Given the land border between Northern Ireland and the Republic of Ireland, as well as the relatively small size of the island, cross border working is a very common practice. In fact, Ireland has the highest level of in-bound (10.55%) and out-bound (7.44%) commuters in the EU, discounting Luxembourg, Liechtenstein and Monaco due to their special status in the EU. It is estimated that around 23,000 people cross the Irish border for work. Whilst this practice is very common, there are a number of things you should be aware ofif you live and work on different sides of the border.
1. Where to pay your taxes
As a rule of thumb you must pay your tax where ever you earn your income. However, your ultimate responsibility is to the country in which you reside. Effectively this means declaring your cross border income to the tax authorities where you live (either HMRC or Revenue) via an annual tax return. The income is then taxed as if it were earned where you live. If the amount of tax you have paid in the country where you work is greater than it would have been in the country where you live, no further tax is payable. However, if the reverse is true, you are liable to pay the difference to the tax man where you reside.
2. USC counts as tax
If you work in the South, you may have noticed a charge on your payslip for Universal Social Charge (USC). This is effectively another tax on income for workers in the South, just with a fancy name. When it comes to declaring your Southern income to HMRC, you can include this in the amount of tax you have paid in the South, thus reducing the likelihood of having a balance of tax to pay.
3. Family Benefits
Depending on where you live and where each parent in a family works, your claim to family benefits may be through the North, the South or a mix of both. The means of determining this is quite complex. However, it is worth looking in to and exploring what your own personal circumstances mean in relation to this. Thankfully though, if you are eligible to claim benefits from more than one jurisdiction, you can claim it in the country which has the higher rate of that particular benefit. For more information on where you should be claiming, check out www.borderpeople.info who have produced a briefing paper with a table outlining numerous examples.
4. State Pensions
EU states that you only have to pay Social Security contributions in one country at a time. Therefore, if you have a job on either side of the border, you are entitled to an exemption from PRSI/NIC in one of them. When it comes to retirement, you should claim your State Pension in the country in which you reside. All of your Social Security contribution across all EU countries can be combined to ensure you qualify to receive it.
5. Paternity Leave
In Northern Ireland and Great Britain, the male or female partners of a woman who has given birth can apply for 2 weeks Paternity Leave and may be entitled to claim Statutory Paternity Pay during this period. At present, Paternity Leave is not recoginised in law in the Republic of Ireland. However, from September 2016 father will be able to apply for up to two weeks paid leave at the same weekly rate paid for maternity leave (€230). It appears that this will only be available to fathers (as opposed to partners regardless of gender).
As outlined, there are a number of key issues to consider when working cross border. The above is just a snapshot of a few of these. For more information, I highly recommend visiting http://borderpeople.info and looking through their FAQ’s and A-Z to find out which issues apply to you and matter the most to your circumstances.
Since the onset of the recession, high streets across the country have struggled to keep tenants. From the loss of “the big guys” such as Woolworths, JJB Sports, Game and HMV to name but a few, to the high turnover of new local start-ups and the closure of some long standing, local landmark businesses – it’s been a tough journey.
The consensus seems to be that that journey is coming to an end. I agree with this to a certain extent for certain sectors. But when we come down to a local level, on the face of it, there is still work to be done.
Newry’s Creamery Quarter (Monaghan Street to Monaghan Row) and Cathedral Quarter (Hill Street to John Mitchell Place) were for years central to the local economy. However, a walk down either is an unfortunate eyesore of empty units, to-let signs and fewer and fewer people.
So how do we reverse this trend? There are a lot of elements in the mix here that add up to the problem; more than I will discuss or claim to know much about. But for my part, I think there are some practical things we can do.
1. Incentivise and de-risk entrepreneurship.
Ok, point number one is a mouthful, but very relevant. I had a conversation with a couple of colleagues in the past fortnight about the exact topic of this article and we spoke about the building Woolworths used to trade in and about the number of empty units on Hill Street. The consensus was that “they should do something with those buildings”. But who are they? The landlords? What can they do? If no-one is interested in renting them, what else can they do?
No, “they” are the entrepreneurs. The current and future business owners. The guy that wants to open a bookshop one day, or the couple that want to run their own travel agents or the mum who makes the best cakes in the world but wouldn’t dare dream of starting a business. There’s not enough incentive and too much risk.
Incentive is probably mainly a personal thing. If running your own business isn’t a big dream of yours, you probably won’t do it no matter what other carrots are dangled in front of you, and that’s fine. But for the ones who do dream of taking the leap but stop short we need something extra. And I’m not talking about grants or other sources of funding. I’m talking about the intangibles – the mentoring, support and advice of the people in business. From the planning stage, to opening the doors on day one and beyond.
