Posts Tagged ‘Tax Saving’

Lights Camera Action……

August 7, 2014

film image

If like me you always had an interest in film but never quite made the cut in acting class, there is still an opportunity for you to get involved. Section 481 TCA 1997 film relief allows individuals to get tax relief for an investment in a qualifying film or television series. This investment relies on the successful completion of the film/television project.

Successful shows which have availed of this scheme include Penny Dreadful, Mattie, Tashi & The Widower to name but a few.

Film Relief is available, generally for high income individuals, who invest up to a maximum of €50,000. Individual investors can invest amounts exceeding €50,000, but only €50,000 relief is allowed in one tax year. Any amounts exceeding €50,000 can be carried forward to the proceeding tax years. Therefore it is generally recommended investing a maximum of €50,000 in any one year.

To get the tax benefit from film relief an investor would typically raise the €50,000 investment slot by part equity / part loan agreement. Based on the credit application being approved, the investor issues a cheque for €17,500 and the remaining €32,500 is financed by a loan, which is applied for through the film production company. The individual then subscribes to shares of €50,000 and Revenue will issue a Film 3 certificate to confirm the investors’ investment.

The investor then makes a claim to the Revenue Commissioners and receives tax relief of 41%, assuming they have enough income at the higher rate. Based on a €50,000 investment, the investor should receive a refund of €20,500 from Revenue.

PAYE investors should see this refund on their payslips before the end of the year in which they invest. Self-assessed investors will have to wait until they file their tax return before seeing their return.

The overall return for an investor will be €3,000 if they invest €50,000 in the scheme.

If you are interested in investing in film relief, please contact us on 021-4641400 or email info@quintas.ie.

Blog by Laura Simpson, Trainee Accountant, Quintas

Top tips for saving tax

November 16, 2011

At this time of the year most self-employed people are acutely aware that their tax return for 2010 should be submitted to the Inspector of taxes by the 31st of October or the 16th of November if filed and paid online. Therefore it is an appropriate time for every tax payer, self-employed or PAYE worker, to ensure that they are claiming all their available tax reliefs for 2010. Annually almost €400m in tax reliefs go unclaimed by tax payers.

Most tax reliefs are now allowable at the standard rate of tax i.e. 20%, but there are some that are still available only at the marginal rate i.e.  41%. The main two being tax relief on pensions and nursing home fees.  The balance of the relief can be claimed by tax payers as a deduction from the tax they paid in 2010, at a rate of 20%.

The most common reliefs are as follows:

Medical expenses: Family medical expenses can be claimed as a tax deduction at 20%. Including non-routine dental expenses, on receipt of a Form Med 2 from your dentist.

Home carer’s credit: This is claimable by married persons who are jointly assessed and where one spouse works at home to care for children, the aged or incapacitated persons. The relief for 2010 is €900 and €810 for 2011.

Rent credit: Tax relief may be claimed by tenants for the rent paid in respect of rented residential accommodation which is their sole or main residence. The tax credit for persons under 55 years is a maximum of €400 for a single person or €800 for a married couple and for persons over 55 years it is doubled. The Finance act 2011 abolished the relief for new tenants with effect from the 7th of December 2010.

Third –level tuition fees: Tax relief is available in respect of tuition fees (not registration fees) paid to an approved college for an approved course. The maximum qualifying fees are restricted to €5,000.

Service charges: Tax relief may be claimed on a prior year basis on service charges paid. An upper limit of €400 applies.

Tax payers beware!

When claiming tax relief it is important that you have the relevant documentation to verify the claim, as The Finance Act 2011 introduced new legislation whereby there is now a penalty of €3,000 payable, by any person who makes a false claim, regardless of how little the refund claim was.

by Abina Kenneally

Abina is Tax Partner at Quintas 

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

 

Women: protect yourself from pension shortfalls

November 4, 2011

Nine out of ten women face poverty in retirement and the problem of low pension provision among the female half of the population is a cause for concern for the Pensions Board. The Central Statistics Office last year revealed that 56% of women are not covered by an occupational pension compared with 45% of men. So if men and women are treated equally in relation to pension provisions why are many women forced to survive on a fraction of their male counterparts’ pension?

