Getting it off your Chest about Taxes

Posted on | May 19, 2011 | No Comments

Dear Mr Taxman …

Sometimes you just don’t want to talk to Revenue. In fact, you maybe shouldn’t be talking to anyone!  So write a Letter.  But maybe not this one…

Previously published in the UK, here you can see how Her Majesty’s Revenue respond to those types of letter.  Too much time on their hands if you ask me.

Enjoy!

Dear Mr Addison,

I am writing to you to express our thanks for your more-than-prompt reply to our latest communication, and also to answer some of the points you raise.

I will address them, as ever, in order.

Firstly, I must take issue with your description of our last as a “begging letter”. It might perhaps more properly be referred to as a “tax demand”. This is how we, at the Inland Revenue, have always, for reasons of accuracy, traditionally referred to such documents.

Secondly, your frustration at our adding to the “endless stream of crapulent whining and panhandling vomited daily through the letterbox on to the doormat” has been noted. However, whilst I have naturally not seen the other letters to which you refer, I would cautiously suggest that their being from “pauper councils, Lombardy pirate banking houses and pissant gas-mongerers” might indicate that your decision to “file them next to the toilet in case of emergencies” is at best a little ill-advised.

In common with my own organisation, it is unlikely that the senders of these letters do see you as a “lackwit bumpkin” or, come to that, a “sodding charity”. More likely they see you as a citizen of Great Britain, with a responsibility to contribute to the upkeep of the nation as a whole.

Which brings me to my next point. Whilst there may be some spirit of truth in your assertion that the taxes you pay “go to shore up the canker-blighted, toppling folly that is the Public Services”, a moment’s rudimentary calculation ought to disabuse you of the notion that the government in any way expects you to “stump up for the whole damned party” yourself. The estimates you provide for the Chancellor’s disbursement of the funds levied by taxation, whilst colourful, are, in fairness, a little off the mark. Less than you seem to imagine is spent on “junkets for Bunterish lickspittles” and “dancing whores”, whilst far more than you have accounted for is allocated to, for example, “that box-ticking facade of a university system”.

A couple of technical points arising from direct queries: 1. The reason we don’t simply write “Muggins” on the envelope has to do with the vagaries of the postal system; 2. You can rest assured that “sucking the very marrows of those with nothing else to give” has never been considered as a practice because even if the Personal Allowance didn’t render it irrelevant, the sheer medical logistics involved would make it financially unviable.

I trust this has helped. In the meantime, whilst I would not in any way wish to influence your decision one way or the other, I ought to point out that even if you did choose to “give the whole foul jamboree up and go and live in India” you would still owe us the money. Please forward it by Friday.

Yours sincerely,

H J Lee, Customer Relations.

PS I retain the right to disbelieve the authenticity of this letter even if it was published in a newspaper.

What is the Pension Levy?

Posted on | May 16, 2011 | No Comments

Pension Levy in Brief

The Pension Levy was introduced by the Minister of Finance, Michael Noonan (picture), to fund the Goverments ‘Jobs Initiative’ of May 2011 as a 0.6% charge on Pension Fund assets held in the state.  It will be charged for a period of 4 years only.

Its impact on your Employment Pension Fund Contributions

If you are working and you or your employer are putting funds into a Pension Fund, the impact on you will differ depending on whether you are contributing to a Defined Benefit (DB) scheme or a Defined Contribution (DC) scheme.  Because depending on what type of scheme you are on, either you take the hit for the Pension Levy, or your employer takes the hit.  Let’s see why…

Defined Benefit Schemes

With a Defined Benefit (DB) scheme, The employer guarantees to pay you a agreed pension amount at the end of your employment – for example 2/3’s final salary.  If the Pension Fund has a shortfall, then the employer has to meet that shortfall.   So in simplistic terms, the Pension Levy will cause a shortfall of 0.6% per year for 4 years that the Employer will have to meet.  So as an employee as it stands, you do not have to worry about this charge.

Defined Contribution Schemes

With a Defined Contribution (DC) scheme, the amount of your final pension on retirement is not agreed, but instead depends on how successfully your pension contributions are invested.  In this case, the pension levy will reduce the amount of fund money you will have available to buy a pension on retirement, so it’s you as the employee who takes the hit.

If you are not sure which type of scheme you are in, then you can check with your employer.  But a bit like having a Tracker Mortgage, if you have a Defined Benefit scheme you’d know it already and rightly feel smug!

