As the self- assessment tax deadline in Ireland draws closer to us. The question on most peoples, slightly quivering lips is, do I need to submit a tax return? Well don’t worry this article should answer this question for you.
You have to file an Irish tax return if any of the following circumstances apply to you:
- You’re self-employed
- You’re a contractor or sub-contractor
- You’re a landlord
- You receive income in addition to PAYE income e.g. income through an investment portfolio, rental income, income from a construction trade, capital gains, consulting, contracting or if you receive any other untaxed income from ‘nixers’ or work you do in addition to your normal PAYE job.
- You’re director of a company
- You belong to an employee share scheme What is the tax deadline for filling the return?
The tax return deadline is 31st October, so ensure to contact your accountant as early as possible in September to organise filing of this return in order to avoid late fees. This is also the payment deadline for any tax liability you have. For example, you must file your 2014 tax return and pay the liability by 31 October 2015.
What is the self- assessment system?
Under the self-assessment system in Ireland, all self-employed people must report all income earned by filing a tax return. Your tax return is also used to claim any tax allowances that can be offset against your tax bill. Preliminary tax is due on the 31st October, this is an estimate of the income tax you will be charged in the current tax year and includes PRSI and Health Contribution. To avoid interest charges you must pay 90% of your liability for the current year or 100% of your previous year’s tax bill or 105% of your bill from the year before that (this last option is available only if you pay by direct debit), whichever is the lowest amount.
NOTE: Even if you only worked for part of the year as self-employed, and were PAYE for the rest of the time, you will still need to file your tax return through a self-assessment tax return.
Self-employed individuals
What expenses can I claim?
As a self-employed sole trader you will come to your profit figure by deducting ‘allowable expenses’ from your sales. So the issue of what is and what is not an allowable expense is crucial. The simplest rule to apply is to ask yourself was the expense incurred ‘wholly and exclusively’ for the purposes of your trade? That is to say the expense must apply only to your business and not to your personal expenses. For example you can claim expenses for business travel or for using your personal computer or office for business purposes.
What expenses can I not claim?
One of the most common items that cannot be claimed for, but yet surprises a lot of sole traders, is client entertainment. You can also not claim for things like lunch while you are at your normal place of business.
What records should I keep?
Sole traders will tend to have a volume of sales and purchase invoices. To accurately manage the accounts and be prepared in the case of an audit, it is important that you hold on to all receipts for 6 years.
Overlooked tax credits
It is amazing how often sole traders fail to claim all of the tax credits they are entitled to. Make sure you are claiming all of the tax credits available to you to pay the right amount of tax. The home carer’s tax credit, for example, is one that can often go unclaimed.
What else can I do to reduce my tax bill?
Once you have calculated your tax you should consider tax planning strategies such as contributing to pension funds, splitting your income with a spouse or forming a company. The most common of these strategies is still contributing to a pension scheme. Relief may be restricted further in years to come so it is important to avail of the maximum relief’s available while you still can.
Non-resident landlords
I am a non-resident landlord, what are my Irish Income Tax Returns Obligations?
If you have property in Ireland but live abroad you’re entitled to exactly the same expenses on your returns as a landlord living in Ireland. The Irish Income Tax code requires tenants to deduct 20% tax on rents paid to a non-resident landlord. This requirement does not apply if you nominate an Irish-resident person as your ‘Collection Agent’. The ‘collection agent’ effectively acts as your nominee for Irish tax purposes. It is possible for a family member or close friend to act as your ‘collection agent’ as they normally don’t have any duties to perform in this capacity, although some people prefer to nominate their letting agent.
After the end of each year, you (or your accountant) needs to complete a Rental Profit & Loss Account and income tax return, and file these with Revenue.The Irish Income Tax system works on a calendar year basis, ie each tax year starts on 1 January and ends on 31 December.
It may transpire that you have little or no tax liability for each year. If you are not entitled to any Irish tax credits as a non-resident, your Income Tax liability will be a flat 20% of your rental profit for the year. (A higher tax rate of 41% applies to any excess profit over €32,800).
You will also be liable for the Universal Social Charge or USC on your rental profit, but you should be exempt from PRSI on the basis that you are non-resident.
How CPC Accountants can help you
Unless your tax affairs are simple, it’s prudent to employ an accountant or tax consultant to complete your tax return and ensure that 
you’re correctly assessed. It is important that you pay all your taxes by October 31st or you will incur interest and surcharges. We offer a very competitive service whereby we will prepare and file your tax return and claim any applicable allowances. Contact us today to get a no obligation quote on the preparation and submission of your tax return. Contact our tax team today on caroline@charlespcrowley.com or call +353 23 8841899