Women on average earn less than men, are more likely to be working part-time, have fragmented career patterns and are also living longer than men, all of which leaves them particularly susceptible to poverty in later life.  Women almost exclusively carry the social responsibility for unpaid care work in families. Whether someone is in full-time or part-time employment has a significant impact on their funding for retirement due to the fact that someone in part-time employment will be less likely to be able to afford the same level of contributions than their full-time counterparts. In addition to this, 45% of all Irish women aged between 15 and 64 are currently not officially in the workforce and therefore have no official earnings. It is significantly harder for women to build up adequate contributions in both private and public systems. It is important for the modern independent woman to think about what standard of living she wants to enjoy in retirement.  Traditionally women over 65 relied solely on the state pension through the social welfare system.   This system defined many women as qualified adults deriving their pension rights through their husbands contribution record thus reinforcing women’s dependency on men as the primary earners.

90% of women experience a huge drop in income upon retirement and find themselves with considerably less money to live on which effects their quality of life as they no longer have the same spending power which can result in a loss of independence. The average woman retiring today at 60 has a life expectancy of a further 20-25 years which is a significant amount of time to enjoy in retirement. It takes a long time to save for retirement and the earlier a person starts to contribute to a pension the better!

by Anne O’Doherty 

Anne is a Senior Wealth Manager at Quintas 

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Jobs Initiative (July 2011) – what are the benefits to your business?

June 29, 2011

Creating Jobs

From the 1st July 2011 the government jobs initiative will commence which will help your business to improve competitiveness, revenue, profitability and reduce labour costs.

Whether or not you agree with the merits of the recent jobs initiative and the methods used by government to ensure that the scheme is revenue neutral (by applying a levy of 0.6% to private pension funds) you must ensure that your business achieves the maximum benefits from the scheme over the next 4 years.

 The Jobs Initiative included a number of measures dealing with business and employment taxes, including:

  • Abolition of Employer’s PRSI charge on share based remuneration
  • Temporary halving of the lower rate of Employer’s PRSI from the 2nd July 2011 (which was included in the Social Welfare Bill published in early June)
  • Amendment of the R&D tax credit regime to enhance flexibility in how companies can account for the credit
  • Temporary reduction in the 13.5% rate of VAT to 9% in respect of tourism-related services
  • Introduction of a 0.6% levy on the capital value of pension funds to fund the job creation measures
  • No Change to the 12.5% corporate tax rate
  • The minimum wage will be increased from €7.65 back to the previous level of €8.65 per week from 1 July 2011.

I have included below a brief explanation on the key initiatives that will benefit your business from the 1st July 2011:

1.            Introduction of a 2nd reduced rate of VAT of 9%

To support the tourism industry, a new temporary second reduced rate of VAT of 9% will be introduced with effect from 1 July 2011 until end-December 2013.

The new 9% rate will apply mainly to restaurant and catering services, hotel and holiday accommodation, admissions to cinemas, theatres, certain musical performances, museums and art gallery exhibitions, fairgrounds or amusement park services, the use of sporting facilities, hairdressing services, printed matter such as brochures, maps, programmes, leaflets, catalogues, magazines and newspapers.

All other goods and services to which a reduced rate currently applies will remain subject to the 13.5% rate.

Please click here for a link to revenue’s website which lists the specific goods and services that can avail of the reduced vat rate of 9%.

 2.            Employer PRSI changes

To support employment and incentive employers to invest in employees there are two significant changes to Employers PRSI.

Firstly, the lower rate of Employers PRSI is to be halved from 8.5% to 4.25% for all workers with earnings of less than € 356.00 per week or € 9.13 per hour. This will lead to a reduction in labour costs for employers and it will go in some way to offsetting the cost of the re-introduction of the minimum wage rate of € 8.65 per hour.

This is a temporary measure which will take effect from the 1st July 2011 to the end of 2013.

The second measure related to the reversal of the Budget 2011 decision which imposed the full employers PRSI charge of 10.75% on share benefits awarded to employees. The reversal of this decision should hopefully send an important signal aboutIreland’s commitment to remain an attractive location for FDI given that the awarding of shares to employees is an important part of the incentives to staff being offered by our multinational friends.

3.            Air Travel Tax

The controversial €3 air travel tax will be abolished. The removal of the air travel tax is, however, dependant on airlines, which will be required to open new routes and boost passenger numbers. The tax will remain on the statue books and will be reinstated if this does not happen.

4.            National Internship Scheme

This scheme begins on the 1st  July and the two-year JobBridge programme will offer work placements to 5,000 people who are on the Live Register. The jobs will be offered in a range of companies in the private, public, community and voluntary sector.