Public Sector payslip 2011

Posted on | May 12, 2011 | No Comments

Example impact of changes from Decembers Budget for a Teacher

If you are working in the public sector, and particularly as a teacher, you will find the following video useful.  It illustrates the impact on a Teachers payslip of the changes implemented in Budget 2011.

Hope you find this useful, but remember no matter how much tax you pay, you are likely due a tax refunds with 80% of Red Oak clients due a tax refund.

Don’t forget to apply for your tax refund with us today!

2011 NPPR notification

Posted on | April 19, 2011 | No Comments

NPPR payment due on second properties

If you have a second property and have registered it as a Non Principal Private Residence, then you will have received a notification today that your NPPR for 2011 is now due.

The NPPR payment can be made anytime from now until the end of June without penalty – after June 30 you will have to make a late filing payment of €20 per property.

To make an online payment you will need your nppr.ie account reference number and pin number.

To find out more about the NPPR, why not check out the dedicated section about Rental Income & NPPR on rentalincome.ie

USC & northern medical cards

Posted on | March 8, 2011 | No Comments

Universal Social Charge limited to 4%

This was brought to our attention on our facebook page (thanks to Rob for that).

Under the USC, if you have a Northern Ireland Medical Card, you can avail of the same benefits offered to Irish Medical Card Holders in the application of the Universal Social Charge (USC). 

i.e.  instead of having to pay 7% on all earnings above €16k a year, you will only have to pay 4%.

What to Do

If you are living in the north and working down south, make sure you inform your employer/payroll of this.  You will save about €300 a year for a salary of €26,000 and €300 for every €10k more than this you earn.

Household Bill Budget Calculator

Posted on | March 4, 2011 | No Comments

Recent tax changes means most of us are taking home a lot less than before, so managing our spend is becoming more important than ever. 

The people at HomePayments.ie have been working on some great free calculators and tools for household expenditure budgeting and I particular liked the Household Bills Budget Planner I was using today allowed me to put in all my known regular bills, for whatever term, monthly or annual for example.  And it calculates what my average monthly requirement to meet bills are.

They also have tools for regular Income and Expenditure and their Debt Buster tool.  Very nice tools – though the results for my own situation surprised me!

Trends in Tax Refunds in 2011

Posted on | March 3, 2011 | 6 Comments

Who’s Claiming Tax Refunds in 2011?

With all the changes in the Tax System in the last few years, you can easily lose track of what you can claim with in excess of 200 Tax Credits and Income Deductions available to regular tax payers.

But beyond the regular tax refunds we see, these are what we are seeing a lot more of this year

1.  Income Levy Refunds

Lots of Income Levy refunds being paid.  Things we look out for are: 

• If you only worked part of the year;
• If you changed job/doubled jobbed during the year;
• If you earn less than €15k over the year; 
• If you have a medical card;
• If you received bonuses/Lump sum/Paid tax on a Redundancy -

If any of the above apply to you, then there’s a good chance you overpaid Income Levy.  That’s a lot of reasons!

2.  Received Redundancy

As we mentioned above, if you received a Redundancy, then you must, must, must get your taxes checked for Income Levy Refunds.  This year, these types of income levy refunds have varied from €200 to just under €2k.

But You could also be due Health Levy Refunds (lumped into the PRSI amount on your payslip). 

If you did pay Tax on your Redundancy, then you need to check to see if you are due Top Slicing Relief.  We’ve dealt with cases where clients are due €15,000 – €20,000 in tax refunds through applying Top Slicing Relief to your Redundancy Lump sum payment

Not to mention that the change in circumstance brought about by the redundancy will greatly affect your Income Tax situation.

3.  Emigrating

When we used to go abroad for a few months or years ‘travelling’ – now it’s a bit more permanent and called emigration.

But don’t forget that if you finish work before the end of the year, you did not receive all your tax credits, so you will be due a refund of some of the tax you paid.  Don’t leave it behind you.

4.  Medical Cards

If you have a Medical Card, then you just got hammered by the latest Budget in your January payslip.  Because If you had a Medical Card, you should not have been paying the Income Levy or the Health Levy.

But we estimate than more than 30% of Medical Card holders were incorrectly paying these levy’s.  Were you? 

If you had a medical card and earned over €500 a week in 2010, then you are probably due a refund of over €1,500 if the medical card was not applied to your pay correctly.

