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Sunday 5th February 2012
Landlords forced into tax net
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…Read more [...]
4 year plan – the Income Tax Changes
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…Read more [...]
Posted in Budget 2012
Tagged 4 year plan, budget 2011, income tax, National recovery plan
5 Comments
2006 Tax Refunds
Last Chance to Claim 2006 Tax Back
If you were working in 2006 and think you may be due a tax refund, the deadline for claims to be completed is in December. Officially its the 31st December, but last year online claims were closed off on the 21st December by Revenue. We are taking applications for 2006 tax refunds for another 2 weeks only - this is to make sure we have time to process them for you - so get your tax refund application form into us as soon as possible. Remember if you are not due a refund, there is no charge for the free tax refund estimate.
in 2006 the Tax System was quite similar to now, so you can claim:
For Service charges, including Bin Collection (typically €80 refund
Trade Union…Read more [...]
Posted in Paye Tax, Tax Refunds
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Budget 2011: First line drawn by backbenchers
Backbenchers say no (ish) to pension cuts.
Some Fianna Fail backbenchers today drew a tentative first line in the sand regarding cuts in the forthcoming budget - with a threat to pension drawing their ire.
Michael Kennedy (Dublin North) and Chris Andrews (Dublin South East) are reported in the Sunday Independent today as saying that cuts to pensions could have disasterous consequences.
Their stance was a break in rank with the standard government TD pronouncement heard of late, typically expressed as 'Nothing could be ruled out', With Michael Kennedy stating that "Any move to cut or hit the OAPs will cause chaos in the parliamentary party. I have been strong in my views that the pensioners must not be…Read more [...]
Buying Home Insurance
Home Insurance: Save Money & Stay Covered
Top Tips: Make sure when renewing Home Insurance to Shop around and check your policiy conditions
Shopping around is never a waste of time. Securing quotes from all of the home insurance providers on the market may sound like hard work, but there are ways of easing the task.
You can buy directly from an insurance company via the internet, or through a broker. Brokers can save time and may have special deals, or be able to provide a quotation from a specialist insurer.
Don't forget to bargain. If you get a good quote from one company, it is worthwhile seeing if your existing insurer can match or better it.
The cost of your monthly premium depends on three factors.…Read more [...]
Posted in Random posts
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Budget 2011: Labour release some proposals
New Upper Rate of 48% if you earn over €100k
In the last week, the Labour gave some indication as to what they would do in the next budget. Specifically, regarding taxation they mentioned:
A new upper tax rate of 48% for those earning over €100,000
Increasing the second property tax from €200
introducing water charges - but only in conjunction with metering
They also did not rule out taxing lower paid worker stating "A well-structured universal levy could have a significant role in achieving savings here".
So it would appear that labour would favour the introduction of a new levy such as the Universal Social Charge proposed by the ESRI.
Budget Day is the 7th December and don't forget to check…Read more [...]
Posted in Budget 2012
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Universal Social Charge
The ESRI published it's latest pre budget briefings and in it outlined a proposed Universal Social Charge. They are proposing that this be introduced in the next Budget as a Revenue Neutral Item.
Why a Univeral Social Charge?
If it's Revenue Neutral why do it? The Universal Social Charge is to replace Employee PRSI, the Health Levy and the Income Levy. These have charge structures which are different and complicated individually, never mind when we look at them all together. So it would help clarify the taxes we pay.
How much is the Universal Social Charge?
The ESRI are proposing introducing the Universal Social Charge at a rate of 7.5%. It is proposed that it is introduced to people similarly to how the…Read more [...]
Posted in Budget 2012, Health Levy, Income Levy, Income Tax, Paye Tax, PRSI
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Budget 2011: Mortgages should be part of balancing act
So instead of having to make up €7.5bn, we are having to make up €15bn in Budget 2011 this December.
And most of the debate to date has focused on whether a large enough contribution is being made to the recovery by low paid workers / Public sector workers / high paid individuals (insert as appropriate depending on your own political persuasion or personal situation).
So can I throw in another sector of society that seems to have been missed out on in the analysis to date: The Mortgage Holder.
