Your No-Nonsense Guide to PAYE Taxes in Ireland

We've broken down the basics in our jargon-free guide so you can get the lowdown on the PAYE tax system in a language you'll understand!

This guide has been updated following the Budget 2020 announcement

It can be difficult to navigate the jargon-filled world of taxes, so if you're struggling to grasp the basics of the PAYE tax system or you need an answer to a specific problem, you're not alone!





1.The Basics of PAYE

So..what exactly does 'PAYE' mean? Well...the term PAYE stands for ‘Pay As You Earn’ and is a system the Irish Government uses to charge you income tax, Universal Social Charge (USC), and Pay related Social Insurance (PRSI) (if applicable) on your income. Each time you’re paid, your employer deducts tax from your income, which is then paid directly to Revenue who collect taxes on behalf of the Irish government. The PAYE system also ensures the yearly amounts you pay are collected evenly on each payday over the course of the tax year. Who pays PAYE income tax? Most people who work in Ireland pay income tax on their earnings through the PAYE system, so unless you're contracting or self-employed, then you're probably paying tax through the PAYE system. Each time you get paid, your payroll will deduct tax from your salary and you’ll see how much was taken on your payslip. If you’re self-employed however, you’ll need to file an income tax return every year and pay any taxes you owe by the 31 October deadline. The PAYE system is also in operation for pensioners upon retiring from pensionable employment. The average Irish tax refund is €1076.17 GET YOURS NOW What is PRSI? PRSI is another deduction you’ll see on your payslip each time you’re paid. Pay Related Social Insurance (PRSI) is a contribution to the social insurance fund and most employees over 16 must pay this. You'll need to pay this whether you work full-time or part-time if you earn €38 or more per week. Self-employed workers with an income of €5,000 a year or more aged 16 or over (and under pensionable age) are also liable for Pay-Related Social Insurance (PRSI) contributions. These contributions may give you an entitlement to claim benefits such as Jobseeker’s Benefit, Illness Benefit, and State Pension. So for example, if you become unemployed and you have enough contributions, you may be able to claim the Jobseeker’s Benefit while you're looking for work.



How much PRSI do I need to pay? How much PRSI you pay is largely based on your earnings and the type of work you do. Your employer will deduct your PRSI and calculate the amount based on your social insurance class. PRSI is taken at source by your employer and collected by Revenue who, along with the Department of Social Protection, will keep a record of your contributions. If you’re wondering how much is deducted from your pay, then you can see this on on your payslip/P60 from employer. Social insurance contributions are divided into different categories known as classes or rates of contribution. The class and rate of contribution you pay is calculated by the nature of your work. Here are the 11 different social insurance classes in Ireland based on your occupation:

Table: Social Insurance Classes Ireland Class J Anyone earning less than €38 per week. People aged over 66 or people in subsidiary employment are always insurable at Class J, no matter how much they earn. Subsidiary employment for Class J is for example, people who are insurable at Class B, C, D or H in their main employment. Only Occupational Injuries Benefit is covered by Class J social insurance. Class E Ministers of religion employed by the Church of Ireland Representative Body. It covers all social insurance payments except Jobseeker's Benefit and Occupational Injuries Benefit. Class B Civil servants and Gardaí recruited before 6 April 1995. Registered doctors and dentists employed in the Civil Service. Only covers only a limited number of social insurance payments. Class C Commissioned Army Officers and members of the Army Nursing service recruited before 6 April 1995. Covers only a limited number of social insurance benefits. Class D Permanent and pensionable employees in the public service other than those mentioned in Classes B and C recruited before 6 April 1995. Covers only a limited number of social insurance payments. Class H Non-Commissioned Officers and enlisted personnel of the Defence Forces. Covers all social insurance payments except Occupational Injuries Benefit. Class K Public office holders with an income of over €5,200 a year. People who pay PRSI on unearned income. Public office holders with weekly income of €100 or less are recorded under Class M. There are no social insurance payments for people insured under Class K. Class M Employees with no liability to contribute to social insurance. Employees under 16 years of age and people with an income of €500 or less and insured in Class K. Class M covers certain contributors with Occupational Injuries Benefit. Class S Class S applies to self-employed people including certain company directors, people in business on their own account and people with income from investments and rents. It covers a limited number of social insurance payments. Class A

Most employees in Ireland are Class A. This applies to employees in industrial, commercial, and service type roles under a contract of service with a reckonable pay of €38 or more per week. Also includes civil and public servants recruited from 6 April 1995. People on CE schemes pay a special contribution at Class A8/A9. Class P Sharefishermen or Sharefisherwomen classified as self-employed and already paying PRSI come under Class P. This class provides limited Jobseeker's Benefit, limited Illness Benefit and Treatment Benefit.

What is USC (Universal Social Charge)? You must also pay USC on your income. USC or the Universal Social Charge is a tax on your gross income that replaced both the health and the income levy in January 2011. Chances are if you work in Ireland you'll need to pay USC and you'll see it deducted on your payslip each time you're paid. All employees earning over €13,000 in gross income will pay USC. Table: Standard Rates of USC 2020

First €12,012 0.5% Next €8,472 2% Next €49,560 4.5% Balance 8%

You'll qualify for reduced rates of USC: If you're aged 70 or over and your total income for the year is €60,000 or less

If you're a medical card holder aged under 70 with a total income of €60,000 or less-If your income is more than €60,000, the standard rates of USC apply to your full income. Table: Reduced Rates of USC 2020 Up to €12,012 0.5% Income over €12,012 2.%

Please note: USC rates apply to you and your spouse/civil partner individually, they can't be combined or transferred. What income is exempt from USC? In some cases, your income may be completely exempt from USC. We've listed them below. Your income is exempt from USC if you earn less than: €13,000 in 2020

Table: Payments that are exempt Payments from Community Employment Schemes and Back to Education Allowance Social welfare or similar payments made from abroad Student grants and scholarships Statutory Redundancy Payments Redundancy payments above the statutory redundancy amount-Universal Social Charge up to certain limits How maintenance payments are treated for Universal Social Charge purposes depends on whether they are voluntary payments or legally enforceable payments Employer’s or pension provider’s contribution to an approved retirement benefit scheme is not liable to the Universal Social Charge, but the employee's contributions are Department of Social Protection pensions or similar pensions from abroad are exempt The USC is only payable on lump sum pension payments on the The USC is only payable on lump sum pension payments on the portion over €500,000 Blind Welfare Supplementary Allowance Community Employment Scheme Fund for Students with Disabilities Job Initiative Scheme Mobility Allowance Vocational Training Opportunities Scheme (VTOS) Income where DIRT (Deposit Interest Retention Tax) has already been paid Certain salary sacrifice schemes, such as the TaxSaver Commuter Ticket Scheme and the Cycle to Work scheme Income qualifying for Childcare services relief Foster care payments Child Benefit Income qualifying for Rent a Room Relief Income from scholarships Youthreach Training Allowance Early childhood and education scheme Maintenance Payments and USC How maintenance payments are treated for Universal Social Charge purposes largely depends on whether they're voluntary or legally enforceable payments. 1. For Voluntary maintenance payments under an informal arrangement: The spouse making the payments isn't exempt from USC on the portion of their income on which they pay as maintenance, however the spouse who gets the payments isn't subject to USC on the maintenance payments.

The spouse making the payments isn't exempt from USC on the portion of their income on which they pay as maintenance, however the spouse who gets the payments isn't subject to USC on the maintenance payments. 2. Maintenance payments under legal obligation: If you’re the one making payments to a spouse, you’re entitled to an exemption on the portion of your income on the maintenance paid to your spouse, however there’s no exemption for any portion of maintenance payments paid towards the maintenance of children. The spouse who receives payments is subject to the Universal Social Charge on the portion of maintenance payments they get, however any portion of maintenance payments paid towards the maintenance of children won't be subject to the Universal Social Charge. Other Rates of USC There are a couple of items subject to different rates of USC, these include: 1. Non-PAYE income above €100,000 On non-PAYE income above €100,000, there's a surcharge of 3% per year. 2. Certain bank bonuses A rate of 45% applies to bonuses paid to employees of building societies and banks that received state financial support. If the payments are €20,000 or less in a year, standard rates of USC apply. If the payments exceed €20,000 in a year, the full amount is charged at 45% USC. This applies to: Allied Irish Bank

Anglo Irish Bank

Bank of Ireland

Educational Building Society

Irish Nationwide Building Society 3. Property Relief Surcharge An additional 5% rate of USC applies to taxable income that is 'sheltered' by property reliefs. This includes property-based capital allowances and relief for residential lessors known as 'section 23-type' relief. The property relief surcharge doesn’t apply if your gross income is less than €100,000. The surcharge applies to: Capital allowances made in or carried forward to the 2012 tax year and any later tax year

Any losses carried forward to 2012 or a later year that are due to section 23-type relief How is my income tax calculated? Any income you earn is charged at the standard rate of 20% up to a certain amount. This amount is called your standard rate cutoff point. Anything you earn above this amount is charged at a higher rate of tax, which is currently 40%. So how much tax you pay mainly comes down to how much you earn and your circumstances, e.g. are you single or married, do you look after dependents, and more. You'll see how much tax you pay on your payslip.

Table: Standard Rate Cutoff Points 2020 Your status Income Rate Single person without dependents or children €35,300 20% One parent family €39,300 20% Married Couple/civil* partners one income €44,300 20% Married Couple/Civil partners, two incomes Up to €70,600 (increase limited to the amount of the second income) 20% All Categories Earned Income remainder 40%



For example: If one person is earning €48,000 and their spouse or civil partner is earning €25,000: The standard rate cutoff point for the couple is €44,300 plus €26,300. The increase in the standard rate band isn’t transferable between spouses/civil partners so the first spouse’s tax bands would be calculated as €44,300 @ 20% = €8,860 and €3,700 @ 40% = €1,480. The second spouse or civil partner's tax bands would be calculated as €25,000 @ 20% = €5,000 and €0 @ 40% = €0 (total €5,000). Tax Credits Your liability for income tax is also reduced by any tax credits and reliefs you can claim each year. Eligibility often depends on your personal circumstances, so if you're looking after someone in your own home, paying for your own healthcare or are recently married, you may be able to get relief to reduce the amount of tax you pay. Tax credits will reduce the amount of tax you need to pay and are deducted after tax by the amount of credit. Depending on your personal circumstances, you may be entitled to a number of tax credits. Each year Revenue will send a summary of tax credits and standard rate cutoff point to your employer so they can deduct the correct amount of tax. If your circumstances change during the year, Revenue will issue a revised certificate. This is why it’s really important that you ensure you’re getting the correct amount of credits and tell Revenue if your personal circumstances have changed. For example if you get married you should tell them because this could reduce the amount of tax you need to pay each year. You can find more details on different types of tax credits and reliefs here.