5.  Stay at Home Mums & Dads

If you or you spouse were looking for work in 2010 and earned less than €5,000 and have kids at home, without realising it , you will probably be due a stay at home parent tax credit, called Home Carers tax credits.  This has become a more common situation in the last year.

 

The above are the main ‘trends’ we have found in the last few months and of course our customers are still receiving refunds for the more regular Medical Expenses, Trade Union subs, Rent relief and so on.  So get in touch today for your Free Refund Estimate by phone or email.

Jan 2011 Payslip Cuts

Posted on | January 23, 2011 | 1 Comment

Budget 2011 changes in Monthly Payslips

How much are you down?  We’ve done an analysis of how much your pay packet will change for different pay levels and personal situations.

Married, Single Income

First up If you are married, your monthly take home pay will change by at least the amounts below.

These are minimum reductions in income.  So if for example, you contribute to a pension, have a medical card, are a member of a trade union or rent for example, you will be worse off that the examples given.

Single Person

If you are single, your income levels will change as below.  Similarly, these are the minimum reductions in salary levels and you could be even worse off depending on your personal situation.

But, surprise, surprise, some people will be better off!  If you earn around the€30,000 level, the abolition of the Health Levy and the introduction of the Universal Social Charge will leave you slightly better off.

If you would like to see how much off you are for your personal circumstances, why not try out our budget calculator.

2011 Bin tax refunds

Posted on | January 21, 2011 | No Comments

Service Charges Tax Credit.

Way back in the Budget in December 2009, it was announced that the services charges tax credit would be abolished in 2011.

But there was no mention of Service Charges in the 4 year plan, which I found strange.  But even stranger it wasn’t mentioned in Budget day in Dec 2010 either.  But like most others out there we thought “Bins are gone, they just didn’t mention it.”

But in a rare piece of good news, it seems that the Bin Charges Tax Credit has been given a reprieve and is still eligible for 2011! 

The Tax Credit will not though be available for 2012 onwards.  so enjoy it while you can.

The bins tax credit is a maximum of €80 for 2011 as in the previous 4 years, so if you have not claimed this before, there is a maximum €320 bin tax refund available for the previous years.

Rent Relief – 2011 tax credit reduction

Posted on | January 19, 2011 | 1 Comment

2011 Rent Relief

Currently renting

If you are currently receiving rent relief, Budget 2011 announced changes in the maximum amount of rent paid that you can get relief upon  as follows:

So, for a single person under 55 in 2010, you will be able to get relief on a maximum of €2,000 at 20%, which gives a rent tax credit of €400.

For a single person under 55 in 2011, this is reduced to  a maximum of €1,600 at 20%, which gives a rent tax credit of €320.

and so on, through to 2018 when no rent relief is allowed.

Not Currently Renting?

Revenue have an additional statement added to the Budget 2011 summary, rent relief section, as follows:
“Claimants who were not renting at 7 December 2010 and who subsequently enter into a rental agreement will not be able to claim relief.”

So if you start renting in 2011 for the first time, you are not eligible for Rent Relief.

In practical terms I would imagine that this means that if you are registered for rent relief as of the 7th december 2010, you will be able to claim it going forward.

so even if you are not due a refund of tax in 2010 from adding in your rent relief tax credit, it’s probably a good idea to claim it regardless so you will be eligible to claim it in following years.

 

 

Universal Social Charge & Over 70

Posted on | January 10, 2011 | No Comments

Liability to Universal Social Charge (USC)

The Universal Social Charge was introduced in Budget 2011 and will be charged on your income in 2011.  It replaces the Income Levy & Health Levy charges from previous years. 

But how will this affect you if you are over 70?  

once you reached 70 you were not charged the Health Levy under the old regime. 

But you did have to pay the Income Levy even if over 65, unless your income was less than the exemption Thresholds for older people of €20,000 for single and €40,000 for married.  And of course, if were any age and held a Medical Card, you did not have to pay Income Levy.

However the new Universal Social Charge has to be paid regardless of your income levy, age, or medical card holder status. 

The only exception for older people is that the Rate is limited to 4%, irrespective of your age.

If you are have overpaid tax or levies in the last 4 years, contact us for a Tax Refund assessment – or visit our website for more information

10 things you should know about your 2010 P60

Posted on | January 7, 2011 | 7 Comments

Welcome to 2011!  If you were working at the end of the year, you will receive a P60 from your employer soon.

