MONEY The tax changes and you

KNOW YOUR DUES The Home Carers’ Tax Credit is now more valuable than ever to anyone caring for a dependent in their home.

The tax changes and you


Money matters
Brid Conroy

Everyone is now paying more tax. Those who were previously outside the tax net are now liable for the new Universal Social Charge (USC). Tax credits are down by 10 percent and you’ll pay tax at the higher rate of 41 percent sooner. However, on a slightly optimistic note, the majority of tax credits were left intact, and now more than ever, it is important to make sure you are being charged the right amounts and have claimed for all that can be claimed.

Universal Social Charge
Lets look first at the Universal Social Charge. If you earn less than €77 a week you are exempt from this charge. Otherwise you’ll pay 2 percent on earnings up to €193 a week, 4 percent on the next €115 a week and the rest is at 7 percent. For Medical Card holders and those over 70 years of age the top rate is 4 percent. If you don’t work for a full year or your pay varies throughout the year, you may find you have paid too much. Call 1890 306706 for a refund form.
There are some types of earnings not liable for this charge for example FÁS, Rural Social Schemes, Farm Retirement Pensions, Farm Assist, Job Seekers Allowance, Job Seekers Benefit and other payments from the department of education, like Youthreach Training Allowance. However, a word of caution – I had someone over 70 in receipt of an occupational pension who is below the exemption limit for tax but is now liable for the new USC.

Spouses
Also this week, I had a query from a household where one spouse is now not working and they wanted to know how if any of their taxes may be reduced. Yes, there is a little help here. You can have the other spouse’s Single Persons Tax Credit, which is worth €1,650 a year into your hand. Also, you will be allowed an extra €9,000 of earnings before you will pay tax at the higher rate. This is worth €1,890 a year into your hand. Call 1890 777425 to make sure you are on the right rates.

Home Carers
Don’t forget the Home Carers’ Tax Credit of up to €810 a year – see citizensinformation.ie for full information on who qualifies. Home carers should ensure that they avail of this credit, particularly in light of the cut of €8.05 per week (that’s €418.60 per annum) to the Home Carers’ Allowance that Budget 2011 brought in. This last cut brings the total annual loss in Home Carers’ Allowance earnings to 10 percent over the past two years (Budget 2010 introduced a 4 percent cut on the allowance and abolished the Christmas Bonus, which equated to a further 2 percent cut).

Trade unions
The relief no trade-union subscriptions have been abolished, as have payments to professional bodies by your employer which are now taxable.

Rent relief
The rent tax credit for rent paid to landlords is being abolished for new tenants from December 8,  but existing tenancies will still get some credit until 2017.

Mortgage relief
Most other credits are still available, albeit it on a reduced basis. Interest on mortgages, top-up mortgages and personal loans to repair or improve your main residence still qualify if taken out before December 31. Loans taken out in 2012 will qualify for the interest relief, but at a much lower rate. From then on it is phased out. Call 1890 463626 to check if you qualify.
Insulation relief
In the coming year, there will be a chance to claim some income tax back when you insulate your home to improve the heating efficiency. The maximum you can get repaid will be 20 percent of €10,000 for a single person or €15,000 for a married couple. The house doesn’t have to be owned by you and the work must be carried out by an approved SEAI contractor on 1850 376666.

Gift/Inheritance Tax
Gift and Inheritance Tax thresholds were reduced, but you can still receive a gift or an inheritance up to the value of €332,084 from a parent, €33,208 from a brother/sister, aunt/uncle or grandparent and €16,604 from anyone else without incurring any tax liability. Anything over these limits are taxed at 25 percent.

Finally to reiterate, make sure you are claiming what you are due. It’s a simple phone call, and it could save you money. Call Mayo Revenue at Davitt House in Castlebar on 094 9037000 or any of the numbers above.

Brid Conroy FCCA is a Chartered Certified Accountant with a practice in Louisburgh. She works on improving personal finances and the profitability of small and medium-sized businesses. To contact Brid, call 098 66870 or email theoldschool@iolfree.ie.

While every effort is made to ensure that the information given is accurate, it is not a legal document. Responsibility cannot be accepted for any liability incurred or loss suffered as a consequence of relying on any matter published herein.