-year, your day count towards residency starts immediately. Timing your arrival strategically can optimise your tax position:

• Arrive in January to use the full calendar year
• Delay major transactions (asset sales, pension withdrawals) until after you become resident
• Plan your departure timing to manage ordinary residency status

Coordinate UK and Irish Filing

Your first year in Ireland typically requires two tax returns: a final UK return (6 April-departure date) and an Irish return (arrival date–31 December). File both on time to avoid penalties and to claim DTA relief.

Plan CGT Disposals

If you hold appreciated assets (shares, investment property) and are planning to sell them:

• Selling before arrival (while UK resident) triggers UK CGT (20%)
• Selling after arrival (while Irish resident) triggers Irish CGT (33%)
• The difference is significant; plan timing accordingly

For a €100,000 gain: - UK CGT: €20,000 - Irish CGT: €33,000 - Difference: €13,000

Pension Income Planning

If you are retiring to Ireland:

• Model your pension income under Irish tax (20%/40% + USC)
• Consider lump sum timing (spread over multiple years to manage tax)
• Claim any UK tax withheld as relief in Ireland
• Assess QROPS transfers carefully; they are not always beneficial

Inheritance and Gift Planning

If you are planning to leave wealth to children:

• Understand the generous €400,000 Group A CAT threshold (vs UK £325,000)
• Use annual gift exemptions (€3,000 per person per year) to pass wealth tax-efficiently
• If married, utilise spousal exemptions (unlimited transfers between spouses are CAT-free)
• Plan business property or agricultural property gifts if relevant

First-Year Tax Compliance

Your first year in Ireland requires:

1. Register for a PPS number and notify Irish Revenue of your arrival
2. File an Irish tax return by the deadline (typically 31 October for self-employed; deadlines vary for PAYE)
3. File a final UK return (if you left mid-way through a UK tax year)
4. Claim DTA relief for any UK tax paid on income also taxed in Ireland
5. Keep records of all income, tax paid, and relief claims for at least six years

Using a tax accountant familiar with cross-border moves ensures compliance and identifies relief you might miss.

Summary: Irish Taxes vs UK Taxes

Here is a quick comparison of Irish vs UK tax rates for quick reference:

Income Tax: - Ireland: 20% up to €44,000 (single), 40% above; tax credit €1,830/year - UK: 20% up to £11,500, 40% above (basic rate band £11,501–£50,270); personal allowance £11,500 - Verdict: broadly similar effective rates; Ireland slightly higher on salaries €44,000+

Universal Social Charge (Ireland) / National Insurance (UK): - Ireland: 0.5%–8% on income (€13,000 exemption); PRSI 4.35% (employee) - UK: National Insurance 8% (employee), 10% (self-employed) - Verdict: broadly similar; Ireland has exemption for low incomes

Capital Gains Tax: - Ireland: 33% flat rate, €1,270 exemption - UK: 20% base rate, £3,000 exemption; 10% on qualifying business assets - Verdict: UK more generous for most gains; Ireland Entrepreneur Relief (10%) competitive for business sales

Inheritance Tax: - Ireland: 33% CAT, Group A €400,000 threshold per child (cumulative) - UK: 40% IHT, £325,000 nil-rate band per person (doubled for married couples) - Verdict: Ireland more generous for passing substantial wealth to children; equivalent thresholds, but 33% vs 40% rate

DTA Relief: - Both countries have DTA; prevent double taxation on most income - Relief must be claimed by filing in both countries and stating foreign tax paid

Overall, Ireland and the UK have broadly similar effective tax rates for most income earners. The differences are in specific areas: UK is better for CGT on gains under £50,000; Ireland is better for modest inheritances to children (Group A CAT threshold is very generous). Plan accordingly based on your specific circumstances.