The placements will last between six and nine months and participants will be paid €50 extra a week on top of their existing social welfare payments. They will retain all of their additional benefits and it is open to anyone who has been signing-on for at least three months.

Companies offering places must have at least one full-time employee and the intern cannot displace an existing worker. The maximum internships an organization can provide depends on their number of full time employees.

A host organisation may have an allocation of Interns as well as an allocation of Work Placement Programme participants at the same time. However, the combined number of Interns and Work Placement Programme participants cannot exceed the total number of employees.

The above government initiatives are being put in place to improve our economic competitiveness, encourage employment, entrepreneurship and targeting the tourism sector to make a substantial contribution toIreland’s economic recovery.

Although our economy has a long road to recovery let’s hope that this is the start of some real government schemes that will support businesses as they try to recover from the serious difficulties of the last few years.

 Regards,

 Mark Ryan

 Mark is a Director at Quintas and heads up the Business Centre.

 Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.

Investing on Certainties

April 28, 2011

Investors should turn investment losses to their advantage by choosing the optimal tax structure to allow these losses offset against current and future profits.  Choosing the most efficient tax treatment is fundamental to a sound investment strategy.

One of the most used (and abused) of investment declarations is that “90% of investing results in losses”.  It is an oft used statement to warn investors of the risks and potential losses of investing.  While it is misleading as a statistic i.e. it doesn’t tell us the amount of money made from the 10% of investments or the amount of money lost by 90% of investments, it does point to one undeniable fact – all investors, at some stage, will lose money from investing.

A more common statement is that “The only certainties in life are death and taxes”.   Now as a statistic this is much more reliable.  For investors the world over know that if they make investment returns they will pay taxes.

Put together, what both statements mean is that you will make losses on investments and that you will pay taxes on profits.  By combining these certainties of investment losses and taxes investors can create an investment strategy that will result in improved returns.

Any investment strategy begins with the development of a good idea which relates to current economic and market conditions.  But a good idea constitutes only the first part of the investment strategy.  The far more important element is risk control.  Risk control means employing an approach which minimises losses.  Good ideas might allow us to make more gains than losses, but it is risk control which ensures we maximise the investment gains available.

If we know that when it comes to investing, we will lose money some of the time and will pay tax all of the times we make profit, then we should look at some way to minimise the taxes we pay.  Put simply, we must make tax consideration a key part of our investment strategy.

We can do this by choosing the most appropriate and tax efficient vehicle when making investment decisions.  In Ireland we are faced with different tax treatments for different investments.  Consider the major categories of tax facing an Irish investor;

Deposit Interest Retention Tax (DIRT): This is tax levied on deposit and deposit based investments.  It is currently levied at 27%.  Bank deposits and most tracker bonds are liable for DIRT.

Income Tax: This is tax levied on any dividend, coupon or interim payment made during the lifetime of an investment.  It is currently levied at investors’ income tax rate (20% or 41%).  Dividends from shares and coupons from bonds are liable for Income Tax.

Exit Tax: This is tax levied on profits made on saving and most fund investments.  It is currently levied at 30%.  Life Company funds and many saving products are liable for Exit Tax.

Capital Gains Tax (CGT): This is tax levied on capital gains made on investments, usually payable on disposal of an asset.  It is currently levied at 25%.  Sales of shares, bonds and property are liable for CGT.

The one factor which differentiates these tax treatments is that losses from investments which are liable for CGT, can be offset against any profits from any other investment liable for CGT.  In addition these losses can be carried forward indefinitely.  So for example a CGT loss on AIB shares realised in 2006 can offset against a capital gain realised on a property disposal in 2010.   This can significantly improve the net return to investors.

Losses made on investments liable for DIRT or Exit Tax are not allowable against gains made on investments with the same tax consideration.  Once losses are realised there is no further recourse for investors.

What this also means for individuals and companies is that they should consider capital losses already incurred and how they may be used to offset tax on future gains.  Many companies with capital losses might be advised to consider an investment liable for CGT against which they can offset previous losses rather than simply placing money on deposit which is liable for DIRT and allows no such offset.

A sound investment strategy should result in investor returns and efficient tax management can help improve these returns.  Making losses is not a rare event, in fact like death and taxes we can say with certainty that all investors at some stage will suffer losses.  This means it is something we can and should plan for by choosing investments which allows for tax offset.  Once you have generated that good idea, don’t waste it by choosing an inefficient investment vehicle.  Maximise your investment returns by making tax consideration part of your investment strategy.

