Taxation
Under the Tax Credit System for income tax, Gross Tax minus Tax Credits = Tax Payable.
Gross tax liability is calculated on your total income
(after deduction of superannuation and permanent health
benefi t) by applying 20% to income up to your standard
rate cut-off point and 41% on the remainder. The cut off
point will be:
STANDARD RATE CUT-OFF INCOME 2011
| |
Weekly |
12 Month Value |
Single/Widowed |
€630.77 |
€32,800 |
One Parent Family |
€707.69 |
€36,800 |
Married (one income) |
€803.85 |
€41,800 |
Married (two incomes) |
€1,261.54 |
€65,600 |
Separated spouses may be taxed singly or jointly.
If you rent rooms in your own home to an unconnected person
and the annual rent is less than £10,000, the rent will
be exempt and subtracted from income before calculating
tax, social insurance or health levy. If you care for up
to 3 children in your home and receive less then 15,000,
this income will be exempt from tax and health levy but
a minimum 253 Social Insurance is payable. If you exceed
these amounts, the exemption is lost and the whole lot is
taxed.
| |
TAX CREDITS 2010 |
| Single Person |
€1,650 Age
(65) Allowance (each) €245 |
| Married Couple |
€3,300 Incapacitated
Child €3330 |
Widowed |
€2,190 Homecaring
Spouse €810 |
One Parent Family |
€3,300 Dependent
Relative €70 |
PAYE Allowance (each) |
€1,650 |
- The Homecaring Spouse Credit is available to a spouse in a one-earner family who is caring in the home for a child who is eligible for Child Benefit or for an aged or handicapped person. You must apply for this allowance. The homecarer is allowed to have up to €5080 income of their own, thereafter the credit is reduced, reaching zero if income exceeds €6,620. Carer's Allowance is not counted as income in this means test.
- One Parent Family Credit applies to a single or widowed person if you can show that your child resided with you for at least part of the year. This relief is not available to an unmarried couple living together.
- Dependent Relative Credit is claimable if you support a widowed mother or incapacitated relative whose income does not exceed the contributory OAP.
- A parent with dependent children who is widowed
gets an additional tax credit in each of the 5 subsequent
tax years of €3,600, €3,150, €3,000, €2,700
and €1,800 respectively.
Tax credits which are unused are not refundable. They will be carried forward from week to week during a tax year, but if unused after the end of the tax year, they are lost.
Age Income Exemption: The exemption from tax for
persons on small incomes aged 65 or over is to be phased
out by 2014. In 2011, if gross incomes from all sources
is under 18,000 (single), 36,000 (married), no income
tax will apply
Mortgage Interest: Mortgage relief is now being
phased out. New loans taken out before 1st July 2011 will
get the full entitlement. The full entitlement is:
- A new loan for a first-time buyer qualifies for seven years of relief on interest up to €10,000 (single), €20,000 (married) and is allowable at 25% for year 1 and 2, 22.5% for year 3, 4 and 5, and 20% in year 6 and 7.
- A new loan to trade up will get 7 fresh years of relief on the entire loan, but a loan to extend will only get 7 years relief on the "top-up" element of the loan. In both cases relief is on a maximum interest of €3,000 (S) and €6,000 (M) and is capped at 15%.
- Mortgages taken out since 1st Jan 2004 hold relief at
20% until 2017.
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• Certain expenses carry a 20% tax credit
o All unreimbursed Medical Expenses (including Nursing Home expenses); Maternity care; A Psychological Assessment and Speech Therapy for children. You can also claim for the medical expenses of a close relative or any incapacitated or elderly person regardless of their means. Routine Dental or Optical Care don't qualify.
o Health Insurance This relief is now granted at source and deducted from your premium by the insurer.
o Insurance to cover long-term care costs in the event of serious disability, and to cover non-routine dental costs.
o Rent to a Private Landlord up to a maximum €1,600
(single), €3,200 (married/widowed), and if you are
aged 55 or over up to €3,200 and €6,400 respectively.
o College Fees of up to €5,000 for full or part-time undergraduate courses in Ireland or EU and for postgraduate courses in non-EU countries as well.
o Local Bin Charge up to €400.
o Trade Union Subscription will no longer apply..