2010 P60

Probably the most important and most talked about bit of post you will receive this time of year is your P60. Here are 8 things you should know about your P60:

1. Your P60 is your summary of your Pay and Income Tax for that year.
2. It will have all your pay from your current employer, but will also show the pay and tax from previous jobs if you gave a copy of your P60 to your current employer.
3. Details of PRSI paid (including Health levy) by you and the employer is on the left hand side.
4. In the PRSI section, they also include number of weeks contribution – this is very important from a social welfare point of view as it can affect your entitlements
5. It does not show the Income Levy you have paid.  For this you should get a separate Income Levy Certificate from your employer.
6. Your P60 is prepared and given to you by your employer.  They will also declare it to the Revenue Commissioners, but you should still make sure you hold on to your copy!
7. If you are not working at the end of the year, you will not receive a P60 ( no employer), but the P45 you received from your last employer holds the same information.  The main difference between a P60 and a P45 is that a P60 is given by the employer you are with at the end of the year, while a P45 is given by an employer you left during the year.
8. P60’s are also issued by pension funds for the income you receive from a non state pension.
9. The amount of Tax credits and tax bands given to you is shown at the top.  Can you figure out what’s included here?  It should agree to the latest tax credits cert you received in that year.
10. The amount of Tax Credits used is given to your employer by Revenue.  This does not mean it’s correct and it is often out of date – we will of course check this for you.  If this is wrong, then you are likely due a refund!

The 2010 P60 does not contain any information relating to the new Universal Social Charge, as this is only charged from January 2011.  But it does include the Health Levy amount within the PRSI figure.

The Income Levy is not on the 2010 P60 – you will receive a separate Income Levy Certificate with details of this.  Make sure to keep this for Income Levy Refund claims.

2011 – Pension Charges & Tax

Posted on | January 6, 2011 | No Comments

What’s new for Pension Contributions in 2011?

in 2010, if you were a higher rate tax payer and made contributions to a pension, you were allowed relief of income tax at 41% – but also you did not have to pay PRSI or Health Levy.  You would have been paying Income Levy on the contributions. All pension contributions are subject to maximum allowable contributions.

4 Year plan – pension changes

Under the 4 year plan, the amount of relief from Income Tax will be reduced from 2012 onwards.  With 34% relief in 2012, 27% relief allowed in 2013 and down to just 20% in 2014. 

But no change to the amount of relief you are allowed from Income Tax in 2011.

Budget 2011 – Pension Changes

Following Budget 2011, Tax Relief from Income Tax is still allowed at a Maximum 41%.  But two very significant changes are:

• Pension contributions are now subject to PRSI.  This  will result in a 4% PRSI charge on pension contributions for many.
• Pension contributions will be charged the Universal Social Charge (USC).  This is charged at 7% on earnings above ~ €16,000, so is much in excess of the old Income Levy charge

 

For most people, this will result in paying 7% tax on pension contributions in 2011 than in 2010 – get an estimate of this difference for you with our 2011 Budget Calculator

P60 Example 2010

Posted on | January 5, 2011 | 1 Comment

Aaaaahhhh!  It’s my P60! 

So many numbers, so much information, I don’t understand it, I think I’ll file it away for now.

If you were working at the end of the year, you should be getting a copy of P60 in the next 1-8 weeks.  So what should you be looking at?

Let’s look at an example P60 for singleton Corey Amos, an angst ridden musical type who had two jobs in the last year and doesn’t get the tax thing.  What should Corey be looking for in his P60?  Here are 5 things to look out for.

1.  Is it Me?  - P60 Personal Details

First up – an easy one for you highlighted in Green in the sample P60 below.

 Check that your P60 has your Name and address right.  Oh, and can you see the year 2010 on the top left?  Nice.  Finally, make sure your PPS number is correct.  This should be 7 numbers and a Letter – but an extra letter at the end (a ‘W’) you need to get an updated PPS number from Revenue and give it to the payroll department.

 

2.  Don’t charge me tax!  – P60 Tax Credits

Now we’re getting into the tricky bits – check out the Tax Credits highlighted in Yellow.

So what difference does a tax credit make?  Well, this is Revenue’s way of saying “We’ll let you off with the first bit of tax”.  Let’s take an example to show this:

The starting point with Tax is you pay tax at 20%.  So if you earn €10,000 they calculate gross tax of  €2,000.  Or you earn €20,000, they calculate gross tax of €4,000, just like we’ve shown below:

But see how this example works with the basic single person tax credits at an income of €10,000.  Your Tax Credits of €3,660 cancel out your gross tax charge of €2,000, so you don’t pay a sausage.