Can I get a refund of unused credits? You can’t get a refund of any unused non-refundable tax credits or carry them over into another tax year. And if you change jobs, you must give your employer your P45 so they calculate the correct amount of tax. If they don’t receive this information, then you’ll be taxed on a temporary basis called ‘emergency tax’. Your tax credits are normally given for a full tax year on a 'cumulative basis'. This means that whether you start work in the first week or the 30th week of the tax year, you’ll still get the full year's tax credits. If you’re on emergency tax or a ‘Week 1 basis’ (the 'non-cumulative basis'), different rules apply. Under the PAYE system, tax credits, and deductions are spread evenly throughout the year. So if you’re working for the full year, your tax credits are divided into 52 weekly or 12 monthly equal amounts, depending on how often you’re paid. Overpaying tax There may be times you end up paying too much tax! I think we can all agree we don't want to end up in this situation so in this case it's important to check your payslip and P60. Taxback.com can also tell you if you overpaid tax for the last 4 years for free. You can claim tax back for up to 4 years. You could end up with an overpayment of tax if: You got taxable benefits from the Department of Social Protection and the tax paid was calculated incorrectly by your employer, i.e. Your personal circumstances changed during the year (marital status or if you claimed tax credits and relief you were actually not entitled to) You switched jobs during the year You can contact Revenue for your Tax Credit Certificate to see if you’re availing of all applicable reliefs or contact Taxback.com for assistance and we’ll check for you. Claiming tax back If you think you're due tax back, you can go back up to 4 years to claim a refund, so for example if you have medical expenses, you can claim them from 4 years back. Just remember that the deadline for filing your tax return is 31 October each year (this date is extended if paying and filing with Taxback.com and the Revenue online service). It's important to keep receipts for things like medical expenses in case Revenue ever requests them. So for example, if you want a tax refund from 2016, then 2020 is your last year to make this claim. The average Irish tax refund is €1076.17 GET YOURS NOW 2. What do I pay tax on? You’ll need to pay tax on almost all types of income. For example you must pay tax on wages, fees, perks, profits or pensions, benefits-in-kind, rental income, and many social welfare payments. We've listed some of them below. Benefit-in-kind Benefit in Kind is a non-cash benefit typically given by employers to employees. If the total value is more than €1,905 then you must pay tax on the benefits. However, employers can give their employees a once-off benefit with a value of up to €500 per year, tax-free. For anything over this amount, tax must be paid. If employers receive a repayment from an employee for the benefit, the value is reduced by that amount. Benefits given to an employee’s spouse, civil partner, family members, or dependents are also taxable. Examples of benefits-in-kind include: Company cars and vans (for mostly private use)

Living accommodation

Loans

Holidays

Payment of bills

Prizes

Medical insurance premiums

Childcare facilities



The value of a benefit is generally calculated as the higher of:





● Employer's cost in providing the benefit ● The value of the benefit if it can be converted into money (less any payment you make to your employer for the benefit) If you use a company car, you can reduce the amount assessed for tax if you have mileage for business purposes and this can be reduced ever further if you contribute to insurance costs, motor tax, or petrol. Preferential home loans A ‘preferential loan’ means a loan from your employer to you/your spouse/civil partner on which no interest is payable or interest is payable at a rate lower than the ‘specified rate’. An employee who gets a preferential loan is charged income tax on the difference between the interest actually paid and the amount which would have been payable at the 'specified' rates of interest for the loans. The current rates are: Qualifying loan for home (principal residence): 4%

Other loans: 13.5% Small benefit relief You can get a small non-cash benefit from your employer without paying PAYE, USC and PRSI. However the benefit must have a value of €500 or under (€250 up to 21 October 2015). This treatment doesn't apply to cash payments, which are taxable in full. You can only avail of this relief once in a tax year and if the benefit is more than €500 in value (€250 up to 21 October 2015), then the full value of the benefit is subject to PAYE, USC and PRSI. Table: Benefits that can be exempt or treated tax efficiently* Bus/train passes for 1 month or more Non-cash personal gifts Employer's contribution to approved pension schemes Mobiles, computer equipment, and home high-speed internet connections provided for business use (where private use is incidental) Private use of company van for the purposes of work: Private use is prohibited Bicycle and safety equipment as part of the Cycle to Work Scheme Certain share and approved profit sharing schemes Canteen facilities Reimbursement of expenses incurred in the course of employment Some accommodation provisions Lump sum and certain redundancy payments Working clothes

*This is not an exhaustive list and restrictions or conditions may apply Cycle to Work Scheme

This initiative was designed with the aim of encouraging people to cycle to work.

Under the scheme, your employer can buy a bicycle and safety equipment for you and it will not be considered a taxable benefit-in-kind (subject to a €1,000 per bicycle limit).

Alternatively, you can approve a 'salary sacrifice' with your employer over an agreed period of time (no longer than 12 months) to cover the cost of the bike. Under such an arrangement, you will only have to pay Income Tax (IT), Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the balance of your salary.

Even if the cost of the bicycle and safety equipment was less than €1,000, employees can only avail of this scheme once every five years.

Note

The scheme does not cover:

• motorbikes, scooters or mopeds

• second-hand bicycles or equipment

• bicycle parts or associated equipment Income that may be exempt from tax Some types of income are exempt from tax. These include things like social welfare payments, lottery wins, compensation, and scholarships. You may also be exempt from tax due to your circumstances, for example if you're a certain age or if you earn under a certain amount. We've listed reasons and items in the table below. Table: Income that may be exempt from tax Payments to approved pension schemes Statutory redundancy payments Certain social welfare payments Scholarship income Licensed lottery wins Certain army pensions and allowances HSE payments to foster parents Some compensation payments under employment law Compensation for a personal injury If you’re on low pay, you may not be liable to pay any tax because your tax credits and reliefs are more than or equal to the tax you owe. There’s no income tax exemption for low income earners under 65 If you’re over 65 and your income is below certain limits. If your income is over the limit then you may benefit from marginal relief Interest from savings certificates and Savings Bonds and National Instalment Savings Schemes, within limits Certain earnings by artists Certain payments in respect of disabilities linked with Thalidomide Age Tax exemption People aged 65 years and over are subject to the same general tax rules as everyone else, but they have a tax exemption threshold below which they pay no tax and may be entitled to additional tax credits. In the case of tax exemption you’re given a standard cutoff point and tax credit on your Tax Credit Certificate and the higher rate of tax applied is the marginal relief rate, currently 40%. Table: Exemption Limits for people aged 65 and over Status 2020 Single, widowed or surviving civil partner €18,000 Married/civil partnership €36,000 First two children €575 each Subsequent children €830 each

Some employees are also exempt from USC where employers are instructed not to deduct it. This will all depend on your income and any other circumstances. Marginal relief If you earn more than the exemption limit, you may be able to claim marginal relief. This means your tax is calculated in a different way in order to limit your tax liability. The relief is only be given when it’s more beneficial than calculating the tax due in the standard way and using your tax credits. The marginal relief rate is 40%.

Example: Mary (67) is married with 2 qualifying children and an income of €38,000 in 2018 with a total tax credit of: €5440 Mary’s Tax Credits: Personal Tax Credit: €3,300 Age Tax Credit: €490 PAYE tax credit: €1,650

Her exemption limit is €36,000+€575+€575(for each child). Here total exemption is €37,150, How she is taxed under the standard rate: Income: €38,000 Tax at 20%: €7,600 Deduct tax credits of: €5,440 Tax Due: €2,160 How she is taxed under Marginal Relief Rate: Income: €38,000 Less Exemption at: €37,150 Excess: €850 Total tax due at 40%: €340

In this case it’s better for Mary to be taxed at the marginal relief rate because the tax due is less than when she uses the tax credits. Tax on income outside of PAYE Even if you’re a PAYE employee, there may come a time when you earn extra income on the side. In most cases you must pay tax on this income and often if you earn over a certain amount, you’ll need to file a self-assessed tax return. This typically depends on the source of the income and amount earned. Table: Examples of income outside of PAYE Rental income Gifts/sponsored ads and content from blogging Share-economy: e.g. hassle, deliveroo, done deal Interest from deposits Pension scheme contributions Dividends from stocks and shares DIRT (Deposit Interest Retention Tax) DIRT is deducted at source by Irish financial institutions, such as banks, from deposit interest paid or credited to the accounts of Irish residents. The DIRT rate for 2020 is 37%. Your bank will deduct the DIRT before they pay you the interest and you can request a statement from them. It’s also up to the financial institution to decide if a deposit is subject to DIRT. is deducted at source by Irish financial institutions, such as banks, from deposit interest paid or credited to the accounts of Irish residents. The DIRT rate for 2020 is 37%. Your bank will deduct the DIRT before they pay you the interest and you can request a statement from them. It’s also up to the financial institution to decide if a deposit is subject to DIRT. In some circumstances, you may also have to pay Pay Related Social Insurance (PRSI) on the interest. Universal Social Charge (USC) doesn’t apply to deposit interest. Financial institutions can mean: ● A licensed bank of any of EU States ● A building society of any of the EU States ● Trustee savings bank ● Post Office Savings Bank ● Credit union