Regards

David O’Shea

David is Investment Director at Quintas.

Who can I turn to if I am refused credit from my bank?

April 14, 2011

Credit Refused

In these turbulent times access to credit facilities from financial institutions is seen to be difficult if not non-existent. On one hand you have the local business owner complaining that the banks aren’t lending and on the other side you have the main banks declaring that they are open for business.

The role of the CRO and its powers as mediator

As a response to this impasse it was announced by the Minister for Finance in the December 2009 budget, that the Credit Review Office (www.creditreview.ie) was to be set up to act as a mediator between the borrower and the lending institution. Headed up by John Trethowan, the CRO is responsible for helping to ensure that small and medium-sized enterprises (SMEs), sole traders and farm enterprises have access to credit from the banks who are participating in the NAMA scheme.

The participating banks are as follows:

– Allied Irish Bank

– Bank of Ireland

– Anglo Irish Bank

– EBS

– Irish Nationwide

The Credit Review Office’s (CRO) review process covers decisions of participating banks to refuse formal applications on all forms of credit extended by banks, including but not limited to, term loans or overdrafts, finance and leasing, and invoice discounting.

In April 2010 the Minister announced that AIB and Bank of Ireland would each make €3 billion available to the small business sector for new or increased credit facilities, including working capital, by the end of 2011. He has since announced a total fund of € 12 billion for new lending to SME’s over the next two years. The CRO have been tasked by the Minister to monitor this lending stream to ensure that it is being directed to the correct areas.

Although, the CRO has no regulatory or mandatory powers over the opinions it gives on applications, the outcomes of the appeals will be collated into a regular report for the Minister for Finance to inform the Government how the credit system is being operated by the participating banks.

Who is eligible and how to apply?

The following eligibility criteria for a CRO review apply;

  • The business is an SME, sole trader or small to medium-sized farm. An SME is defined by the EU as a business with less than 250 employees, turnover of less than €50,000,000 and/or balance sheet value of less than €43,000,000.
  • The business has applied for credit facilities from €1,000 up to €250,000 with one of the participating banks.
  • The credit facility was refused and the business has exhausted the banks internal appeals process.
  • Withdrawal or reduction of credit facilities would also come within the CRO’s remit.
  • The bank has attached terms and conditions to the loan such that the loan cannot be accepted.

In summary the keys stages involved would be as follows:

1. Make a formal professional application in writing to the relevant bank for funding. This should  include latest accounts, management accounts, cash flows and budget forecasts and a proposal as to how the debt will be repaid.

2. If the application is refused there is an internal appeals process available within the bank for a second review of the refusal.

3. If this appeal is unsuccessful the borrower can make an application to the Credit Review office to consider the application.

4. The Credit Review Office’s credit underwriters will review the application and give an independent and impartial opinion on the credit request. They will form an opinion on whether the borrower could be expected to service the interest and repayments of the credit.

5. The bank will be required to comply with the recommendation or to give their reasons for not doing so to the Credit Review Office. The borrower will be advised of the content of this response.

A fee of €1 per €1,000 will be charged for this service, with a minimum charge of €100 and a maximum charge of €250.

The doors are half open – provided you have a viable business plan and cashflow

Head of the CRO, John Trethowan recently stated that “SME’s need to be a lot more professional in approaching their banks for credit. Banks are returning to the first principles of cash flow lending, unless you can show them where you are getting the cash to repay the borrowing, then they will be very reluctant to lend you the money”

The importance of preparing a strong and professional business plan when applying for finance or when completing a bank review cannot be overstated. A business that can show where it will get the cash flow to repay its debt will go a long way to ensuring that an applicant will get the support of their bank, as the days where banks relied on the security of other assets when reviewing and approving funding applications are history.

Given the uncertainty surrounding the other non-NAMA banks and their willingness to provide additional lending to the Irish market the importance of the two main Irish banks (AIB & BOI) and the government’s € 12 billion lending plan to the survival of the SME sector cannot be understated.

Let’s hope that the current marketing and advertising campaigns are an indication that all of the various banking institutions ‘doors are open’ and that they will continue to support the SME sector which will be a key growth area in the economic and employment recovery in 2011 and beyond.

