Are you a cross-border / frontier worker? Are you paying the correct tax?

An individual is a cross-border worker if they work on side of a country border but live on another and return home at least once a week.

Cross-border workers sometimes referred to as frontier workers are obliged to pay income tax in their country of employment and in the country in which the live.

Republic of Ireland (ROI) residents working in Northern Ireland

  • Will have UK Income tax deducted automatically from their salary and paid directly to HMRC.
  • Will be obliged to submit an annual self-assessment income tax return to the ROI Revenue and customs.
  • May be entitled to claim transborder relief which will reduce any additional income tax that may be payable in the ROI.

Northern Ireland residents working in the ROI

  • Will have ROI Income tax deducted automatically from their salary and paid directly to Revenue and Customs.
  • Will be obliged to submit an annual self-assessment income tax return to the HMRC.
  • Will be eligible to claim tax relief for any ROI income tax and Universal Social charge paid against any additional income tax that may be payable in the UK.

If you require any assistance in completing these income tax returns please contact us for further assistance.

Has your company recently purchased energy efficient equipment?

Did you know you may be entitled to additional tax relief?

Normally when a company purchases a capital asset the cost of the asset is claimed as capital allowances over the next 12 years, and in some cases may not even qualify for capital allowances. However, in the 2008 Finance Act Accelerated capital allowances of 100% in year of the expenditure incurred on the purchase of energy efficient equipment was introduced.

In order to qualify for these the following condition must be met:

  • Allowances are available to companies only.
  • Energy Efficient Equipment must be new.
  • The equipment must meet an energy efficient criteria and fall within one of the 10 classes of technology as listed in point 4.
  • The company is required to incur a minimum amount of expenditure on the equipment as follows:

    1. Motors and Drives – €1,000
    2. Lighting- €3,000
    3. Building Energy Management Systems – €5,000
    4. Information and Communications Technology – €1,000
    5. Heating and electricity provision – €1,000
    6. Process and heating ventilation and air-conditioning control systems – €1,000
    7. Electric and Alterntive Fuel Vehicles – €1,000
    8. Refrigeration and cooling systems – €1,000
    9. Electo-mechanical systems – €1,000
    10. Catering a hospitality equipment – €1,000

This scheme is available until the 31 December 2014.

If you have any further queries please do not hesitate to contact us.

Reduced 9 % VAT Rate from the 1st July 2011

A new temporary reduced VAT rate will be introduced for certain goods and services from the 1st July 2011 to 31 December 2013.

The rate applies to the following goods and services:

  • Catering and Restaurant Supplies, including vending machines and take-away food.
  • Hotel Lettings, includingguesthouses, caravan parks, camping stes etc
  • Cinema, theatres, certain musical performances, museums, art gallery exhibitions
  • Fairgrounds or amusement park services
  • The use of sporting facilities
  • Printed matter such as brochures, maps, programmes, leaflets, catalogues and newspapers
  • Hairdressing Services

Remember, if you have stock on hand at the 1st July 2011 any subsequent sale of that stock will be liable to VAT at the 9% rate even though it may have been purchased at te 13.5% rate.

Do you employ someone to help you take care of a relative?

If you employ a person to take care of a relative who is totally incapacitated by physical or mental infirmity you may be entitled to tax relief.

The maximum relief that can be claimed is the lower of €50K or the actual cost of employing the carer. Where two or more persons employ a carer the allowance will be apportioned between them.

This relief is not available if the Dependent Relative Tax Credit or Incapacitated Child Tax Credit has been claimed in respect of yor dependent relative.

Tax Relief will be given by one of the following means:

  • It will be coded into your tax credits. This means that the tax paid on your wages will be reduced.
  • You can claim it after the end of the tax year by sending your P60 to Revenue and requesting a PAYE balancing statement or using PAYEantime. Using this method will mean that you will receive a tax rebate after the year end.
  • Including it on your Income Tax Return if you are self-employed. This will reduce the Income Tax payable.

It is important to remember that if you employ the carer directly that you will have obligations as an employer and will have to operate PAYE/PRSI and the Universal Social Contribution (USC).

If you require any assistance on making your claim please feel free to contact us.

Changes to Relevant Contracts Tax (RCT) System

The new RCT Scheme is expected to be introduced on the 1st January 2012.

The new RCT scheme will operate as follows:

The current 0% and 35% rate will be replaced with the following rates:

  • 0% rate – this will apply to those that currently hold C2s and those that have been tax compliant for last three years.
  • 20% rate – this will apply to subcontractors registered for tax with a record of substantial compliance.
  • 35% rate – this will apply to subcontractrs that do not meet the conditions for the 0% and 20% rate. This would normally apply to subcontractors who are not registered with Revenue or who have a bad compliance record.
  • The current monthly RCTDC repayment system will be abolished and replaced with an offset and annual repayment system.
  • Mandatory electronic filing of payments and returns.