Capital Gains Tax (CGT) Capital Gains is a tax on the gains when you dispose of an ‘asset’ such as land or property. When you own or part own an asset, you may sell, gift or exchange it and this is called a ‘disposal’. Table: CGT is due on gains made from these assets Land Buildings (houses, apartments, commercial property) Company shares (resident or non-resident) Assets such as goodwill, patents, and copyright Currency (other than Irish currency) Assets of a trade Foreign life insurance policies and offshore funds Capital payments (in certain situations) You may also have to pay CGT on gains for other types of assets such as jewellery, antiques, paintings, etc. Cryptocurrency Some gains are not subject to CGT and some are exempt only in certain circumstances. Table: Gains in the following circumstances aren't liable to CGT Up to a certain amount is your Personal exemption You don’t need to pay CGT on the first €1,270 of your gain for each year Disposing of your Principal Private Residence You also don’t need to pay tax on the disposal of a property which you occupied or was occupied by a dependent relative as a sole or main residence. (Restrictions may apply where the property was not fully occupied as a main residence throughout ownership or where the sale price reflects development value). If you let out your home at any point while you owned it, you can claim a partial exemption. The Rent-a-Room scheme doesn’t affect your claim for full exemption. You may sell your home and surrounding land of up to 1 acre for its development value. In this case, the exemption will apply to the value of the house or land without its development value. You may have to pay CGT on the value of the house or land over that amount. Lottery wins Gains from betting, lotteries, sweepstakes, and bonuses payable under the National Instalments Savings Scheme and Prize Bond winnings aren’t liable to CGT Stocks and securities You don’t need to pay CGT on gains on Government Stocks and other securities (e.g. securities issued by certain semi-state bodies) Disposal of wasting chattels (e.g. animals, private motor cars, etc) A wasting chattel is a tangible moveable property that’s a ‘wasting asset’. Examples of wasting assets include bloodstock, livestock, motor cars and household furniture, and appliances (besides antiques). The exemption doesn’t apply to wasting chattels for business purposes to the extent that the expenditure on the assets qualified for capital allowances. Neither does the exemption apply to commodities. Life Assurance policies Unless purchased from another person or taken out with certain foreign insurers on or after 20 May 1993. Tangible movable property E.g. household furniture, where the consideration doesn't exceed €2,540. Transferring land to a child If you transfer land to your child to build a house which will be used as your child’s only or main residence, you won’t have to pay CGT on the transfer. A transfer in this case includes a joint transfer by you/and your spouse/civil partner to your child. This also includes a child whom you fostered. This must have been for at least 5 years before the child reached the age of 18. You must support the claim that you fostered the child by evidence from more than one person. To qualify for relief, the land must: Be 1 acre or less

Have a value of €500,000 or less

Your child may pay CGT on the disposal of the land from you to them in 2 specific situations: 1. Without having built a house on that land or 2. If they built a house on the land, having not occupied that house as their only or main residence (this must be for a period of at least 3 years). This rule doesn’t apply if the child disposes of the land to their spouse or civil partner. If I need to pay CGT, how much do I pay? This type of tax is a self-assessment tax and you must calculate the gain or loss arising on the asset you sold. Irrespective of whether a gain or loss was realised, you must report the gain or loss on a tax return. Just remember that you don’t need to pay tax on the first €1,270 of your gain. The rate of CGT also depends on the date of disposal, so after the tax-free amount you pay: Date CGT 6 December 2012 – present 33% 7 December 2011 – 5 December 2012 30% 8 April 2009 – 6 December 2011 25% 15 October 2008 – 7 April 2009 22% Up to and including 14 October 2008 20% Other rates apply for specific gains: ● Gains from foreign life policies and foreign investment products are charged at 40% ● Gains from venture capital funds are charged at 12.5% (individuals and partnerships) and 15% (companies) ● Windfall gains are charged at 15% Calculating the gain The gain/profit is usually calculated by the difference between the price you paid for the asset and price you sold it for. In some cases, for example where an asset is disposed of by gift or acquired on the death of the previous owner, the market value is substituted for the sale proceeds and actual cost. The following deductions can be considered when you're calculating your capital gain or loss:

Cost of acquisition Inflation index if the asset/property was purchased before 2003 Expenditures incurred for the purpose of enhancing the value. For example, if a property was bought in 2005 for €200,000 and in 2007 a small guest house for €80,000 was built in the yard of the property, for the disposal, the cost deducted for tax purposes would be: €280,000 Incidental expenses incurred on acquisition or disposal, such as solicitor's fees, advertising costs, auctioneer's fees, accounting fees, etc Disposal of shares Special rules apply if you calculate CGT on gains from the disposal of shares. A chargeable gain on the disposal of company shares is arrived at by deducting the cost of the shares (adjusted for inflation, as appropriate) from the net consideration received for the disposal of the shares. The calculation is relatively straightforward where a person acquires one block of shares and at a later date, without there having been any changes in the number or type etc. of the shares held, sells all or part of that holding. Often there will be increases in the shareholding, either because a person purchases additional shares of the same type or they receive additional shares under bonus or rights issues. There are special capital gains tax rules for these situations. If you need more information, you can contact our advisors at Taxback.com about your particular situation. Capital Gains Tax Reliefs There are a number of reliefs available relating to CGT in certain circumstances. This will help reduce the amount of tax due on the disposal. We've listed them below. 1. Indexation Relief Also known as ‘inflation relief’, this may be claimed if you owned the asset before 2003 and the market value of the asset at the time you became the owner is increased based on inflation calculated by the Central Statistics Office. For example, if land is being used for development, relief applies to the value that the land would have had at the date you became the owner when it wasn’t development land. Indexation relief was abolished for the tax year 2003 and any year thereafter, however you can get indexation relief up to and including 2002. If you acquired the property in 2003 or any subsequent year, then you can't avail of this relief. 2. Farm Restructuring Relief

If you dispose of land to make your farm more efficient then you may be able to claim this relief. Teagasc (the Agriculture and Food Development Authority) must issue a certificate in order for you to claim this relief. This certificate must state that you carried out the transaction for farm restructuring purposes. Conditions The first sale or purchase must be from 1 January 2013-31 December 2022.

The next sale or purchase must be within 24 months of the first sale or purchase.

You may also be able to claim relief where you exchanged land with another person. The amount of relief you can claim will be reduced if the land has a higher value than either: ● Land you purchased ● Land you received in exchange for your land 3. Revised Entrepreneur Relief This relief is for you if you made gains from the disposal of business assets. There is a lifetime limit of €1 million for this relief on gains made on or after 1 January 2016. This relief replaced a relief that applied for the years 2014 and 2015. With this relief, you must pay CGT at the rate of 10% on gains from the disposal of business assets. This is reduced from the normal rate of 33%. Up to 31 December 2016, gains from such disposals are charged at 20%. 4. Compensation and insurance money You must pay CGT if you receive compensation or insurance money, however if you use the money to replace an asset you may defer the CGT. The compensation you get reduces the cost of the asset. It can also reduce the replacement cost of the asset if you have lost it or it was destroyed. Example: Matthew receives compensation from his insurance for damage resulting for a recent flood. If he uses the money to repair damage to the property he can defer the CGT payment until the property is sold. 5. Land or buildings disposed of between 7 December 2011 and 31 December 2014 If you dispose of land between 7 December 2011 and 31 December 2014 then you may be due relief on CGT. You must have owned the land or buildings for at least 7 consecutive years. You can reduce the gain by the number of years you owned the property divided by 7 years, so if you owned land or buildings for 10 years, the gain will be reduced by seven tenths. You can claim this relief in respect of land or buildings in this country or in any European Economic Area (EEA) state. 6. Disposal of a business or farm other than to your child (Retirement Relief) If you’re 55 or older, you may be able to claim relief on disposing any part of your business or farming assets. Although this is called Retirement Relief, you don’t need to retire to avail of it. There are some circumstances in which you may qualify for this relief before 55: ● You’re unable to continue farming due to ill health ● You reach the age of 55 within 12 months of the disposal For disposals made up to and including 31 December 2013, you can claim full relief if the market value at the time of disposal doesn’t exceed €750,000. The threshold is €500,000 if both of the following apply: ● The disposal takes place on or after 1 January 2014, and ● you’re 66 or older If the market value is more than the above threshold, marginal relief may apply which limits the CGT to half the difference between the market value and the threshold. The threshold of €750,000 (€500,000 after 1 January 2014 for persons aged 66 or older) is a lifetime limit. If you exceed this threshold, relief will be withdrawn on earlier disposals. 7. Disposal of a business or farm to your child If dispose all or part of your business or farming assets to your child, you may be entitled to relief from CGT. Your child in this case can include: ● A child of your deceased child ● A niece or nephew who worked full-time in the business or farm for at least 5 years ● A foster child whom you maintained for at least 5 years The amount of relief depends on your age at the time of disposal: ● Up to 31 December 2013, you may claim full relief if you’re 55 or older ● From 1 January 2014, you may claim full relief if you’re between 55 and 65 ● If you’re 66 or older the relief is restricted to €3 million If your child disposes of the asset within 6 years, relief will be withdrawn and your child must pay CGT on the original disposal by you, in addition to the CGT on their own disposal. You need a CG50A (CGT Clearance Certificate) certificate if:

● You sell an asset on or after 25 March 2002 for over €500,000 ● You sell a house or apartment on or after 1 January 2016 for over €1 million. The buyer is obliged to withhold 15% of the purchase price from you if you don’t have a CG50A Form. The buyer will then give you a Form CG50B. This will allow you to reclaim the amount withheld by them from Revenue at a later date. You can apply for a CG50A using a Form CG50 and you must meet at least 1 of the following criteria:

● Be resident in the country ● Have paid CGT on the disposal, if it’s due Alternatively, you can use the following Tax Clearance Certificates:

● A current Tax Clearance Certificate ● A certificate of authorisation (C2 cert) ● A Tax Clearance Certificate issued specifically for the purpose of Section 980, Taxes Consolidation Act 1997 How do I pay Capital Gains Tax? If you're registered for income tax, you must report the capital gain/loss on a Form 11. If you're not registered for income tax, you can report it with Form 12 or complete a CG1 form. Having calculated the tax due you should send a cheque for that amount to the Collector General's office in Limerick (the payment should be sent with a CGT payslip with relevant details on the payment). CGT can also be paid online. Whether you submitted a payment or whether the gain is relieved from tax or a loss arises on the disposal, you must submit a tax return or CG1 Form to Revenue to declare any disposals. When do I need to pay? For 2009 and subsequent years the tax year is divided into a set of 2 periods for CGT payment purposes: 1.Initial Period, for disposals between 1 January-30 November You must pay CGT by 15 December of the same year. 2. The later period, Disposals between 1 December- 31 December You must pay CGT by 31 January of the next year. For disposals made under a written contract, the time of disposal is usually the date of the contract. Capital Gains Tax Frequently Asked Questions Q. What if I make a loss? A. If you make a loss on the sale of a property, you still need to declare it. However, it can be utilised against any capital gain incurred in the same or subsequent period. For example even if a loss was realised on the sale of your house, it can be used against any chargeable gain incurred on the sale of other assets such as shares, land etc. Q. Do I need to pay CGT on an investment property? A. Yes, you must pay CGT on any gain in this instance. The gain you make in this case is the difference between the purchase price and sale price. Q. What if I gift the investment property to my children? A. The market value at the date of the gift is used as sales proceeds and CGT is then calculated in the normal manner. Q. What if I sell part of my own garden to a developer? A.You must pay CGT on the gains if the development land exceeds €19,050. Normally your main residence has principal private residence relief, however if the garden is sold for great than its current use value, then this constitutes the sale of development land. The difference between the consideration and the current use value is liable to capital gains tax. Capital Acquisitions Tax (CAT) If you receive a gift, you may need to pay a 'gift tax' on it called Capital Acquisitions Tax. For example, if you receive an inheritance following a death, it may be liable to inheritance tax. These taxes are types of Capital Acquisitions Tax.

When do I need to pay CAT? You’ll pay Capital Acquisitions Tax if a gift is valued over a certain limit and various thresholds apply, depending on the relationship between you (the beneficiary) and the gift giver (the disponer).



Exemptions and reliefs

There are also a number of exemptions and reliefs depending on the type of gift or inheritance. For example, if you receive a gift or inheritance from your spouse/civil partner, then you’re exempt from Capital Acquisitions Tax. Also, the tax applies to property in Ireland even if the property isn’t in Ireland when either the person giving the benefit or the person receiving it are resident or ordinarily resident in Ireland for tax purposes. Different thresholds apply based on the relationship of the giver and the person who receives the gift. These thresholds apply for gifts/inheritance on or after 12 October 2016. Table: Capital Acquisitions Tax Thresholds Group A: €335,000 Applies when the person receiving the benefit is a child of the person giving it. This includes a stepchild or adopted child. Group B: €32,500 Applies where the beneficiary is a brother, sister, niece, nephew or lineal ancestor or lineal descendant of the disponer Group C: €16,250 All other cases These thresholds apply for gifts/inheritance on or after Group A Applies if the person receiving the benefit is a child of the person giving it. This includes a stepchild or adopted child. It can also include a foster child if the child resides with you and was under your care at your own expense for a period or periods totalling at least 5 years before the foster child became 18. This minimum period doesn’t apply in the case of an inheritance taken on the date of death of the gift giver or disponer. In this case the Group A threshold will apply provided that the foster child was placed in the care of the disponer prior to that date. Group A also applies to parents who take an inheritance from their child but only where the parent takes full and complete ownership of the inheritance. If a parent doesn’t have full and complete ownership of the benefit, or if a parent receives a gift, Group B will apply. Group B Applies where the beneficiary is a: Parent (however if a parent inherits from their child with full and complete ownership of the inheritance then it’s exempt from tax if in the previous 5 years, the child took an inheritance or gift from either parent that wasn’t exempt from Capital Acquisitions Tax. In this case, no tax needs to be paid even if the inheritance from the child is over the threshold). Grandparent, grandchild or great-grandchild (If a grandchild is a minor (under 18 years of age) and takes a gift or inheritance from his or her grandparent Group A may apply if the grandchild's parent is deceased). Brother or sister, and nephew or niece of the giver (Group A may apply if the nephew or niece has worked in the business of the person giving the benefit for the previous 5 years and meets the following criteria: -The nephew or niece is a blood relation rather than a nephew or niece-in-law -The gift or inheritance consists of property used in connection with the business, including farming, or of shares in the company. -If the gift or inheritance consists of property then the nephew or niece must work more than 24 hours a week for the disponer at a place where the business is carried on, or for the company if the gift or inheritance is shares. However if business is carried on exclusively by the disponer, their spouse and the nephew or niece then the requirement is that the nephew or niece work more than 15 hours a week. The relief doesn’t apply if the benefit is taken under a discretionary trust. Group C Applies to any relationship not included in Group A or Group B. If you receive a benefit from a relation of your deceased spouse or civil partner, you can be assessed in the same group as your spouse or civil partner would have been if they were receiving a benefit from their relation. For example, if you get a benefit from the father of your spouse/civil partner, the group threshold would be Group C. However, if you receive a benefit from the father of your spouse/civil partner and your spouse/civil partner is deceased, then the group threshold would be the same as for a child receiving a benefit from a parent, Group A. Valuation The valuation is the day that the market value of the property comprising the gift/inheritance is established. In the case of a gift, the valuation date is normally the date of the gift. If it’s an inheritance, the valuation date is normally the earliest of the following dates: ● Date the inheritance can be set aside for or given to the beneficiary ● Date it’s actually retained for the benefit of the beneficiary ● Date it’s transferred or paid over to the beneficiary The valuation date is typically the date of death in the following circumstances: ● Gift made in contemplation of death (Donatio Mortis Causa) ● Where a power of revocation hasn’t been exercised-This could happen if a person makes a gift of property but reserves the power to take back the gift. If he or she dies and this power ceases, the recipient then becomes taxable as inheriting the benefit. If the beneficiary had free use of the benefit before this, he or she will be taxed as receiving a gift of the value of the use of the property. Taxable value A gift acquires its market value at the time you become entitled to it. The value that’s taxable is then the market value after following deductions: Any liabilities

Costs and expenses that are properly payable

Including debts due to the inheritance or gift-for example, funeral expenses, costs of administering the estate or debts owed by the deceased

Stamp duty, legal costs. If you make a payment for the benefit or some other contribution in return for it, this may be deducted and is known as a 'consideration' and could be a part payment or payment of debts of the donor. If you don’t get full ownership but instead receive a benefit for a limited period, then a number of factors are taken into account to calculate the value. Rates Capital Acquisitions Tax is charged at 33% on gifts or inheritances made on or after 6 December 2012 (the rate was formerly 30%). This only applies to amounts of capital gain over the group threshold. Table: Exemptions from CAT Gifts/inheritances from a spouse/civil partner Payments or compensation for damages Benefits used only for the medical expenses of permanently incapacitated person Benefits taken for charitable purposes or received from a charity Lottery, sweepstake, game, or betting winnings Retirement benefits, pension, and redundancy payments are usually not liable The first €3,000 of the total value of all gifts received from one person in any calendar year is exempt. This doesn't apply to inheritances. If you receive a gift or inherit a house that was your main residence, it may be exempt from tax if you don’t own or have an interest in another house however there are conditions on how long you should be resident before and after receiving the benefit. If a parent receives inheritance from his/her child and takes complete ownership of the inheritance, it’s usually taxable under Group A. However it’s exempt if in the previous 5 years, the child took an inheritance or gift from either parent and it was not exempt from Capital Acquisitions Tax. Other exemptions relate to certain Irish Government securities, bankruptcy, heritage property, and support of a child or spouse. If you;re confused about Capital Acquisitions Tax you can email us at info@taxback.com or live chat with one of our friendly advisors here. The average Irish tax refund is €1076.17 GET YOURS NOW 3. Starting work in Ireland When you start employment in Ireland under the Pay As You Earn (PAYE) system you’ll immediately begin to pay tax (including PAYE, PRSI, and USC) on your income. You’ll have to pay a number of different taxes and the amount of tax you pay depends on your salary and personal circumstances. Tax is normally withheld from your wages and your employer then submits the tax to Revenue. Here are some tax terms you should understand when starting work in Ireland:

Pay As You Earn Tax (PAYE) PAYE is charged on the basis of your gross income. How it’s calculated depends on your yearly tax credits and income tax rate band. It can be calculated in 3 ways. 1. Cumulative basis Your yearly tax credits and income tax rate bands are evenly distributed over the course of the tax year.



2. Month 1/Week 1 Basis



USC You must pay Universal Social Charge (USC) if your gross income is more than €12,012 per year. USC is taxable on gross income (this also includes any additional pay such as Benefit-in-Kind and is calculated before any relief for certain capital allowances and pension contributions i.e. there is no relief from USC on pension payments). Read more about USC here. Tax Credits Tax Credits are used to reduce your income tax liability and the amount of credits available to you depends on your personal circumstances. However, everyone in PAYE employment is entitled to a PAYE credit of maximum €1,650. Anyone with an annual PAYE income (employment income, DSP income) under €8,250 is entitled to 20% of his/her income as PAYE credit (for example a person with total employment income for a year of €7,000 will be entitled to a €1,400 PAYE credit). Not all tax credits will be factored into payroll and in some cases additional tax credits may be claimed after the year end resulting in a refund. Tax credits represent euro for euro the actual money in your pocket i.e. a tax credit of €100 means a tax saving of €100. Read more about different types of tax credits and reliefs here. Tax Bands There are currently 2 rates of PAYE tax in Ireland, the standard rate of 20% and the higher rate of 40%. The first portion of your income is taxed at the standard rate and once you’ve earned a certain amount, everything after that is taxed at 40%. Your tax band confirms the amount you can earn before being taxed at 40% and this band is allocated on an annual basis, divided out into weeks or months to help spread your tax evenly.