Regards

Mark Ryan

Mark is a Director of Quintas and heads up the Business Centre. This article was included in our Autumn 2010 quarterly newsletter.

Tax Refund Tip-Medical expenses claimed 2010??

March 16, 2011

 

Hard earned cash

In the 1st of a series of Quintas Tax Tips we will explain how to claim back some of the hard earned cash that you have spent on medical and dental expenses. This includes doctors and hospital bills and prescription charges, etc. which are not reimbursed under a medical insurance scheme and certain non-routine dental expenses.

Despite a national advertising campaign by revenue over the last number of years, there is still a significant sum of cash that is not being claimed correctly by tax payer’s.

Now is the perfect time of year to claim your tax relief for any medical expenses incurred during 2010 as you should have received your P60 and income levy certficate for 2010 from your employer. 

MED 1 – Medical expenses and prescription costs 

Full details of qualifying expenses are shown on the form Med 1.  In addition, if you pay medical expenses on behalf of any other person (whether or not they are related to you is no longer relevant), then these expenses qualify for relief also. People who are Celiac or Diabetic can claim tax relief on expenses incurred in the purchase of any special foods which they require as such purchases qualify as medical expenses. 

MED 2 – Dental expenses (non-routine)

The Med 2 claim form relates to dental expenses incurred for non-routine dental work. This would specifically exclude for example, relief for expenditure incurred on the extraction, scaling and filling of teeth and the provision and repairing of artificial teeth or dentures.

Examples of non-routine dental work would be crowns, veneers and orthodontic treatment (this involves the provision of braces and similar treatments) etc.

To make a claim your will need a completed Med 2 form from your dentist and ensure to include the cost for same as part of the Med 1 form noted above.

How to make a claim
To claim either of the above relief’s  please click here and follow the link to Revenues website and complete the relevant form and send it to your local revenue office. All medical bill receipts should be retained for a period of 6 years, should Revenue ever wish to inspect them.

If you have registered for PAYE Anytime through ROS, you can review your tax credits and previous claims and also arrange for the refund to be lodged directly to your bank account.

It really is that simple to claim back some of the expenses that you have incurred and which you are entitled to a refund on from revenue.  A claim can also be submitted for the past 4 tax years (2007, 2008, 2009 & 2010) if you have not done so already.

Please note that the rate of tax relief for medical and dental expenses was reduced from the higher tax rate (currently 41%) to the standard tax rate (currently 20%) in 2009, so there is double relief available for 2007 and 2008.

Regards

Mark Ryan

Mark is a Director of Quintas and heads up the Business Centre

Quintas New Investment Products 2011

January 26, 2011

 

Following on from a successful 2010 Quintas Wealth Management have launched 2 new investment products for Quarter 1 2011

The BRIC Outperformer (Tranche II) eliminates market direction by constructing a relative value strategy where Emerging Markets are expected to outperform the S&P 500 (benchmark for the developed world).  There is strong capital protection with potential early redemptions every 6 months with a 7% (or 14%p.a.) return available.

The Agri-Protector offers clients a 97% capital guaranteed exposure to the soft commodities of Corn, Cotton and Sugar.  There are potential early redemptions every year with a 10% p.a. return available.

Our recent investment successes have provided clients with returns of up to 22% for up to a 12 month investment. This represents a fantastic return for clients, particularly in this difficult environment. Quintas Wealth Management is Ireland’s only financial services firm designing and creating short dated niche products, combining optimal structuring and producing these sort of consistent returns for clients

For brochures on the above and for more detailed information Please click here

Regards

Mark Ryan

Mark is a Director of Quintas and heads up the Business Centre

How Budget 2011 has impacted on your Pocket?

January 14, 2011

A summary of the key changes for Employers & Employees due to Budget 2011:

We have outlined below some of the key changes to payroll that both Employees and Employers will need to consider from the 1stJanuary 2011.

Budget 2011 & the 4 Year National Recovery Plan

Based on the recent 4-year national recovery plan published by Government, it is intended to base the Income Tax system at approximately 2006 levels by a reduction of 16.5% in the value of the tax credits and tax bands by 2014. The proposed reduction is to be staggered as follows: 2011 (10%), 2012 (2.5%), 2013 (2%) & 2014 (2%).

It is hoped that the majority of the tax increases and the respective reduction in employees take home pay and employee’s costs will take place in 2011. This front-loading of tax increases in 2011 shall hopefully lead to less severe reductions in employees take home pay from 2012 onwards.