But on €20,000, the Tax Credits cancel out most, but not all of your tax bill, so you pay a few quid.

Remember that the tax credits apply to all taxable income in the year – so if you have two or more jobs or incomes in the year, you don’t get any extra tax credits for that.

IMPORTANT!   If your tax credits are wrong by €100 on your P60, you’ll overpay tax by €100 – And you will be due a Tax Refund.  That’s what we are about.  We find missing tax credits and incorrect tax credits and turn those into tax refunds to you.

 

3.  Are you a High Earner?  – P60 Tax Bands

Do you have to pay tax at the higher rate?  – check out the Standard Rate Cut-off Point (SRCOP)  highlighted in pasty pink in the example p60.  (If you know the Technical term for this colour  – let me know and I’ll update!)

So while the Taxman starts off by charging you at the standard rate of 20%, you might be considered a “High Earner” by Revenue and have to pay tax at the Higher Rate (Also known as Marginal Rate).  In 2010 the Marginal Rate was 41% and the point at which a typical person was considered a “High Earner” and started paying tax at the higher rate was €36,400. 

But if you are married and your partner doesn’t work or use all their standard rate tax banks, you could increase your tax bands.  Let’s see how this works.

 

You can see now how important the Standard Rate Cut-Off Point is then – in this instance wrong tax bands on your pay and P60 could get you nearly €2,000 of a tax refund.

Tax bands can increase and decrease each year and based on your personal circumstances.

 

4.  How much?!  – P60 Pay & Tax

So you now know you are going to be charged tax at 20%, when you will be charged tax at 41% before Revenue apply your personal discount (Tax Credits).  So how much does this work out at?  Why not try calculating your tax charge for your pay level – check the important numbers in Blue on the Example P60.

We have highlighted Corey’s Total Pay and Tax for 2010.  But this can easily be wrong if Corey has a second job as a musician, or his details from previous jobs as shown on the P60 are incorrect, or he had welfare income or …. as you can see there are many reasons a P60 may not show your full tax history for the year.

 

5.  Is that a Tax?  – P60 PRSI & Health Levy

So you now know how your income tax is calculated.  But that’s not all.  Your P60 will also show how much PRSI & Health Levy you are charged – these are both bundled into the same number and just labelled “PRSI” which is a bit lazy of the P60 design team you’ll agree. 

The Employee PRSI calculation is really complicated here.  But let’s get to the crux of the manner – you want to know if you are due any of this tax back.  And the Key to this is the Social Insurance Contribution Class.  If you have any weeks where the social insurance class has a “1″ in it, then you’ll likely due a refund of Health Levy contributions if:

• You have a medical Card
• You earned less than €26,000 in total in the year from all jobs.

You may also be due a PRSI refund if you make pension contributions not through your employer.

 

2010 P60 – Claiming Tax Refunds

I hope that helps you understand your P60 better.  It’s a bit of a dinosaur of a document and I’d like to see them change it a bit.  But it is important to keep it, especially now with employers going bust and not making correct returns.  If you would like us to check for 2010 tax refunds, include a copy of your 2010 P60 with our application form for the speediest of service.

 

best wishes,

John

Example P60 – Click to Open

http://blog.redoaktaxrefunds.ie/wp-content/uploads/2011/01/P60-highlighted.jpg

Paying Tax for the 1st Time?

Posted on | January 4, 2011 | No Comments

You may be one of 140,000 to receive a nasty surprise in your first payslip of the new year 2011.

The recent changes in tax from Budget 2011 will mean that many will see a tax charge on your payslip in January 2011 for the 1st time.  All down to the reduction in Tax Credits pushed through in Decembers Budget.

If you are a low paid worker, you will also find the Universal Social Charge on your payslip.  This charge affects those earning less than €26,000 harder than the old Health Levy / Income Levy combo.

But if you have not being paying tax before and are required to do so now, you may not have had the right tax credits in the past.  Why not check to see if you are due additional tax credits and a tax refund of overpaid tax when you get your 2010 P60 this month.

Getting your taxes right isn’t always about claiming tax back, but also about getting it right in the first place.  Which is probably not a bad place to start in 2011.

2010 Tax Refunds

Posted on | January 3, 2011 | No Comments

Start your Tax Refund Claim Now!