I was at an event in Newry & Mourne Enterprise Agency and Conor Patterson, the Chief Executive, used a great word in his speech – co-opitition. Cooperative competition. I think, to a certain extent this is happening in Newry. Business owners, by proximity or otherwise, know each other and talk and work together on certain things, all the while competing for the same trade. The logic behind this has a lot of validity – if my shop is packed with customers, yours is also more likely to be packed too and vice-versa.
This co-opetition would be a real kick-start to the next raft of entrepreneurs looking to move in to those empty units. It would probably happen organically anyway but I think to explicitly and formally set-up something like this and let people know it’s happening might just bring those considering starting a business out of the woodwork.
This access to local expertise also goes some way to de-risk the process. But removing the risk from going in to business is tricky. Some risk cannot be mitigated. Another recession is beyond our control, bank lending policies are beyond our control, interest rates are beyond our control. But some risks can be dealt with. One of the main ones, which is closely linked to the problem being addressed here is premises, which leads me to my next point…
2. We need landlords who get it.
Efforts are being made by landlords to get properties let. But for the most part it’s not helping. Three month rent free periods and one year leases are not enough it would seem. And I can understand why. If you want to take a punt on a business idea, it’s scary to think that if you close the doors six months in, you still have to pay rent and rates for another six months with potentially no income for a number of weeks or months.
I also feel for the landlords as well. Vacant rates discounts have fallen (if not gone??) and if they still owe money on the mortgage the bank still want it whether there is a tenant or not.
I think the solution here, or part of it, is for both parties to give up just a bit more than they think they are willing to. It can only really be looked at on a case by case basis, but if a start-up could get a three month lease and had no rent to pay but covered the rates they would have the opportunity to test their trade and, if it worked, keep going and start paying rent.
The landlord should see this as an investment in the individual who had the balls to give it a go. Now the above scenario obviously doesn’t suit if your business idea is a coffee shop with a £30k fit out cost. But pop-up shops, retail trades that just need a space and some racks and shelves, they could really gain from this. And if they get some traction and keep going then we all win. We’re in to job creation, tourism benefits, aesthetic benefits, and who knows what else.
Ideally, the incentive for the landlords would come from Land & Property Services via their rates bill; a discount, a credit, a free month, something to recognise that they are trying to help their local economy. I don’t see that happening however. Rates go up and only up it seems. LPS and local authorities are unreceptive, unresponsive and uninterested in any pleas for reductions. Maybe one day…
3. We need to reclaim Newry Market.
When I was a child, I used to go Newry Market with my parents. Almost every Saturday we wandered about the stalls with the throngs of other shoppers. If I let go of my mum or dads hand, I was a goner. I’d be lost among the masses.
A walk through the market nowadays is a rather depressing affair. Many stalls are empty. Those that aren’t are terrible. For the most part it’s tat. Some of the stalls are still quite good selling homemade breads & cakes, fresh produce, fish and flowers. But mainly it’s awful. And the worst part is, it has so much potential.
To my mind, there’s no reason why Newry can’t have it’s own version of St. Georges Market in Belfast. I know for a fact that we have some fantastic local food producers, local artists, local craftsmen and women that could really up the standard of Newry Market; people and products that would bring customers in the gates.
And wouldn’t this be a great place for potential entrepreneurs to perfect their craft? A low cost, low risk chance for the girl that makes wedding bouquets to bring them along for sale or order; for the florist who can’t afford premises to begin to build the business; for the local artists to build a reputation and sell their creations. I really think this is one of the biggest missed opportunities in the CIty. But it would take a “mass invasion”, 10-20 willing participants to go in there say once a month, publicise it and do what we can to resurrect this local landmark.
4. Creamery & Cathedral Quarters have free public Wi-Fi. Use it!
A couple of years back I was part of a group of local business people and politicians who approached the council about trying to implement free public Wi-Fi throughout the city. It has been up and running for over a year now (albeit Newry & Mourne District Council did zero to publicise the fact).
This is quite an exciting asset for the area, especially for tourism/tourists. It aids businesses marketing efforts via social media and opens up the doors to any amount of creative marketing strategies such as Phlok, Dealtronic and other such platforms which help incentivise businesses and consumers to shop local.
Over and above just making the most of the WiFi, businesses should make the most of the internet in general. This isn’t particularly specific to the Cathedral and Creamery Quarters but worth mentioning.