Over the course of this Plan it is intended to fundamentally reform the Income Tax system. This will involve bringing more of the workforce into the tax system.  In 2010 approximately 45% of the workforce were exempt from tax.  We reached a point in 2010 whereby just 8%  of tax payers (earning €75,000 or more) were paying 60% of all Income Tax, while almost 80% (earning €50,000 or less) contributed just 17% of all Income Tax.

Examples of how Budget 2011 will impact on your take home pay:

We have included below examples of the impact that Budget 2011 will have on an employees net take home pay versus 2010.

As can be seen from the examples below the average reduction in net pay in 2011 will be approximately 1.5% to 3% versus 2010 depending on that individual’s personal circumstances or the equivalent of €33 to €140 per month in the case of the following scenarios:

– Single €17,542.20 gross p/a:              2010–Net €17,191.20                 2011-Net €16,787.16 (2.35% reduction)

– Single €35,000.00 gross p/a:              2010–Net €28,424.08                 2011-Net €27,933.20 (1.73% reduction)

– Single €100,000 gross p/a:                 2010-Net €60,752.24                  2011-Net €59,133.20 (2.66% reduction)

– Married (1 income) €70,000 p/a:         2010-Net €49,588.00                 2011-Net €48,273.00 (2.65% reduction)

– Married (2 incomes) €80,000p/a:        2010-Net €62,337.00                 2011-Net €60,666.00 (2.68% reduction)

Please click here to view more detailed calculations for the above.

If you would like us to provide you with a guide as to the change in your own personal take home pay in 2011 please contact us on 021-4641400 or email us on payroll@quintas.ie and we will be happy to assist you.

Alternatively, we would suggest browsing the links below should you wish to estimate your new net pay and see the comparison between 2010 and 2011.

http://taxcalc.eu/

http://www.irishtimes.com/indepth/budget2011/calculator/

Key changes to consider from the 1st January 2011:

As you may be aware, there have been significant changes to the PAYE/PRSI system as part of Budget 2011. This may affect your business and your employees in a number of ways. Below are a few basic points of note to be aware of from the 1st January 2011:

  • Employees who receive their net pay by standing order/direct debit, will need to have the standing order/direct debit reduced accordingly.
  • Review monthly P30 liabilities, as they may increase due to higher PAYE/PRSI contributions by employees as a result of the changes in Budget 2011.
  • Payroll Software – ensure that up-to-date versions of your payroll software are installed correctly prior to running the first week’s payroll for 2011. Failing to do so could lead to incorrect payroll information, which in turn could lead to increased liabilities at the payroll year 2011.
  • It is advisable that for all employees, you have an agreed gross (before tax) hourly/weekly or monthly wage in place. Please note that the total wages cost for the employer can be calculated 2 ways, (Gross wage + employers PRSI) or (Net wage + PAYE + PRSI + Income Levy/Universal Social Charge (USC) + all other deductions).
  • Ensure before processing the first pay run in 2011 that you have updated the reduced 2011 tax credits and standard cut off point for your employees. If the 2010 tax credits are used, employees will be overpaid. This may, in turn, lead to incorrect returns to revenue and could then result in interest and/or penalties.

Understanding Budget 2011

Below are a few of the changes in the Budget and how they will impact on your payroll:

  • PAYE

What Changed?

While there have been no changes to the standard (20%) or the higher rates (41%) of Income Tax in 2011, Personal Tax Credits have been reduced and Standard Rate Cut-Off Point (SCROP) has been lowered by 10%.

To view the amendments to the Personal Tax Credits and the SCROP for 2011 please click here.

What This Means

Employees will pay more PAYE on their gross pay – This will result in increased deductions from employee’s gross pay therefore less net pay for employees and increased P30 liabilities due to Revenue by employers.

  • PRSI & Health Levy

In 2010 PRSI contributions were made up of 2 different parts: PRSI Contribution and a Health Levy.

What Changed?

The Health Levy (this was included in the total PRSI deduction) has been abolished. The Health Levy will now be combined with the Income Levy and it will now be called a Universal Social Charge (USC).

Also the upper ceiling for PRSI (annual income of € 75,000 p.a) has now been abolished.