How is your tax calculated? When you’re being paid, your employer will apply PAYE and USC tax based on information from Revenue on your employee Tax Credit Certificate. If Revenue doesn’t have up-to-date information on your personal circumstances (marital status, dependents, etc.), this could result in the incorrect allocation of tax bands and credits. So for example, if you get married/enter into a civil partnership, you should inform Revenue (with your PPS numbers) as quickly as possible because you could end up paying more tax than necessary.

PAYE tax deductions are calculated using one of the following 3 different methods:

1.Cumulative basis The purpose of the PAYE system is to ensure that an employee's tax liability is spread out evenly over the year. To ensure this, PAYE is normally calculated on a cumulative basis. This means that when your employer calculates your tax liability, they actually calculate the total tax due from 1 January to the date on which the payment is being made. The tax to be deducted in a particular week or month is the cumulative tax due from 1 January to that date reduced by the amount of tax previously deducted. The cumulative system operates for both tax credits and standard rate cutoff points. Any tax credits and/or standard rate cutoff point which aren’t used in a pay period are carried forward to the next pay period within that tax year. Another feature of the cumulative basis is that refunds can be made to an employee where, for example, the employee's tax credits and standard rate cutoff point have been increased. Tax is calculated at the standard rate of tax on pay up to the amount of your standard rate cutoff point. Any balance of pay above the cumulative standard rate cutoff point is taxed at the higher rate of tax. The tax calculated at the standard rate is then added to the tax calculated at the higher rate to arrive at the gross tax figure. The gross tax figure is then reduced by the amount of your individual tax credits to calculate how much tax due in that pay period. So, for example:

If you're a single person and you earn €41,600 per annum (€800 per week), Revenue will issue a Tax Credit Certificate to your employer showing the following figures: Standard rate cutoff point = €35,300 (per year), €678.85 (per week) Tax credits -= €3,300 (per year), € 63.46 (per week)

The rates of tax are taken as 20% (standard rate) and 40% (higher rate). The tax calculation for week number 1 would be: €678.85 @ 20% = €135.77 €121.150 @ 40% = €48.46 Gross tax = €184.23 Less tax credit of €63.46 Net tax due = €120.77 2. Non-cumulative basis (week 1/month 1 basis) In certain circumstances Revenue may direct your employer to deduct tax on a week 1 or month 1 basis. Where the week 1/month 1 basis applies, your pay, tax credits, and standard rate cutoff point are not accumulated for tax purposes. Your pay for each income tax week or month is dealt with separately. The tax credits for week 1 (or month 1) are applied to pay for each week (or month) and tax is deducted accordingly. You can’t receive any tax refunds in such cases. Where your employer holds a Tax Credit certificate on a cumulative basis and they subsequently receive a Tax Credit Certificate or tax deduction card issued on a week 1/month 1 basis, the new basis will apply from the first payday after the date of issue printed on the certificate.

3. Temporary basis & Emergency basis Your employer must use the temporary tax deduction basis if they’ve been given parts 2 and 3 of a current year or preceding year form P45, stating: Your PPS number and

that you weren’t on the emergency basis

And the employer has sent part 3 of the form P45 to Revenue and is waiting for a Tax Credit Certificate from Revenue. Entries on the temporary tax deduction card are made on a non-cumulative basis (week 1/month 1 basis) and the calculation of tax due each week (or month) is done on the same basis as in the week 1/month 1 procedure outlined above. Your employer should give you weekly or monthly tax credits and standard rate cutoff point shown on form P45 on a non-cumulative basis (week 1/month 1 basis). You can’t receive a refund of tax while using a temporary tax deduction card. If you can’t supply your P45 and PPS number when you start a new job, your employer will be obliged to deduct tax on an emergency basis. In short, this will mean you will pay a higher level of tax until you can supply your P45 and PPS number.

What happens when I start work for the first time? When you start your new job, your employer must deduct tax from your pay under the PAYE system. To make sure your employer deducts the right amount of tax, you should register the details of your new job with Revenue. It’s best to do this as soon as you accept an offer, even if it’s only part-time or holiday employment. This gives your employer and the tax office time to get things sorted out before your first payday. Revenue will then send a Tax Credit Certificate to you and your employer which shows the total amount of your tax credits and rate band. You should ask your employer if they have received this a week or two after you have registered the new job with Revenue or provide them with the one you received.

When do I start paying income tax? You’ll typically pay tax from your first payday. The amount depends on your income and tax credits. If your pay on any payday is less than your tax credits then you don’t pay tax on that day. If your pay is more than your tax credits, you pay tax on the difference. If you start work in the first week/month of the tax year your employer will deduct 1 week’s/month’s fraction of your annual tax credits from your first week’s/month’s pay and will deduct tax from the balance. So for example, if you start work in the 27th week of the tax year your employer will calculate your gross tax on your wages but you’ll have 27 weeks of tax credits to offset against this liability. This will continue until you utilise all your unused tax credits. What do I pay tax on? You pay tax on earnings of all kinds arising from your job including bonuses, overtime, and non-cash pay and you can read more about it here.

You don't pay tax on: Scholarship income

Interest from Savings Certificates, Savings Bonds, and National Installment Savings Schemes with An Post

Payments to approved pension schemes If you’re starting a job for the first time you should: 1. Give your PPS number (Personal and Public Service Number) to your employer so they can inform the tax office that you’re working.

2. Apply for a Tax Credit Certificate by registering for myAccount on the Revenue website. When you receive your myAccount password, you can register your new job using the Job and Pension service in myAccount. The tax office will then issue a Certificate of Tax Credits and cutoff point in two working days, which you can give to your employer.



Emergency tax When you start your new job, you should give your employer your P45 (parts 2 and 3) and your PPS number. Your P45 is a statement of your earnings, tax, Universal Social Charge, and PRSI deducted in your last job. When your new employer gets your P45, they’ll inform the tax office so a credit certificate can be sent to them. The best place to get your P45 is from your previous employer and your PPS number can be found on tax documents or communications from a social welfare or tax office. It may also be on payslips from previous employment. If you don't know your PPS number, you can contact your local social welfare office. If you can’t supply your P45 and PPS number, your new employer will deduct tax on an emergency basis and give you a temporary tax credit for the first month of employment, but tax deductions will be increased progressively from the second month onwards. The effect of emergency basis is that after 4 weeks no tax credits are given and tax is paid at the higher rate from week 9, regardless of the level of pay. If you’re starting your job for the first time, you should contact Revenue to request a Tax Credit Certificate to give to your employer. The average Irish tax refund is €1076.17 GET YOURS NOW What happens when I don't give my PPS number to my employer? Where you can’t supply a PPS number, your employer is obliged to calculate your tax at the higher rate with no tax credit. When you subsequently provide your PPS number, the normal emergency basis will apply to the earnings in that and subsequent weeks. If emergency tax was deducted from you, you can apply for a refund as soon as you become unemployed. Alternatively this can also be repaid via payroll if you provide your new employer with your P45. You can see the emergency rates in the tables below.

Tax Rates 2015-2020 Standard rate 20% Higher rate 40% Emergency rates where you provide your PPS number 2020 Weekly Paid Weekly Cutoff Point Weekly Tax Credit Weeks 1 to 4 €679 €0.00 Weeks 5 onwards €0.00 €0.00





Emergency rates where you provide PPS number 2020

Monthly Paid Monthly Cutoff Point Monthly Tax Credit Month 1 €2,942 €0.00 Month 2 onwards €2,942 €0.00

Where you provide a PPS Number 2019 Weekly paid Weekly Cutoff Point Weekly Tax Credit Weeks 1 to 4 €678.85 €32 Weeks 5 to 8 €678.85 €0.00 Week 9 onwards €0.00 €0.00 Second or multiple jobs If you take up a second job, the PAYE system will treat one job as your main employment. Revenue will then give your tax credits and rate band to that job. You should contact Revenue as soon when you start your second job to ensure you receive a separate Tax Credit Certificate for each employer. Without this, your new employer may deduct the incorrect amount of tax from your pay. If you’re receiving a pension from a former employer (occupational pension), this is taken to be your main employment for tax purposes and any other jobs you have are treated as second or multiple jobs. Splitting tax credits When you start a 2nd job you can: Leave all your tax credits, tax rate band, and Universal Social Charge (USC) rate band with your main job Or divide your tax credits, tax rate band, and USC rate band between your jobs in any way you want Or transfer any unused tax credits, tax rate band, and USC rate band to your other jobs It’s important to remember that splitting your tax credits and rate bands between jobs won’t change the total amount of tax you pay. However it can ensure you pay an even amount of tax in each job and get the full benefit of your tax credits and rate bands during the year. Some tax credits or deductions such as flat-rate expenses can’t be split as they are given only for specific jobs. What if I've been out of work? If you’ve been out of work for a while, you may not have a P45. In this case, you should contact your local revenue office as soon as possible so your tax credits and cutoff point can be accessed. Your spouse/civil partner may be using the tax credits you’re due if you’re being assessed as a married couple. If your new role is temporary then it might not be worth looking at these tax credits for that year. However, you’re entitled to a PAYE allowance and expenses in your own right if you qualify for them. These can be set against your income and aren’t transferable to your spouse. If your spouse isn’t in receipt of taxable income you may be able to claim additional tax credits. Since 2019 you will no longer get a P45 when you leave a job. Instead, your employer will enter your leaving date and details of your final pay and deductions into Revenue's online system. Returning to work after unemployment If you’re unemployed before starting your first job or unemployed between jobs, then you might be able to claim a tax refund immediately. This is typically the case if you were unemployed for a period of at least 4 weeks. If you were taxed on Emergency basis you may apply immediately for a refund on becoming unemployed. If you were unemployed between jobs, you may end up with unused tax credits, which could result in a tax refund, so it’s worth reviewing your tax position at the end of the year. If you were on Jobseeker’s Benefit or Illness Benefit while out of work, you should contact your local tax office when you resume employment. If you’re returning to work after a significant gap, you need to ensure your tax and PRSI deductions from your wages are correct. Your new employer must deduct tax and USC from your pay from the beginning of your employment. To make sure your tax is dealt with properly from the start you should: Give your employer your PPS number and ask for your Employer's Registered Number

Register the details of your new job with Revenue

Ideally you should take these steps as soon as you accept an offer of a job. This will give your employment and the tax office time to get things sorted. When you’ve registered the details of your new job, Revenue will send your employer a Tax Credit Certificate showing the tax credits your employer deducts from your tax bill. Otherwise your employer will tax you on an emergency basis. PRSI and unemployment. Giving your employer your PPS number will also allow your social welfare contributions to be recorded along with any contributions you paid in previous periods of employment. If you’ve been out of work for a number of years however, you won’t qualify for short-term social welfare payments such as Illness Benefit immediately. You’ll be immediately covered for Injury Benefit if you’re unable to work due to an accident at work. How soon you qualify for the various social welfare benefits will depend on the type of benefit and circumstances before returning to work.