Lets illustrate with an example first featuring Joe Mortgage Holder and Joe Mortgage Free.
Joe Mortgage Free could be renting, living at home or have paid off his mortgage - it doesn't really matter to this…Read more [...]
Posted in Budget 2012, Mortgage Interest Relief
Tagged budget, budget 2011, budget income tax, budget levy, budget mortgage
2 Comments
mortgage cost up 25% in last year
What a difference a year makes. Very interesting article in the examiner recently quoting statistics from latest CSO figures.
According to the CSO, the typical cost of a €250,000 mortgage has increased by 25% in the last year. Karl Deeter of Irish Mortgage Brokers breaks that down usefully and for a 25 year mortgage you are looking at additional costs of €1,560 a year before claiming interest relief at source.
These increases are due to Irish mortgage lenders increasing what they charge for mortgages by 1% in that period. This is due to increases in their cost of lending rather than for any changes in the european central bank rates. Because of this, those on Tracker mortgages will not have felt…Read more [...]
Posted in Mortgage Interest Relief
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Redundancy and your Income Levy
This will be of interest to any of you out there who paid tax on a redundancy payment received in the last few years.
One of the main refunds due that is not claimed for people who pay tax on a redundancy is of Income Levy and Health Levy.
While Income Tax is charged on a year to date basis, Income Levy and Health Levy are charged just on the income received in that period. Of course, with a redundancy payment, you receive a fine big lump sum in that period, whether weekly or monthly paid.
This often means that the Income Levy and the Health Levy are charged at the highest rates. How much of a difference can this make? well it depends on your annual income from all sources, but just as an example we recently source…Read more [...]
Posted in Redundancy, Tax Refunds
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mortgage interest relief for spouse
Claim extra tax relief at source benefits.
So you bought a house, took out a mortgage, met a girl/boy and get married. Congrats! not only can you now receive the benefit of being taxed as a married couple, but you should also think about how this affects the mortgage interest relief you receive at source each month.
First Time Buyer
Where your new spouse was not registered on the house deeds or had never received mortgage interest relief on another property, they are now considered a first time buyer and can be added as eligibile for mortgage interest relief on your house.
Will this make a difference to your tax relief at source?
If you are paying more interest than your maximum allowed limits, you can…Read more [...]
Posted in Tax Refunds
3 Comments
Aer Lingus Redundancies Tax under review
RTE report this morning that the Revenue are reviewing 715 redundancies in Aer Lingus 2 years ago. According to the article, the staff made redundant were re-employed a matter of weeks later, so they are questioning the validity of the redundancy.
Why do Revenue Care?
The Employer Impact
Well firstly, The Statutory redundancy payment part of the staff payment is part paid by the state - so while Aer Lingus pay this amount to the employees, they are looking for a rebate of 60% of this from the government. This happens with all statutory Redundancies.
This is what the rte article has focused on, and they reckon there could be millions of euro of a rebate due to Aer Lingus for this - if they can satisfy…Read more [...]
Posted in Redundancy
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5 tips to save Money this Autumn
Introducing the MoneyDoctor: We're long time fans of the MoneyDoctor, John Lowe here in Red Oak Tax Refunds. Not only does he offer great advice, but he makes everything so simple and understandable. Because as well as being smart with Tax, we know there are so many ways in which we can be smart with our money, that are very achievable. I'll leave it over to the MoneyDoctor then to describe his 5 money saving tips for this Autumn.
5 top tips to save money this autumn
Plan it – there is a difference between saving and investing – saving is generally short term and immediate while investment is for a minimum period of three to five years. You have to work out initially, how much disposable income…Read more [...]
Posted in Random posts
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10 things to know about Tax & Marriage
CONGRATULATIONS, YOU'RE MARRIED!
Now get your tax right and save up to €4,620 per year
Savings like that are sure to lead to marital bliss. And the example of €4,620 is a very realistic saving on getting married for a High Tax payer with a stay at home partner. While in other cases it may make no difference to the amount of your pay that is taxed.
Top 10 things you should know about Tax & getting married.
