Category: Allowances


P60

Now is the time you should be receiving a P60 from your employer or pension provider. They are required by Revenue to issue them between 1st January and the 15th February showing your income for 2016.

What information do they show: A P60 shows your name and Personal Public Service number (PPS), as well as your tax credits. Then the gross amount earned for the year together with the tax deducted by your employer and remitted to Revenue.

Your P60 will also show the amount of income for Universal Social Charge (USC) purposes, which is not always the same as the taxable gross income. For instance, if you received some Benefit in Kind it will be added into your USC gross income. The amount of USC deducted by your employer will also be shown.

Then there is the amount of Pay Related Social Insurance (PRSI) deducted as well. This is what your Contributory State Pension (formerly the Old Age Pension) will be based on in due course. It is important that these are recorded correctly by the Department of Social Protection. If you are in any doubt about the number of contributions that you have paid, or what type of deductions have been made for you, you can request a copy of the record of your contributions held by the Department of Social Protection by phoning the PRSI Records Customer Service Team at 1890 690 690.

What do you do with your P60?
This is the information you need to put into your Return of Income Tax for 2016. If you do not send in a return then there is no way for you to know if the correct amounts have been deducted from your salary. I am aware of one company with 3,500 employees, who did not update their employee tax credits when they received a batch of amendments from Revenue. The result was an incorrect amount of tax was deducted and had to be sorted out at the end of the year.

Do you need to send in a tax return?
If you have untaxed income of more than €3,147 then you are required to submit a tax return. If Revenue have written to you to say that you are required to submit a tax return then you should do so. You could also be due a refund e.g. for incorrect tax credits or correct tax credits applied incorrectly, or you may be due a credit against your tax e.g. for medical expenses, so it is a good idea to send in a tax return.

If you send your tax return in now, you will get your refund back immediately. If you owe tax, then you still have until 31st October 2017 to pay it and it is a good idea to know how much it is so you can budget for it.

If you have any problems with any of the above, or if you do not understand it, then you should contact Cliff Kirker.

For most of us, this comes into play if you rent a room to students or an employed person. Revenue have a clear policy on this.

For Rent
If you let a room (or rooms) in your sole or main residence as residential accommodation, including for example, rooms let to students for the academic year, and the gross amounts receivable, including monies for food, laundry or similar goods and services, does not exceed the exemption limit for the year of assessment in question, the profits or losses on the relevant sums are treated as nil for Income Tax purposes.

The exemption limit for 2014 was €10,000 and for 2015 is €12,000.

Bed and Breakfast
Revenue make it clear that this allowance does not apply to Bed and Breakfast use (including Airbnb). They state: “The room or rooms must be used for the purposes of residential accommodation, i.e. the occupant is using the room, either on its own or in conjunction with other parts of the residence, as a home. The relief does not apply to rooms that are used for the provision of accommodation to occasional visitors for short periods, including, for example, where the accommodation is provided through online accommodation booking sites.”

Income Tax return
Even though the income is exempt if it is under the exemption limit, it still needs to be included in your Tax return under the Exempt Income section.

Airbnb
Please see the separate blog below about this.

If you have any questions about any of the above or if you want help to get your tax affairs sorted out, then please Contact us.

The deadline for sorting out your rental income through Airbnb is looming. Any income earned in 2014 needs to be entered on your 2014 Income Tax return which is due to be filed by 31st October 2015.

If you are not in the habit of filing Income Tax returns then you need to start now. Don’t leave it until the end of October as you will need to register for filing online and this takes up to two weeks. You will have a penalty to pay if your return is late.

If you have already filed then you need to send in your rental details and ask for an Amended Assessment.photo

2013 Income
If you had income in 2013 which you have not declared, then you need to declare it now, before Revenue come to you. Otherwise the penalties and interest you have to pay will be a lot steeper.

2015 Income
You need to be setting aside up to 58% to pay your Income Tax when it becomes due.

You cannot afford to ignore this. As you know, Airbnb are supplying names and addresses to Revenue of all those who rent out a room / house through them so Revenue will most certainly be aware of the income. If you do not go to Revenue first, they will come to you, and the result will not be pleasant!

Capital Gains Tax
Be aware that if you are renting part of your Principal Private Residence then you may have a Capital Gains Tax liability if you sell your premises. Normally, there is no liability on your Principal Private Residence but there may be on the part used for a business (in this case renting).

Rent A Room Allowance
Please see the separate blog below about this. It is a connected area and can cause confusion.

If you have any questions about any of the above or if you want help to get your tax affairs sorted out, then please Contact us.