A significant cost to many small businesses is obsolete and surplus stock. Many go with the traditional big discount sale when they can realise much higher margins by flogging this stock online – typically around 70-80% of RRP as opposed to 50% when going down the traditional sale route.
For some of the more niche products, there are great websites like Etsy out there to give retailers another low cost outlet for selling stock. Even if you are not particularly tech savvy, there are (local) companies out there that will sell your stuff for you on a commission basis – check out Cargobox.
By embracing online retail for a local level, retailers will actually help mitigate one of their main threats. If Amazon is diverting your customers attention away from you, use it to get it back and then some.
Social media is a huge thing for local businesses too. Many within the town use it and use it well. I could write a blog post on local businesses using social media alone. In short though I think all businesses have their space on social media and should experiment to find out what works well for them. The return to be gained from social media can be different things for different businesses. Some might see the results in their sales, some might just see the value in adding value to their existing customers. Be realistic in your expectations however and, perhaps most critically of all, engage with your customers. Don’t just be a shop window – be the shop keeper; be personable.
5. Carbane Development
This could be the knock-out blow to a lot of local businesses. If this dubious development goes ahead, it will further pull people out of the city centre – that’s a no brainer.
Ok, so 800 jobs are going to be created. But most studies seem to show that out of town developments result in a net loss of jobs. Ok, so it will increase spending in the area. But spending a quid in one of these multi-national stores results in approximately 5p going back into the local economy. Compare this with spending a quid with your small independent local retailer where around 75p goes back in to the local economy and you quickly see how, while spending might increase, the cash is actually being stripped from the local economy.
Aside from the shop local debate, the decision to create a site where ASDA can go seems poorly thought out. Between Tesco, Sainsburys, Dunnes, Fiveways, SuperValu, and two Lidl stores, local supermarkets would already appear to be eating each other’s dinners. Throwing another one in to the mix would further dilute the food retail sector in the city.
I actually think that in order to offset the threat of this development, we need to proactively try to attract some of these bigger retailers on to Hill Street. They will be guys who will bring people on to the street. The idea was never to stop them from turning up – the idea was to bring them in on terms and in locations that were in the interests of the area, its economy and its heritage. But in order to attract them the area needs to be shown as attractive in the first place. Kind of a chicken and egg scenario here.
I have no solutions for this threat to our city centre. Well nothing new I’m afraid. We can petition, talk to Minister Mark Durkan who approved the development, hassle the Council, kick up a fuss etc. But I wouldn’t be surprised if that weren’t enough. If it goes ahead, counteractive measures might be all the arsenal we have.
Newry is not unique in being a town where the local high street is struggling. In fact it’s probably gotten off lightly compared to many others. But that doesn’t change the fact that something needs done about this. The recession picked off a lot of businesses over the course of the past 6 years. I think it would be a shame for those that weathered the storm to fall now because of out-of-town developments, unaffordable rents and rates and, perhaps most cruelly, because the are part of the cycle of business closure/decreasing footfall. The more business that close in the Cathedral/Creamery Quarters, the less people will go there and so on. This cycle won’t just hurt our local traders though. It will have it’s knock on effect on the library, charities, taxi drivers, banks. The whole supply chain gets hit.
These areas of our city mean a lot to a lot of people. The people that own these businesses, work in them, shop in them or supply them. Some have been around as long as I can remember, some are new to the party but fit in well. I would love to see these Quarters really thriving however. Busy, bustling street of shoppers, coffee drinkers, families, tourists. A vast array of grocers and restaurants and crafts stores and jewellers and coffee shops and music stores and butchers and bakers and candle stick makers. No to-let signs. No empty units. Ok, so potentially no estate agents as they gradually go out of business but, you know what they say – every war has its casualties 🙂
To find out more about the Cathedral & Creamery Quarters including history of the area, news, what’s on, what to do and where to stay, visit Hello Newry
Since the introduction of the R&D Tax Credits in to the UK Corporation Tax regime, there have been two strands to it – the Small and Medium-sized Enterprise (SME) scheme and the Large Company scheme. Since August 2008, the definition of SME has been a company with less than 500 employees and, either less than €100m or a balance sheet with less than €86m.
In the context of Northern Ireland, the vast majority of companies will fall into the SME category and will be able to claim under the SME scheme. Which, from a tax perspective, is a good thing! The tax man will allow you to claim an additional 125% on top of the cost of R&D activities. So if you spend £10,000 on qualifying Research and Development, you are treated as having spent £22,500 and your taxable profits are reduced (or your tax relievable loss is increased).