Nothing changes immediately ... In the world of tax, the Tax man treats you as a single person until Jan 1 of the following year. Maybe treat it as another wedding anniversary date and celebrate it!
There are 3 different ways (called basis of tax assessment) of being taxed as a married couple…Read more [...]
Posted in Random posts
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New Computer System identifies UK Tax Errors for 6 million People
A New computer system introduces in the UK to handle PAYE (salaried employees) tax has uncovered that the wrong tax was being charged for nearly 6 million people. In total, some £2bn was underpaid and £1.8bn overpaid. For those due refunds, the average refund will be £420.
How can this happen?
Easily enough I'm afraid. This is due to a simple tax code that each employee is given was incorrect. This type of mistake is something that often occurs in Ireland resulting in the taxpayer overpaying tax. The reason it happens is that over 40% of employees believe that their employer looks after all their tax affairs. Unfortunately, the employer only gives tax codes and tax credits as per instruction from…Read more [...]
Budget 2011 Date announced
Surprising a few, Brian Lenihan has revealed the date of Budget 2011 quite early this year. The Budget has been set for Tuesday 7th December.
It is thought that some of the Budget deficit will have to be made up through taxation increases - up to this point, the emphasis has been on spending cuts to make up the difference.
While spending cuts have been decided in a number of areas, Minister of Health Mary Harney has revealed that they are still reviewing where cuts can be made in health.
Married & Tax Assessment basis choice
Are you Married?
It's well worth knowing what Tax Assessment Basis is - and how this could affect your tax bill / tax refund
In the year you are married, you continue to be taxed as a single person - but you may be due a refund through a Year of Marriage Review.
In the years following Marriage, there are 3 basis of assessment allowed:
Assessment as a single person (Separate Treatment)
Separate assessment
Joint assessment/aggregation.
If you get the assessment basis wrong, this will probably cost you in terms of overpaid tax.
So what's the Difference?
Joint Assessment: With Joint assessment, your tax credits and tax bands can be shared or allocated between the spouses. So this allows one…Read more [...]
Top Slicing Relief
This is part of a series of articles on Tax and Redundancy. Click here for the first post in this series.
Reducing the Tax payable
The previous calculations focussed on reducing the amount of the Lump Sum payment that tax is calculated on.
This final calculation examines the amount of the tax charge and looks to reduce it further. This is called Top Slicing Relief.
The key consideration in giving Top Slicing Relief is that the individual should not suffer a tax rate on their Lump Sum in excess of the average rate of tax paid on all their income for the previous 3 years.
i.e. if the lump sum is being taxed at the higher rate (41% in 2009) and the average tax rate applicable for the preceding 3 years was 35%,…Read more [...]
Posted in Redundancy
Tagged exempt redundancy, Redundancy, redundancy payments, redundancy tax, redundant, statutory redundancy
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Refunds of DWT (Dividend Withholding Tax)
DWT, or Dividend Witholding Tax, is deducted from dividends paid by Irish companies. If you are in receipt of Irish dividend income, DWT is deducted at 20%. This 20% is then used as an offset against your income tax liability.
But what if you do not have an Income Tax liability?
You can claim a refund of DWT, where your income tax calculated on your taxable income (from dividends and other sources) is less than the amount of DWT paid. This can in particular happen if you are out of work or finished work.
DWT refunds available if you are over 65 and your income is below the revenue exemption limits, a topic we will cover in a later blog.
If you need further information or help on this matter, why not contact…Read more [...]
Posted in Income Tax
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Taxable Redundancy Payment Calculation
This is part of a series of articles on Tax and Redundancy. Click here for the first post in this series. If you have received a redundancy payment in excess of the statutory redundancy amount, we look at additional deductions we can make to that amount here.
Taxable Lump Sum Calculation
The Lump Sum received on Redundancy that exceed the Statutory Redundancy amount is assessable for Income Tax in the tax year in which it is received. However, this taxable amount is reduced by an allowed ‘exempt’ amount.
There are two possible methods to reduce the taxable amount of your redundancy payment and you are allowed whichever gives you the greater reduction in your taxable amount.
These two exempt amount calculation…Read more [...]