Once the new scheme is in place the procedure for operarting RCT will be as follows:

  • When a principal enters into a relevant contract with a subcontractor, they will be obliged to provide Revenue with details of the subcontractor and the contract using the mandatory online system. These contracts will be able to be registered from the 28th November 2011.
  • Revenue will then send an acknowledgement of receipt of this information to the principal.
  • Revenue will then advise both the principal and the subcontractor of the appropriate RCT rate to be applied.
  • Prior to making any payment to the subcontractor the principal must notify Revenue using the online system of their intention to make payment and of the gross amount to be paid.
  • Revenue will issue a deduction authorisation setting out the rate of RCT and the amount of tax to be deducted.
  • The princial must then pay the subcontractor the appropriate amount and give them a copy of the deduction authorisation.
  • Revenue will automaticlly put credit for any tax deducted onto the subcontractors record and the credit will be available for offset against other tax liabilites as they arise or for refund annually. There will be no need to submit RCTDC claims to Revenue.
  • A deduction summary will be issued to the principal prior to the due date for filing their return.
  • The principal then only needs to arrange payment for the 23rd day after the end of the period covered by the return.

All principals will have to ensure they are registered for ROS before the new scheme commences.

If you are a princiapl and operate an in-house RCT software system this will need to be updated for the new RCT system. If this applies to you contact Revenue and and they will ensure that you receive the necessary information.

If you require more information or assistance in implementation of the new system please contact us.

Cycle to work scheme

If you provide a bicycle for your staff the first €1,000 per employee/ director of the cost incurred on the provision of a bicycle or bicycle equipment will not be treated as a Benefit in Kind and will be exempt from Income Tax.

In order to qualify the following conditions must be met:

  • The bicycle/bicycle equipment must be used for travel to and from work.
  • Employer must purchase the equipment; it cannot be a reimbursement of costs incurred by the employee/director.
  • Employer cannot claim back any of the VAT incurred on the purchase of the vehicle.

Alternatively, the employer and employee can enter into a salary sacrifice arrangement provided that it does not last for longer than 12 months. In these circumstances the employer is repaid on a periodical basis for the cost incurred in providing the bicycle or bicycle equipment and the employee will then be exempt on the Income Tax, PRSI and levies on the salary foregone.

If you require any further information on this relief please feel free to contact us.

Are you an artist/musician/author?

Did you know you may be able for the first €40K of your profits to be exempt from tax.

In order to qualify for this exemption your work must be original and creative and have either cultural or artistic merit.

The Artists exemption applies to the following categories of work:

    1. A book or other writing
    2. A play
    3. Musical composition
    4. Painting or other picture
    5. Sculpture

It should be noted that the Artists Exemption only exempts you from Income Tax, you will still be liable to the Universal Social Contribution, PRSI and High Earners Restriction.

For further information or help makingor Artists exemption claim please contact us.

Renting a room in your home? If yes, you may be overpaying your tax.

Did you know if the rent received is less than €10,000 per annum it is exempt from Income Tax, PRSI and the Universal Social Contribution?

‘Room’ in this context includes self-contained units which are attached to your home such as basement flats or a converted garage.

The €10,000 limit is the gross amount received before a deduction can be taken for any expenses. Once gross rents received is over €10,000 all of the rent becomes taxable.

Also, your tenant can still claim the rent tax credit.

Rent a Room relief is given to you automatically by Revenue. If you think that you have been paying tax on your rents incorrectly you may be entitled to a refund.

It should be noted that you cannot avail of the Rent a Room relief if you are receiving rent from your child.

If you require any further information about claiming this exemption, please contact us.

Mandatory Online Filing from the 1st June

The following categories of persons/businesses must file their tax returns and pay any liabilities from the 1st June 2011:

  • All Companies.
  • All Trusts.
  • All Partnerships.
  • Individuals filing stamp duty returns in respect of Instruments executed on or after the 1st June 2011.
  • Individuals or companies filing 3rd part returns (Form 46G).
  • Individuals subject to the high earners restriction.
  • Individuals benefiting from or acquiring Foreign Life Policies, Offshore Funds or other Offshore products.
  • Individuals claiming property based incentives.

Remember this means that Revenue will not longer issues paper returns to the above mentioned categories, therefore if you normally used your paper return as a reminder to file your tax return care will have to needed to ensure filing and payment dates are not missed.

From the 1st October this year, employers with more than 10 employes will be also required to pay and file their P30s, P45s and P35 together with appropriate paymens online.

If you fall into any of these categories and are unsure how to proceed please feel free to contact us for assistance.

Caring for a Relative? Are you claiming your additional tax credits?

If you care for a dependant relative you may be entitled to the dependent relative tax credit.

This credit can be claimed by a person who maintains a relative who:

  • Is incapacitated due to old age or infirmity.
  • Is a widowed mother/father or mother in law/ father in law regardless of age and health.
  • Is a son/daughter with whom which you reside and depend on due to old age or infirmity.
  • This tax credit is not available if the dependent relative has income in excess of €13,837. If your dependent relative is your child it would be advisable to look at claiming the incapacitated child credit as this is available irrespective of the relatives income. It should be noted that you cannot claim both these tax credits.

    In addition to this tax credit you may also be able to claim Mortgage Interest relief in respect of interest paid on a loan for a residence for that dependent relative.

    The dependent relative tax credit is €70 for 2011.

    If you require any further information regarding the dependent relative tax credit please do not hesitate to contact us.