What This Means

Employee’s PRSI contributions will decrease as a result of the Health Levy now being included in the Universal Social Charge instead of being part of the PRSI contribution. This maybe rebalanced by the inclusion of the Income Levy in the Universal Social Charge. As a result of the PRSI ceiling being abolished Employees will pay PRSI on their total gross pay rather than previously up to an income limit of € 75,000 p.a.

For details on the new 2011 rates and bands for PRSI – Please Click Here

  • Income Levy

This was a completely separate deduction, which was introduced in April 2009 as an emergency source of revenue for government.

What Changed?

This deduction has been abolished and will now be incorporated into the new Universal Social Charge (USC) for 2011.

  • Universal Social Charge (USC)

This is a separate deduction, which effectively replaces the Health Levy portion of the 2010 PRSI contribution and also incorporates the 2010 Income Levy deduction.

Please click here for USC rates.

  • National Minimum Wage

What Changed?

The National Minimum wage has been reduced from € 8.65 per hour in 2010 to € 7.65 in 2011. This reduced rate will not apply to existing employees as a reduction in their wages would be a change to their terms and conditions of employment.

What This Means

New employees hired must be paid € 7.65 or above per hour provided they meet the criteria to qualify for the minimum wage.

For more details on the criteria for minimum wage:  Please click here

  • Pension Contributions & PRSI

What Changed?

For 2011, relief for employee PRSI for pension contributions will be abolished. The annual earnings cap for employee/personal pension contributions is to be reduced from €150,000 to €115,000. Employers will still obtain relief from Employer PRSI in respect of 50% of any employee pension contributions.

What This Means

Employees with a pension contribution that is being included in payroll will not have as much relief in 2011. This will result in slightly increased deductions from employee’s gross pay.

It is proposed that over the following 3 years (2012 to 2014) of the National Recovery Plan the rate of Income Tax relief on pension contributions will be reduced from 41% to 34% in 2012, to 27% in 2013 and 20% in 2014.

  • Maternity Leave

What Changed?

Maternity and Adoptive Benefit has been reduced by € 8 meaning the maximum payment of €270 is to be reduced to €262.

What This Means

If employers pay employees while on Maternity Leave, it will cost the employer more to bring employees up to their regular pay.

  • Rent Relief  

Tenants who pay rent to landlords for private rented accommodation are entitled to claim tax relief at the 20% rate in respect of such rent. The maximum amount of rent upon which tax relief is available has been reduced by 20%, as follows:

  2010 2011
Single & under 55 years of age €2,000 €1,600
Married/Widowed & under 55 years of age €4,000 €3,200
Single & over 55 years of age €4,000 €3,200
Married/Widowed & over 55 years of age €8,000 €6,400

This tax relief is being withdrawn for current tenants on a phased basis over the next 7 years.

Claimants who were not renting at 7 December 2010 and who subsequently enter into a rental agreement after this date will not be able to claim this relief.

  • Child Benefit 

Current Child Benefit rates are being reduced by €10 per month to €140 for the first and second child and by €20 per month to €167 for the third child and by €10 per month to €177 for the fourth child and subsequent children. 

  • Local Authority Service Charge Tax Credit

People who paid a Local Authority Service charge can claim in full (up to a Maximum of €400) the tax credit in 2011; however this will be abolished in 2012.

Other Useful Links

National Recovery Plan – Please click here

Budget 2011 – Please click here 

Quintas Budget 2011 Summary – Please click here

Family Budget Planner 2011 – Please click here

If you have any queries in relation to any of the points outlined above please contact the payroll department on 021-4641400 or e-mail payroll@quintas.ie

Regards

Mark Ryan

Mark is a Director of Quintas and heads up the Business Centre

Quintas – 2010 Tax Saving Investments

December 2, 2010

Saving Tax

Quintas have just launched their 2010 Horizon BES Fund and their 2010 Film Relief investment. Both of these investments are methods for tax payers to save tax or receive a refund of tax for the 2010 tax year.

Quintas have previously raised in excess of € 4m for their BES funds in 2008 and 2009. We also launched our First Film Relief scheme earlier in 2010 raising € 500,000.

Both of these investments provide a tax saving investment opportunity for individuals whilst also providing much need capital funding to companies in Ireland.

For more information on BES or Film relief please email mark.ryan@quintas.ie for a brochure or click on the links below:

BES 2010 – Click here

Film 2010 – Click here

Regards

Mark Ryan

Mark is a Director of Quintas and heads up the Business Centre