Medical cards and unemployment If you’re unemployed and returning to full or part-time work, you can keep your medical card for 3 years (from the date you start work) as long as you’ve been getting one of the following allowances or benefits for 12 months or more:

Jobseeker's Benefit

Jobseeker's Allowance

Illness Benefit

Invalidity Pension

Disability Allowance

Blind Pension or

Have been on an employment incentive scheme or educational opportunity scheme Rent Supplement When you re-enter employment, if you’ve been unemployed or not in full-time employment for at least 12 months and are assessed as in need of housing under the Rental Accommodation Scheme, you may be entitled to retain your Rent Supplement. Understanding your payslip Your employer may prefer to pay your wages on a weekly or monthly basis. Regardless of how you’re paid, it’s likely your employer will send you a payslip when money is transferred into your account. We've explained the various terms that you'll see on your payslip below. Sample Payslip Your payslip will include a number of details including: 1. PPS Number Your Personal Public Service (PPS) number is a unique identifier which is used for: tax purposes

when you need to access social welfare benefits

and for public services and information in Ireland





2. PRSI Class Your PRSI Class is dictated by your employment and influences the amount of PRSI contributions you pay. There are 11 different classes. See a list of classes here.



3. Weekly/monthly cut-off

The amount you earn each time you’re paid before you pay the higher rate of tax. Every time you’re paid, you pay tax at the standard rate up to your standard rate cut-off point.



4. PAYE Pay As You Earn (PAYE) is a system of deducting income tax, PRSI, and USC from your income.



5. Tax Credit Every person is entitled to tax credits. These credits differ from person to person and are based on personal circumstances. Your tax credits are allocated each year and tax is calculated as a percentage of your income. Tax credits are deducted from this to leave the amount of tax you’ll pay. Any unused credits are forwarded to your next pay period(s), so the tax credit will reduce your tax by the amount of the credit.



6. PRSI Most employees in Ireland need to contribute Pay Related Social Insurance (PRSI). These deductions go towards Social Welfare benefits and pensions. How much you pay depends on your job, earnings, and PRSI class. 7. USC If you earn more than €12,012 per year (gross), you’ll pay the Universal Social Charge (USC). 8. Gross Pay Gross Pay is the total amount you’re paid before any deductions are made.



9. Net Pay Here you’ll find the total amount you’re paid after tax, PRSI, and other deductions.



10. Deductions The total amount of money deducted in that pay period. Table: Other standard payslip terms explained Company name Your employer’s name Current period Indicates this payslip is for this pay period. Emp name Your name goes here Frequency How often you get paid. So, for example, M = Monthly, W = Weekly, F = Fortnightly, 4 = Four-Weekly, B = Bi-Monthly Pps no Your Personal Public Service Number Emp no If you have an employee number you can find it here Dept Department you work in will be detailed here Cost Details of the cost centre allocated to you by your employer Pay period Pay period the payment relates to. If you’re paid monthly the number 2 will indicate February. If you’re paid weekly, 2 will indicate the second working week of the year Pay date Date you would receive the net pay in your account is outlined here T/N/G T =Taxable payment or deduction. N = net payment or deduction. G = gross deduction Other deductions These are voluntary contributions Pension Pension contributions you made AVC Additional Voluntary Contributions towards pension Health Health insurance contribution for dependents Summary of pay A Summary of your pay for this period Gross pay Total taxable income for this period Total deds Total deductions for this period. Statutory and Voluntary Contributions Non-tax adj Details of Non Taxable Adjustments Rounding If any rounding was carried out it will be detailed here Net pay Amount you’ll receive after paying all statutory taxes and voluntary contributions Pay method The way you get paid. PayPath directly to your bank or by Cheque Cumulative details This sections outlines your year-to-date earnings and tax allowance summary Non-tax deds Pension/PRSA and other gross deduction contributions this year Taxable pay Taxable earnings in the current year Tax credit Personal Tax Credit used this year Std. Cut-off Standard Rate Cut-Off Point used this year Tax paid Tax paid (PAYE) so far this year Tax/PRSI Details Tax Status and PRSI Contribution details Tax code Tax code used to calculate your PAYE tax. N = Normal/Cumulative Basis, W = Week 1/Month 1 Basis, E = Emergency Basis Emr st period Indicates if you started on emergency tax basis this year Tax Credit Tp Personal Tax Credit's value applied Pay rel code PRSI Class at which PRSI is calculated Total ins weeks Total number of insurable weeks to date you’ve been in this employment from start of the year Comments Outlines details of employer contributions Emp'er PRSI per Employer PRSI Contribution this period Emp'er PRSI td Employer PRSI Contribution for the year to date Tp pener Amount of Employer Pension/PRSA Contribution this period Ty pener Amount of Employer Pension/PRSA Contribution paid in the tax year Bik ytd Details of Benefit in Kind paid this year

Understanding Your P60

Your P60 is basically a document that summarises your tax, PRSI and USC deducted by your employer in the relevant tax year. You should get a P60 by 15 February each year from your employer if you were employed on the last day of that year i.e. 31 December.

If you leave employment during the tax year, then you’ll get a P45 instead.

Employers must deduct tax based on the Tax Credit Certificate issued to them by Revenue. So it's important Revenue has the correct information for you. At Taxback.com, we can check your P60 to see if you've overpaid tax.

A P60 isn't a Revenue assessment of your position or an indication of your final tax liability for the year.

Article: Read how your P60 can make you money here

Sample P60





Top portion – Personal details

Here you’ll find the year the file relates to as well as a number of your personal details including:

Name

Address

PPS number

Tax credit

Rate band information

Note: The tax credit and band are merely a summary of what’s been applied by payroll.

Section A – Taxable pay

Details of your gross taxable pay for the year. It’s important to remember the figure here will be after pension deductions or similar contributions made through payroll. Also, if you changed jobs during the year, your pay details in this section will be split into the salary paid by your previous employers and what you’ve been paid by your current employer.

Section B – Tax deduction

Details your total tax deduction in the year. Again, the tax paid details will be subdivided by employer if you changed jobs during the year.

Section C – Local Property Tax (LPT)

Here you will find details of LPT deductions.

Section D – Pay for Universal Social Charge (USC)

In section your total pay for USC purposes is outlined.

Section E – USC Deducted

Here you'll see how much of your pay was subject to USC in the year. This figure may not be the same as the amount of pay subject to tax as it will be prior to the deduction of pension contributions.

Section F – PRSI in this employment

This outlines exactly how much PRSI you paid in the previous tax year.

The bottom section

The last section is where you can see details of your employer’s name, registration number, and address.

You can send your P60 to info@taxback.com to help us determine if you can claim a PAYE tax refund.

As part of PAYE modernisation, P45s and P60s have been abolished and replaced with an online system.

For the year 2019 and in future, you no longer get a P60 at the end of the year. Instead, an Employment Detail Summary will be available to you.

An Employment Detail Summary contains details of your pay as well as the income tax, PRSI and Universal Social Charge (USC) that has been deducted by your employer and paid Revenue. It also records your Local Property Tax (LPT) deductions (if you choose to have the LPT deducted from your pay).

It is based on information given to Revenue by your employer. You may have other tax liabilities that are not listed.

Check out this interactive example with full explanations here.

Calculating how much tax you'll pay in 2020

While your payslip and your P60 will both tell you how much tax you pay currently, you can use our calculator to work out what your pay once the announcement in Budget 2020 have kicked in which include a cut to USC and expension of income tax bands:

Leaving Ireland and tax

If you emigrate it’s a good idea to bring as many important documents with you as you can in addition to your passport.

Table: Important documents Your birth certificate Driving licence Student card Any visas or work permits you may need European Health Insurance Card Any relevant certificates from education or training courses References for work A record of your employment and social insurance contributions in Ireland can all be extremely useful to have as you're setting up, you can do this by filling out a U1, see below



Where can I find a record of my employment in Ireland?

Before you leave Ireland, you should get a Form S1 (certificate of entitlement to healthcare if you don't live in the country where you're insured) and Form U1 (statement of insurance periods to be taken into account when calculating an unemployment benefit) from the Department of Social Protection.

These forms have details of your Irish social insurance record and you’ll need them if you want to claim sickness, maternity, or unemployment benefits in another European country.

This is what the first page of the U1 form looks like:

Processing your application can take a few months as sometimes the department needs to make enquiries with former employers. The more documents you can supply (including your P45 and P60) the easier it's to issue the forms!

If you don’t bring your S1 or U1 with you or if you haven’t received them and you need to claim a sickness or unemployment benefit in another European country, the country you’ve moved to can contact Irish authorities to get a record of your insurance contributions.

Is my Jobseeker’s Benefit payment transferable?

If you’ve been getting Jobseeker’s Benefit in Ireland for at least 4 weeks, it’s possible to transfer it to another European country for up to 13 weeks if you’re looking for work there. Your Jobseeker’s Benefit will be paid directly to you at the same rate as it was paid in Ireland.

How to transfer the benefit

To do this, you must inform your local social welfare office at least 4 weeks in advance of leaving Ireland and ask for a completed Form U1. You must bring this form to the social services office of the country you’re travelling to and register with the unemployment services there within 7 days of arrival.

You may transfer your Jobseeker’s Benefit payment more than once while you’re unemployed as long as you don’t exceed the total maximum of 13 weeks.