Certain items are still allowable at your top rate of tax. These are:
o An Incapacitated Person or one or more of their family, can claim up to €50,000 to enable employment of a home help.
Back to Work Tax Allowance if previously unemployed
or on disability allowance for 12 months or more - of €3,810
plus €1,270 for each child in year 1, and two-thirds
of these allowances in year 2,
A Universal Social Charge will replace the Health
and income levies. It will apply to gross income, from whatever
source (excluding only Social Welfare Payments) and without
deduction of pension contributions 2% up to 10,036 (193
per week) 4% on the next 5,979 (next 115 per week)
7% on the remainder An exemption applies to persons whose
total income is under 4,404 (85 per week) one-third in
year 3.
Pay Related Social Insurance (PRSI) applies to gross
income (with no deduction for pension contributions) of
workers and the selfemployed aged 16-66. A single rate of
4% now applies to both categories with no ceiling. Public
servants on modifi ed rate will now a pay 4% on their income
in excess of 75,036. PRSI will be merged into the Universal
Social Charge in 2012.
Redundancy: You do not have to pay tax on Statutory Redundancy,
nor on termination payments due to injury or disability.
Tax is payable on any other lump sums but after the deduction
of the more favourable of:
765 for each complete year in the job, plus 10,160
and a further 10,000 is allowable if you are not a member
of an Occupational Pension Scheme, or
1/15th of your annual income (average of the last 3 years)
for each year less any tax-free lump sum from the pension
scheme. This deduction cannot exceed 200,000. The balance
is taxable either as extra income for that year or at the
average rate of tax you paid in the previous years.
Pensions: A certain portion of gross earnings under 115,000
can be put into a pension tax free. It is up to 15% (under
30%) rising in steps to 40% (60 years or over), allowable
at your top rate of tax. However, it is proposed to move
gradually to a standard rate allowance between 2012 and
2014. The following are the pension options: If not in
a Pension Scheme you may put the money into a Personal Retirement
Savings Account (PRSA) where the fund will accumulate free
of tax on income or on gains. You cannot withdraw money
before age 60. On retirement you may take out 25% tax-free.
If in a Pension Scheme you can top up contributions in
your own Scheme or a linked PRSA by making tax free Additional
Voluntary Contributions (AVCs) up to the income ceiling
and maximum benefi ts permitted by Revenue. You can spread
back AVCs for up to 10 years to provide for dependants
benefi ts. A Self Employed person can put contributions
into personal pension schemes, in which there is no limit
to the pension or death benefi t, but the tax free lump
sum at retirement is limited to 25% of the accumulated fund.
Retirement lump sum payments in excess of 200,000 will
be taxable in 2011, at the standard 20% rate.
Capital Acquisitions Tax: Gifts or inheritance bear a
25% tax on the market value of the assets received in excess
of certain thresholds, which vary according to your relationship
with the giver. Lower thresholds and a progressive rate
structure are to come in for 2012. Relationship to Giver
Exempt Threshold 2011 A. Son/Daughter 332,084 B. Grandchild/Brother/Sister/Niece/Nephew/Parent
33,208 Relationship other than Group A or B 16,604
Stamp Duty: From 8th Dec 2010 transfers of residential
property will pay 1% up to 1 million, and to 2% on any
excess over that.
Site Value Tax: a uniform charge of 100 will apply in
2012, from 2013 it will become related to the value of the
site. No charge applies in 2011. Water charges based on
metering are to be introduced by 2014, but no firm date
has been set.
| Relationship to Giver |
Exempt Threshold 2010 |
| A. Son / Daughter |
€332,084 |
| B.Grandchild/Brother/Sister/Niece/Nephew/Parent |
€ 33,208 |
| C. Relationship other than Group A or B |
€16,604 |
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Contact us at-Washington House, 33 Washington Street, Cork, Ireland
Ph: 021 4272242
Fax: 021 4271879
Email: Colm@colmburke.com, brid@colmburke.com, niamh@colmburke.com