 

Best wishes to all of you in this New Year.  Revenue have now updated their systems and we can now start your full Tax Refund review for 2010.

Just a few helpful hints to help you claim tax refunds.

Existing Customers:

If you are an existing Client of Red Oak Tax Refunds and we reviewed your taxes in the last year, you should use the 2010 Tax Refund Application Form – click here to open this.

 

New Customers:

For new customers, we can review the last 4 years, back as far as 2007, for you.  In this case, use our full Tax Refund Application Form – click here to open.

 

2010 P60’s and other forms

 

If you were working at the end of the year, you will receive a P60 and an Income Levy certificate.  If you can include copies of these with your application, this will speed the process up.    Revenue systems update P60’s received from employers slowly, but we can update these manually for you.

Universal Social Charge and Medical Cards

Posted on | December 30, 2010 | 3 Comments

Paying more Tax in 2011?

For the years 2010 and before, if you received a Medical Card, you were exempt from having to pay Income Levy and Health Levy.

However, under the new Universal Social Charge which is replacing the Medical Card, this has been changed.  Now you will have have to pay Universal Social Charge on any PAYE income you earn as follows:

Universal Social Charge & your Salary

Have you wrongly paid Income Levy or Health Levy in the past few years?

Make sure you check if you have been receiving your exemptions from Income levy and Health Levy in your pay.  Income Levy is straighftorward to check – if you were charged income levy in your payslips, you are due a refund of this for the period you had the medical card.

It’s harder to identify if you were charged the Health Levy incorrectly, as this is wrapped into the Employee PRSI amount.  However, if you can see your PRSI class as A1 (private sector) or B1 (public Sector), then you were being charged Health Levy.

Register for a Free Tax Refund assessment with Red Oak Tax Refunds today!

Budget 2011 – Tax Cuts and Levy increases

Posted on | December 7, 2010 | 3 Comments

So you have checked on the Budget Calculator how you are affected by Budget 2011 – see below how some other people are affected by the changes.

Single person Earning €30,0000 – Better Off!

Jenny earns €30,000 a year and lives with her parents
With the changes in tax credits, Jenny’s income tax bill will increase by €360.
But the new Universal Social Charge, which replaces the Income Levy and Health Levy,  is Jenny’s saving grace – this saves her €380.
So overall, Jenny will be €20 Better off  over the year  from the Budget Changes.

 

Single person Earning €20,0000 – A black day

Jack earns €20,000 a year, rents from a Private Landlord and is a member of SIPTU
Rent Relief is being phased out over 8 years and we have estimated this will cost Jack €50 this year. He will also no longer receive €70 of tax credits for his trade union Membership
With the other changes in tax credits, Jack moves from a situation where he paid no income tax in 2010 to having an income tax bill of €350 in 2011.
The  new Universal Social Charge is also an expensive charge for Jack – this will cost him €319 a year more than the old Income & Health Levies..
So overall, Jack will be €670 Worse off  over the year  from the Budget Changes.

Married Couple, one income with 2 Kids – Not looking good

Pippa & Mark are married with 2 kids and have one income of €40,000.
The Child Benefit rates for 2 kids will cost them €20 a month.
The changes in Tax Bands will see Pippa now paying tax at the higher rate of 41% on all income over €41,800 in 2011, whereas in 2010 the higher rate only kicked in on her income over €45,400.
This allied with the reduction in Home Carer tax Credits from €900 to €810 and the 10% in personal and PAYE tax credits will cost Pippa and Mark €1,486 more in Income Tax.  Ouch!
The Universal Social Charge will be €181 less than the old Income and Health Levies.
Overall, Pippa & Mark will be worse off by €1,295 in 2011 from the Budget

 

High Earners take a hit too

James earns €100,000 a year and contributes €10,000 to a pension plan from his salary.
While no changes were made to the amount of income tax relief James receives on his pension in 2011, James will now have to pay PRSI on his pension contributions and on his income above €75k.  This will cost James €955 in PRSI.
The income tax changes will cost James €1,296, mainly because he will now pay more tax at the higher rate of 41%.
Topping that off, the Universal Social Charge will cost James €70 more than the old Income and Health Levies.
One saving for James is the reduction in the travel tax on flying from €10 to just €3, which will save him €35 a year on his normal 5 flights a year
Overall, James is worse off my €2,100 in 2011 from the budget

