Income tax cuts widen gap

The income tax cuts in the British budget have widened the gap between take home pay of workers in the UK and Ireland. The biggest difference is for single earners, where the UK regime is much more generous - for married couples on low earnings there is little difference. However, mortgage interest relief is now abolished in Britain, but Irish mortgage holders still benefit. Comparisons ignore the pound/sterling exchange rate differential.

For a single worker on a salary of £15,000 - and counting just the basic tax allowances - the Irish tax authorities will take over £3,300 each year. On a similar sterling salary, the UK Inland Revenue will look for a little over £2,200 in tax.

The gap remains for a £20,000 earner, where the tax take in Ireland will be over £5,900, but in Britain will just exceed £3,400. For the better off single earner, the Irish tax code demands a payment of over £20,600 on an income of £50,000, while in Britain the same income will require payment of £13,311.

Because of the structure of the two tax systems, the tax gap is less for married couples. For a married couple with one earner the tax tax on a £15,000 income is almost identical at almost £2,100, while on a £20,000 salary, the Irish couple will pay just over £3,200 and their British counterparts will be taxed to a total of £3,610. On a £50,000 salary, the gap widens.