If you return to Ireland on or before the expiry of the 13 weeks in the other European country, you’ll still be entitled to Jobseeker’s Benefit in Ireland.

However, it’s important to be aware that if you transfer your Jobseeker’s Benefit payment to another European country and stay there for longer than 13 weeks, you’ll lose your entitlement to the payment if you return to Ireland. You’ll need to apply for a means tested payment instead (for example Jobseeker’s Allowance).

Means tested social assistance payments can’t be transferred to another country.

Reclaiming tax when leaving Ireland

If you worked and paid tax since 1 January and you’re now unemployed and/or leaving Ireland, you may be entitled to a tax refund if you have unused tax credits.

If you haven’t paid any tax, you won’t be due a refund.

The average Irish tax refund from Taxback.com is €1076.17 so it’s worth your while investigating if you have any tax refund entitlements. You can use our calculator to estimate a refund.

Can I get a refund of my PRSI contributions?

You can only receive a refund of PRSI contributions in limited circumstances, usually in cases where contributions have been paid in error or paid at the wrong rate.

What happens to my PPS number when I leave Ireland?

In short, nothing. Your PPS number is your unique reference number and is yours for life. You can use the same number if/when you come back to Ireland.

Tax abroad

Tax laws vary from country to country and it’s important to be aware of them. Be aware that unless you reside for a whole year abroad, you may have to pay tax on your earnings in Ireland.

How much tax will I pay abroad?

You’ll have to pay varying levels of tax depending on the country you move to. For example, if you move to Dubai or the Cayman Islands it’s likely that you’ll pay very little income tax. However, you’ll find a relatively similar tax burden to Ireland in most other popular destinations.

You may be able to reclaim some tax if you work abroad. For example, the average tax refunds with Taxback.com are $2600 for Australia, £963 for the UK and $904 for Canada.

Split-Year Treatment

If you’re moving abroad and will be resident in Ireland the year you leave and non-resident the next year, you can claim 'Split-Year treatment' in the year of departure. This means you’ll be treated as resident up to the date of departure.

All employment income up to that date is taxed in the normal way and your employment income from the date of departure is ignored for Irish tax purposes. Generally, full tax credits are allowable on a 'cumulative basis' which means you receive a full year of tax credits even though you’ve been resident here for only part of the year.

Similarly, if you’re coming to live in Ireland or returning after living abroad for a few years and you’ll be resident here for the next year, you can claim Split-Year treatment in the year you arrive.

This means you’re treated as resident in Ireland from the date you arrive and all your employment income from that date is taxed in the normal way. Split-Year treatment only applies to employment income.

If you’re leaving Ireland, to qualify for SYT you must be resident in the year of departure and intend to be non-resident in the year following your departure. You don’t have to wait until the tax year following the year you arrive or depart. However you must satisfy Revenue that you fulfil the intended residence requirements for the following tax year. A letter confirming your employment or an employment contract are preferred forms of proof. If you're unsuccessful, you can reapply at the end of the following tax year.

If you have successfully qualified and fulfilled your intentions, you'll be taxed as resident in the state for the appropriate period. You should be aware that if you qualify for Split Year Treatment and don't fulfil your intention for some reason (e.g. ill health or cancellation of employment), the ruling will stand regardless. This could leave you liable to pay Irish tax on foreign employment income for the following year, if you were resident in the state for the previous tax year.

If you need help claiming Split-Year relief you can contact our friendly team at info@taxback.com or live chat here.

Tax treaties

Ireland has tax treaties with more than 70 countries to ensure if you earn income that is taxed in one country, it won’t be taxed again in another country.

Under a tax treaty, a tax credit or exemption from tax may be given on some kinds of income, in either the country of residence or the country where you earned the income.

Redundancy

If you’re made redundant, you may receive a lump sum payment from your employer however if all of your lump sum is statutory redundancy, (subject to a maximum lifetime tax-free limit of €200,000), no tax will be due.

You’re entitled to one of the following tax exemption options on your redundancy payment, whichever is the higher:





1.Basic Exemption

The Basic Exemption due is €10,160 plus €765 for each complete year of service (this doesn't include statutory redundancy which is tax-free).

2. Basic Exemption plus Increased Exemption

An additional €10,000 (called the Increased Exemption) is also available in 2 circumstances.

a. If you haven't received a tax-free lump sum in the last 10 years and you’re not getting a lump sum pension payment now or in the future.

b. If you’re in an occupational pension scheme, the Increased Exemption is reduced by any tax-free lump sum from the pension scheme you may be entitled to receive.

3. Standard Capital Superannuation Benefit (SCSB)

This is an additional relief that typically benefits people with higher earnings and long service. It can be used if the following formula gives an amount greater than either basic exemption or Basic Exemption plus Increased Exemption.

Calculation of tax in redundancy

As mentioned above, a certain amount of your redundancy payment is tax-free and the balance will be taxed as part of the current year's income. The amount of your lump sum subject to tax is not subject to PRSI, but the Universal Social Charge may be payable.

Leaving employment to returning to education

More and more people are choosing to leave employment and return to education. If you leave a job to upskill, you may also be entitled to claim tax back.

For example if you pay fees to attend college, university or a training course, you may be able to claim relief. The limit on tuition fees you can claim is €7,000 per course and you’ll receive relief at the standard rate of tax which is 20%.

If you’re studying more than one third level course at the same time, the amount of qualifying fees is restricted to €7,000 per course and a single disregard amount (further detail below) is applied to the claim.

Note: No relief is available for examination fees, registration fees or administration fees.

Every claim is subject to a single disregard amount each tax year. This amount is taken away from your qualifying fees so you can’t get relief on that portion of the fees.

If you’ve paid fees for more than one course or student, you only subtract the disregard amount once. There are different disregard amounts for each year and for fulltime or parttime courses.

For example, the disregard fees for 2019 are Year Full-time course Part-time course 2020 €3,000 €1,500

Restrictions

You can’t claim relief for fees funded by grants, scholarships or your employer. If you get partial funding, you must declare it to Revenue when you claim tax relief.

If you’ve already claimed tax relief for tuition fees and the fees are later refunded by the college, you must tell Revenue within 21 days of receiving the refund.

Undergraduate courses

To qualify for relief, an undergraduate course must:

be carried out in an approved college

last at least 2 academic years in duration

Postgraduate courses

To qualify for relief, a postgraduate course must:

be carried out in an approved college

last at least 1 academic year but no longer than 4 academic years

lead to a postgraduate award based on either a thesis or an examination

To claim relief on a postgraduate course, you must already have an undergraduate degree or equivalent qualification.

Postgraduate courses in publicly funded or duly accredited universities and institutions of higher education in non-European Union (EU) Member States also qualify for relief.

Payment of tuition fees

If you pay tuition fees in instalments, you can claim relief on your tuition fee instalments either:

in the tax year the academic year commenced

or in the tax year in which you paid the instalment

If you claim relief for the tax year when the instalment was paid, you must subtract then disregard the amount that applies to that year. It’s often more beneficial to claim relief in the tax year that the academic year commenced.

Alternatively, if you pay college fees in advance, relief can be allowed as follows:

If details of actual amounts due for each year are available, then that amount is allowed each year for the duration of the course. This is subject to the ceiling of €7,000 per year along with the disregard amount that applies.

If no breakdown of fees is available, the relief can be divided evenly over the duration of the course.

You can contact us or apply with Taxback.com here to find out for free if you're due tax back on tuition fees.

Retirement and Pensions

You can get income tax relief (at your highest income tax rate) against earnings from your employment for your contributions (including Additional Voluntary Contributions (AVCs)) to the following types of pension plan:

Occupational pension schemes

Personal Retirement Savings Accounts (PRSAs)

Retirement Annuity Contracts (RACs)

some overseas plans

Note: There’s no relief from USC or PRSI for employee pension contributions.

Tax relief for employee pension contributions is subject to 2 main limits:





Age-related earnings percentage limits

You can get tax relief on your pension contributions up to the relevant age-related percentage limit of your earnings in any year. This relief is only from the employment in respect of which the contributions are made.

The age-related earnings percentage limits are:

under 30: 15%

30-39: 20%

40-49: 25%

50-54: 30%

55-59: 35%

60 or over: 40%.

The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.

Personal Retirement Savings Accounts (PRSAs)

Tax relief for PRSA AVCs is based on the age-related percentage limit of the income from the employment in question as reduced by any employee contributions to the pension scheme relating to the employment.

You may pay a once-off or special pension contribution after the end of a tax year but before the following 31 October.

If you do you can choose on or before 31 October, to have the tax relief for the contributions allowed in the earlier tax year.

Overseas pension plans

If you’re coming (or returning) to Ireland, you can get tax relief for pension contributions made to pre-existing plans with a pension provider in another EU Member State.

Where the relief applies, the contributions to the overseas plan are treated as if they were made to an occupational pension scheme, PRSA or RAC, as appropriate.

Taxation of social welfare pensions

Social welfare pensions paid by the Department of Social Protection (DSP) are liable to tax but not USC or PRSI. The DSP gives Revenue the information on the taxable amount of these pensions.

How the tax is collected depends on whether you’re a PAYE taxpayer or self-employed. If you’re PAYE taxpayer, your annual tax credits and rate band on your Tax Credit Certificate (TCC) will be reduced to take account of your pension.

If you’re self-employed, you should include details of any social welfare payments on your Form 11 and pay the tax due when making your annual tax payment.

Taxation of private pensions

All private pensions and occupational pensions are taxable sources of income. They are liable to income tax, USC, and PRSI in the same way as employment income. Your pension provider will deduct the tax from each payment it makes to you.

Avoiding emergency tax on your private pension

Your pension may be paid by your former employer or through a pension company. To avoid paying emergency tax on your private pension, be sure to get a Tax Credit Certificate in the name of your pension provider.

A widowed or surviving civil partner may be getting a private pension from a deceased spouse's or civil partner's pension provider. If this is the case, to avoid paying emergency tax, you’ll need to get a Tax Credit Certificate in the name of the pension provider.