Both Parents Working

Sandra  &  Tom are married with 3 kids and both earn €40,000.  They both contribute 5% of their salaries into pensions and are union members.
The Child Benefit rates for 3 kids will cost them €40 a month.  The rate for the first 2 children drop by €10 each, while the Child Benefit for the 3rd child is cut €20.  A bit harsh on the youngest I think you’ll agree.
PRSI on the pensions will cost them €160 over the year, But  the Universal Social Charge saves then €402.
Their Income tax bill shoots up though from €8,412 to €10,784, a cost of €2,372
Overall, Sandra & Tom will be worse off by €2,484 in 2011 from the Budget

Pensioners hit

James is married to Mary and receives a state pension of roughly €20,000 and €16,000 from a private pension.
Previously they were exempt from income tax as their total earnings were less than the €40,000 exemption limit that applied in 2010.  This exemption limit has been decreased to €35,000.
With the cut in personal tax credits and the reduction in the Age Tax credits for married people from €650 to €490, James will have to pay €1,760 in tax in 2011 compared to €0 (zero) in 2010.

Landlords forced into tax net

Posted on | December 6, 2010 | 3 Comments

3 prong strategy forcing landlords into declaring rental income

 

What have the 2nd Property Tax, PRTB Tenant Registration and the Rent Relief Tax Credit got in common?  They can all be used by Revenue to identify Landlords who are not declaring rental income.  Any one of these tax / registration requirements can be interrogated to identify landlords who are not declaring income.

Up until 2008, It would have made little difference to many small  landlords.  Rental income tended to be less than the mortgage interest on the property.

But since May 2009, only 75% of mortgage interest is allowable as a tax deduction against rental income.

But also if you are not registering your tenants with the PRTB, the mortgage interest may not be allowed as an expense against your rental income.  Given that Interest is usually your largest deduction again interest income, this could result in a very large tax bill.

The cost of registering tenants with the PRTB is set to increase next year from €70 to €90.

4 year plan – the Income Tax Changes

Posted on | November 24, 2010 | 4 Comments

Front loading with 2/3’s of increases in Budget 2011

Lots of reaction to the 4 year National Recovery plan issued today, but we wanted to give you a bit more information on what income tax changes have been signaled today in the 140 page 4 year plan.

The Main stated Tax Credit changes are:

• Trade Union Subscriptions are to be abolished.  This is worth €70 a year if you are in a Union
• Age Tax Credits to be abolished over the next few years.  that’s worth €650 to married couples and half that to single people over 65.
• The Age Exemption where you don’t pay tax on earnings under €20,000 for singles and double that for married couples will be removed over the 4 years.
•  Rent Relief Tax Credit will be removed by 2017.  That’s worth €800 to married couples and €400 to single people under 55 for example.
• The BIK exemption on employer provided childcare is to be removed.  This is provided by a lot of large irish companies, such as VHI, and could cost staff as much in the region of €3,500 in tax savings.
• No Mention of the removal of Service Charges Tax Credit, but I put this down as an oversight and will be gone from January – worth about €80 a year.
• Redundancy payments over €200,000 are to be taxed.
• Tax Relief on Approved Share Option Schemes to be abolished – no timeframe given, but presume this is January as well.

The”Big Idea” change to Income Tax are:

In addition to the changes above, the Big Idea in the plan is to have more people paying tax.

This will see the entry point at which you start paying Income Tax switch from €18,300 now to €15,300 by 2014.

In bald terms, this will see the worker who earned €18,300 and paid no tax, pay €600 tax per year by 2014.

This can be done through reducing your tax credits and/or through increasing your standard rate (the 20% tax rate).  €240 off your personal tax credit and 2% on the standard rate would do the trick here.

 

4 year plan – but how much in January?

Expect to see the bulk of the changes above hitting your wallet in January – I’d expect about 2/3’s of the cost to be implemented in the first budget.

We will of course update these changes in our budget calculator on December 7

 

Other Changes

There are some big changes in PRSI/Income Levy/Health Levy through the introduction of a Universal Social Charge – we talked about this 4 years ago, but I’ll post a blog on this to update you shortly

Also Pension Contributions took a clattering, we’ll post shortly on that also.

keep looking »

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Welcome to the Red Oak Tax Refund Blog, where we will discuss money matters, tax and in particular tax refunds relating to PAYE employment in Ireland. If you have any topics you would like discussed, send us a mail to refunds@redoaktaxrefunds.ie and happy reading!.

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