A report by Ibec, the Confederation of British Industry (CBI) Northern Ireland and recruitment firm Hays has found that cross-Border tax rules are a significant barrier to the all-island labour market.

The report states that more than two-thirds of employers on the island believe the skills they need can be found in the other jurisdiction, but only a third are confident in managing the associated tax challenges. Some 46 per cent of workers would consider a cross-Border job, with better pay and opportunities cited as the main attractions.

Angela McGowan, director general of CBI Northern Ireland, said differences in pensions rules between Ireland and the UK create complications. She noted that unless a pension is recognised in the UK, individuals are not entitled to tax relief there. McGowan added that while systems do not need to be identical, they should be aligned so that two payrolls and two regulatory systems can work closely together.

Fergal O'Brien of Ibec said some companies report they can no longer hire cross-Border due to concerns about tax compliance. He added that the issues extend beyond tax, with foreign-born staff facing particular difficulties. One in five workers in the Republic is not an Irish citizen, but such employees cannot be stationed by their employers in Northern Ireland-based operations, even if legally resident in the Republic.

The report notes that top-up tax bills are a particular deterrent for Northern Ireland residents working in the Republic, with more than half of those surveyed citing them as a concern. Less than a third of people from the Republic working in Northern Ireland find top-ups a fear, as southern tax rules offer cross-Border workers' relief.

Other practical issues include remote and hybrid working arrangements, where cross-Border tax laws have not fully caught up. The report also highlights that the daily cost of commuting is a bigger concern than tax challenges for employees considering a cross-Border move, followed by poor transport links.

Fifty-three per cent of employers across the island are calling for tax alignment between HM Revenue and Customs and Revenue. The report states that half of employers are finding it difficult to fill key roles, and a quarter anticipate a tightening market over the next 12 months. It adds that more than 550,000 jobs have been created on the island since 2019, though there are early signs of cooling.