Taxation of foreign pensions

Some foreign pensions aren’t taxable in Ireland. These are foreign occupational and social security pensions that wouldn’t be taxable if you lived in the country that granted the pension. However if you have a foreign pension (including UK and US pensions) it will generally be counted as a taxable source of income in Ireland and will be liable for income tax, USC, but not PRSI.

If you’re a PAYE taxpayer, contact Revenue and inform them of your foreign pension. They’ll reduce the annual tax credits and rate band on your Tax Credit Certificate to take account of it. If you’re self-employed, you should include details of the pension on your Form 11 and pay the tax due when making your annual income tax payment.

Tax-exempt pensions

The following pensions are exempt from tax:

Wound and disability pensions and all gratuities granted in respect of wounds or disabilities under the Army Pensions Acts - except any part of the pension that not attributable to disability

Military gratuities and demobilisation pay granted to officers of the National Forces or the Defence Forces of Ireland

Pensions and other allowances payable to War of Independence veterans and their families

Magdalene laundry payments

Foreign occupational and social security pensions that would not be taxable if the recipient lived in the country that granted the pension

The average Irish tax refund is €1076.17

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4. Tax Credits, Allowances and Reliefs

Tax Credits

Tax credits reduce the amount of tax you pay during the tax year. You’re automatically given certain credits and must claim others. You'll see them on your Tax Credit Certificate.

Tax Reliefs

Tax reliefs reduce the income on which you pay tax, which may result in a refund of tax paid and the amount of relief depends on which rate of tax you pay. If you’re paying tax at the higher rate of 40%, then your income is reduced by the relief and the balance is taxed at 40%.

Otherwise it's reduced by the relief and the balance taxed at the standard rate of 20%.

Tax Allowances

You may get a tax refund for specific expenses for items you need for work, like laundry expenses if you wear a uniform for your job. The value of a tax allowance will depend on whether it’s allowed at the highest rate of income tax that you pay or is restricted to the standard 20% rate.

For example:

Take a claim of €100. If you pay tax at 40% and you can claim it at the highest rate of tax you pay, it will reduce your tax by €40 (€100 x 40%).

If the highest rate of tax you pay is 20% or the relief is restricted to the standard rate, then the claim of €100 will reduce your tax by €20 (€100 x 20%).

Tax Exemptions

You may be exempt from paying tax on certain types of income, depending on your circumstances.

List of Tax Credits, Allowances and Reliefs

You may be entitled to certain credits, allowances and reliefs to reduce you tax liability. We've detailed them below.

The Cycle to Work scheme

The Cycle to Work Scheme is a tax incentive scheme to encourage employees to cycle to and from work. Under the scheme, employers can pay for bicycles and relevant equipment up to a maximum value of €1,000 for their employees and you can pay this back through a salary sacrifice arrangement of up to 12 months.

The scheme means that you aren't liable for tax, PRSI or the Universal Social Charge on your repayments so can make a good saving!

Note: The scheme can be applied once every 5 years.

Taxsaver travel tickets

Taxsaver incentivises people to use public transport (including LUAS, DART, and Dublin Bus) to and from work by offering travel tickets at a reduced expense. If you want to take advantage of the scheme, it’s best to contact your employer and ask them to register (if they haven't done so already) at Taxsaver.ie.

Once registered, your company can order your ticket online. The cost of the ticket is taken directly from your salary and you can save between 31% and 52% on the regular price depending on ticket type and tax band.

If you plan to claim tax expenses, remember that you’ll need to keep all relevant receipts and invoices as Revenue may need to verify them.

Personal Tax Credit

The personal tax credit is granted to all taxpayers but the amount you get varies depending on your personal circumstances.

Basically you'll get the Personal Tax Credit if you're resident in Ireland and how much you get depends on whether you're:

single

married or in a civil partnership

widowed or a surviving civil partner

separated

divorced or a former civil partner.

Single person

You can get this credit if you're single, separated, divorced or a former civil partner. You're also entitled to it if you want to be assessed under separate treatment as a married couple or civil partnership.

Married person or civil partner

You can get the credit if you're married or in a civil partnership and if you're:

jointly assessed

separated, divorced or a former civil partner and you pay enough voluntary maintenance to maintain your spouse or civil partner

Widowed person or surviving civil partner You're also due this credit if you're a widowed person or a surviving civil partner. The amount due to you depends on when your spouse or partner died and whether you have any dependent children. You receive a higher tax credit in the year of bereavement. It's the same amount as the married person or civil partner credit. You may claim the Widowed Person or Surviving Civil Partner with Dependent Children Credit for 5 years. This starts the year after your spouse or civil partner dies.

Table: Personal Tax Credit Rates Your status 2020 Single person €1,650 Married person or civil partner €3,300 Widowed person or surviving civil partner with dependent child(ren) €1,650 Widowed person or surviving civil partner without dependent child(ren) €2,190 Widowed person or surviving civil partner - year of death €3,300 Widowed parent - 1st year after death €3,600 Widowed parent - 2nd year after death €3,150 Widowed parent - 3rd year after death €2,700 Widowed parent - 4th year after death €2,250 Widowed parent - 5th year after death €1,800

Married or a Civil Partners Person's Credit

If you get married or enter a civil partnership, you and your spouse will be treated as single people for tax purposes that year. However, if the tax you pay as two single people is greater than the tax that would be payable if you were taxed as a married couple, you can claim the difference (in other words, you can claim a tax refund).

Refunds are due from the date of marriage and calculated after the following 31 December. So, if you get hitched in 2020, any refund will be calculated after 31 December 2020.

You can read more about the tax treatment of married couples and civil partners here.

Employee Tax Credit

If you’re taxed under the PAYE system, you can claim an employee tax credit on your income, including:

wages

occupational pensions

Department of Social Protection (DSP) pensions

certain foreign pensions.

How much can I claim?

The amount you can claim will depend on your income and the maximum for 2020 is €1,650. If your yearly income is €8,250 or more you’ll be entitled to the full amount.

If your income is below €8,250 then the credit is capped at 20% of your income.

For example, if your yearly income is €5,000 this amount of credit is €5,000 @ 20% = €1,000

If you’re married/in a civil partnership and both of you have PAYE income, you can both claim the credit, however you can’t transfer the credit to your spouse or civil partner.

You only get one employee tax credit per year no matter how many jobs you have.

This credit can’t be claimed by:

proprietary directors, their spouse or civil partner

the spouse, civil partner or child of a person paying the income

the spouse, civil partner or child of a partner in a partnership

A proprietary director is a director who:

is the beneficial owner of a company

can directly or indirectly control more than 15% of the ordinary share capital of a company

Children of proprietary directors can claim the credit if:

their job qualifies in a Pay Related Social Insurance (PRSI) class

PAYE has been deducted from their income

the child gives all of their time to the job

they’re paid at least €4,572 per year

Earned Income Credit

The Earned Income Credit is a separate credit to the Employee Tax Credit in that it can also be claimed by people who are self-employed. Available from 1 January 2016, if your income qualifies for the Employee Tax Credit and Earned Income Tax Credit, the combined value of these credits cannot exceed the maximum of PAYE Credit.

The credit can't be transferred between spouses or civil partners. If your income qualifies for the Earned Income Credit and Employee Tax Credit, the combined tax credits can’t be more than €1,650.

Single Person Child Carer Credit (SPCCC)

This tax credit is €1,650 per year and will reduce the tax you pay by €31.73 per week. You may also be entitled to an increased rate band of €4,000 per annum. This is an additional €4,000 at the 20% tax rate. If you’re due the credit, then you’re automatically due the increased rate band.

This credit is for people looking after children on their own and came into effect on 1 January 2014. It replaces the One-Parent Family Credit which was abolished from 31 December 2013.

Who is it awarded to?

The credit is typically given to the person with whom the qualified child lives with for the majority of the year (over 6 mts). This person is called the primary claimant. However the primary claimant can give the entitlement to a secondary claimant who meets the qualifying conditions if the child lives with that person for more than 100 days in a year.

Only one parent can claim the SPCCC in a tax year.

You can’t claim the SPCC if you:

Are jointly assessed as a married person/civil partner

Are married/in a civil partnership (unless separated)

Are cohabiting

Are in a year in which you became widowed or a surviving civil partner and received the personal tax credit of €3,300. In this case you can claim in subsequent years.

To qualify as a primary claimant you must:

Live with the qualifying child or children for more than 6 months of the year

Be the child’s parent or person who maintains the child at their own expense for the whole or greater part of the year

If both parents have equal custody by court order, the credit is determined by which parent gets child benefit from the Department of Social Protection.

A child living away from home while attending college is considered a qualifying child if they’re still maintained by the claimant and live at home outside of term-time.

Secondary claimant

The primary claimant can give up their Single Person Child Carer Credit in favour of a secondary claimant but the child must live with the secondary claimant for at least 100 days in the year.

The secondary claimant must meet the same conditions except for the condition that the child lives with him or her for the greater part of the year. For the purpose of this limit a day can include the greater part of a day.

So, for example, if a child stays with the secondary claimant from Saturday morning until Sunday evening, this can be counted as 2 days

A qualifying child is:

born in the tax year or

aged under 18 at the start of the tax year or

if over 18 at the start of the tax year, is in full-time instruction at any university, college, school or other educational establishment

A qualifying child can also be someone over 18 who is permanently incapacitated either before age 21 (or after age 21 while they were receiving full-time instruction). There is an additional Incapacitated Child Tax Credit.

A qualifying child may be your own child, an adopted child, stepchild or any child you support and maintain at your own expense. However, foster children cannot be qualifying children.

If you surrender your credit to a secondary claimant, this arrangement will remain in place until you withdraw it and when you withdraw the credit, it will be restored at the beginning of the following tax year.

Can both parents claim a Single Person Child Carer Credit?

No. Only one credit for a qualifying child is available to the primary clamant.

However, if you're a primary claimant with more than one qualifying child and you surrender your entitlement to the SPCCC, two or more secondary claimants can claim the credit provided they are caring for qualified children for more