In our article this week Noelle O’Connor, Director of Business Services discusses tax saving measures that will help everybody in all aspects of their business and personal life.
Now that the kids are back to school/college and your wallets have been emptied I thought it best to start the new term with a summary of tax tips that can help you save money if utilised correctly.
- Contribute to a pension and receive tax relief at 41% in 2014 and 40% in 2015 (provided you are paying tax at the top rate). Age and income limits do apply but this is an efficient method of saving tax.
- Medical expenses – you can claim tax relief at 20% on amounts paid for GP visits, Physiotherapy, prescriptions, food for coeliac/diabetics, travel expenses to/from hospitals and some dental expenses (Form Med 2 required to be signed by your dentist). A GP visit costing €50 will include €10 in tax relief so it is very important to keep your receipts.
- Claim tax relief on the cost of a carer for a family member up to a maximum deduction of €50,000 per annum in 2014 and €75,000 in 2015. This is provided the carer is either an employee of yours or an agency. The amount of the tax relief obtained will depend on the amount of tax that you pay.
- Rent a room in your home – Up to €12,000 may be earned tax free by availing of this relief.
- An individual can earn up to €15,000 per annum tax free by looking after other people’s children in their own home, provided certain conditions are met.
- The Home Renovation Incentive (HRI) Scheme provides for tax relief for Homeowners and Landlords by way of an Income Tax credit at 13.5% of qualifying expenditure on repair, renovation or improvement works carried out on a main home or rented property by qualifying Contractors.
- If you hold shares transfer some of them into your spouse’s name, as when it comes to selling them both parties can avail of the annual capital gains tax exemption of €1,270 each.
- Sell loss making assets or investments before selling assets that will attract a capital gain. This will reduce the capital gains tax (33%) payable on the gain made by offsetting the loss made on the first disposal.
- Utilise the small gift exemption of €3,000 per annum. Relatives can receive up to €3,000 per year as a gift without paying Capital Acquisitions Tax (CAT). This gift can happen once a year and from both parents so children/grandchildren/daughter/ son in laws can receive up to €6,000 per annum without paying CAT on the gift.
- Bike to work scheme – buy a new bike, plus equipment every 5 years and receive tax relief on the value of the bike.
- Use the TaxSaver commuter scheme to purchase your bus or rail ticket, this leads to tax savings of up to 51% and cheaper fares.
- Permanent health insurance/income protection provides tax relief, so reduces the cost of the premium – this is particularly important for self-employed individuals.
- Incorporate your business to reduce your tax rate to 12.5% on profits.
- Employ your spouse or children (provided they are over 16) to utilise their annual tax credits and standard cut off point. There is no sense in you paying tax at top rate while leaving your children and/or spouse tax credits and tax bands unutilised.
- Give €250 voucher (not cash) to your employees at Christmas time if you want to reward them in some way as this is tax free.
- Start-up exemption from Corporation Tax for new companies in which the business is a new trade. The relief is based on the employers PRSI paid and any unused relief may be carried forward.
- There are a number of Government schemes to encourage the unemployed back to work which benefit employers – Jobs Plus, Job Bridge, Work Placement Programme, Tus Scheme etc.
- Start Up Relief for Entrepreneurs (SURE) – this is a tax relief incentive scheme for unemployed/PAYE workers who start up a new company. If you are interested in starting your own company, you may be entitled to an income tax refund of up to 41% of the capital that you invest under SURE. Depending on the size of your investment you may be entitled to a refund of income tax paid over the 6 years prior to the year in which you invest.
This article is a brief summary of tax saving measures and reflect the state of tax provisions at the time of writing this article. Please bear in mind that other conditions may apply to each relief mentioned above so it is important to obtain proper tax advice in relation to this.
Call us today if you require good sound financial, business or tax advice which is guaranteed to save you money.