Under the Large Company scheme, the additional relief given on top of the actual spend is just 30% – still a worthwhile relief, but pretty much miles behind the SME scheme.
However, although the vast majority of companies who are claiming R&D tax credits in Northern Ireland meet the criterion of an SME, there is a situation when they will not be able to claim under this scheme: whenever they claim grants which are State Aid Notified.
Being a member of the EU, the UK must comply with the laws surrounding State Aid – that is, the government using tax-payers money to give assistance to one or more organisations that give them an advantage over others. The laws are generally concerned with distorting competition across the EU and aim to stem any such distortion by monitoring and measuring the money Member State governments dish out to these organisations.
There is a de minimus level of state aid – a threshold of state aid a company can receive without causing any issue. This level currently sits at €250,000 in any 2 year period.
The R&D Tax Credits are a form of State Aid. More often than not, the scheme doesn’t result in cash being given to a company (although this can happen) but the enhanced tax saving available is deemed to be financial assistance.
So, in order to try to ensure that the de minimus level of State Aid is not breached by any company claiming under the SME scheme, the government has had to exclude from the scheme any SME that was in receipt of a government grant that was State Aid Notified.
In Northern Ireland at the minute this causes a problem. Some of the most common grants available are either awarded by Invest NI or a third-party on behalf of Invest NI. And, you guessed it – they are almost all State Aid Notified.
This is unfortunate. Not least because the companies carrying out this expensive and essential R&D are exactly the ones most likely to seek and claim grant funding.
However, there are a few things you can do in order to maximise your claim to R&D Tax Credits and, if the circumstances allow for it, claim a few pound back from HMRC in cash.
1. Ask Invest NI to award your grant under the “de minimus” rules.
Up until recently, Invest NI wasn’t able to do this. All grants were dished out as State Aid notified and no-one really complained. That was until the accountants told these companies that they were losing out on the uplift in their R&D expense and potential cash payments.
So, after a bit of pressure being put on, Invest NI have found a work around and are now able to offer de minimus grants where grant funding is £100k or less.. While there seems to be an awareness of this now with Invest NI staff, make sure you ask that the grant be awarded in this way. You should still make sure that the combined grant, plus all other grants in the past two years and the tax relief don’t push you over the de minimus limits.
2. Can your R&D spend be broken down into separate projects?
It is actually possible to claim under both the SME scheme and the Large Company scheme. If a company is carrying out a number of R&D projects, any that receive grants are relieved under the Large Company scheme whilst those that do not receive government assistance are able to remain under the remit of the SME scheme.
Say for example your business is researching a new medical vaccine and it receives a proof of concept grant in relation to a piece of new equipment that is being designed to administer the vaccine. This piece of equipment is separately identifiable from the vaccine and, has its own research activities and development activities. The grant was also given specifically in relation to this equipment. So it would be treated as a separate project for R&D tax credits and, due to being in receipt of the grant would receive tax relief under the Large Company scheme. This divisibility also protects the rest of the R&D project and ensures that it can still receive the 225% relief on its spend.
3. Reject the grant. Seriously.
This seems somewhat counter intuitive but, depending on your total R&D spend, it may be better for you to reject or not seek grant funding. This comes down to the differential in the SME and Large Company scheme uplift rates (125% – 30% = 95%) multiplied by the rate of Corporation Tax (usually 20%). So, if your total R&D spend times 19% (95% x 20%) is greater than the grant amount – you’re worse off I’m afraid.
Now, this is a purely mathematical and pragmatic view of things. Naturally there are other factors to consider with grant funding. The main one being, R&D is expensive and suppliers do not accept magic buttons or well wishes in lieu of payment so if you need the cash – take the grant! Remember also that tax relief will only actually materialise if you, one day, make a profit. Grants funding can also be more valuable than potential tax relief from the point of view that it may come with some professional advice, a chance at further grant funding or an introduction to potential equity investors.
So, whilst the R&D scheme is a pretty generous tax relief, SME needs to be careful not to fall in to the trap of excluding themselves from claiming the the maximum relief possible under the SME scheme. Remember also that grants are a taxable income stream themselves. So not only might they reduced you R&D uplift, but the may in fact cancel out the uplift that you do qualify for.
As with everything in business, consider the wider context when deciding on issues of tax planning and fundraising. Never undertake a transaction solely to gain a tax benefit. Weight up all the factors, including tax, and then see what’s best for you and your business.