Brian Keegan: January is the month when most of us have to engage with Revenue

This month, many of us will have to engage with Revenue; the so-called Preliminary End of Year Statements have become available on their website in recent days.

Contrary to what people might expect, the less contact the tax office has with you, the better it suits Revenue. 

Tax collection is, after all, a business. Customer service is costly to provide. This is why Revenue much prefer to deal with people’s employers (who are fewer in numbers than individual employees and therefore easier to look after) and have put an emphasis on automating most tax return and collection processes.

There are of course times when employees cannot avoid dealing directly with Revenue. 

This month, many of us will have to engage with Revenue; the so-called Preliminary End of Year Statements have become available on their website in recent days.

The preliminary end of year statement is a summary of an employee’s tax affairs for 2021. It includes income, as reported by employers, and incorporates some other tax-deductible amounts which are reported separately to Revenue, like pension contributions.

Checking this end of year statement mightn't be the most exciting thing to do in January, but it can be worthwhile.

Often PAYE errors can be on the side of over-collection rather than under-collection.

This is not because of any particular flaw in the system, but rather that while taxable wages are almost certain to be reported to Revenue, various individual deductions like college fees and medical expenses are not automatically reported and need to be claimed separately.

Most medical expenses, such as visits to the GP, attract a tax relief of 20% of the cost you have to bear; that's €12 in tax back for every €60 consultation. 

It's worth keeping all your medical receipts and making sure that they are taken account of for your 2021 tax.

Payments for third level tuition might also be eligible for some tax relief; again, relief at 20% is available on college fees provided they exceed a particular threshold in the year, normally €3,000.

Where two or more people going to college are being supported, the relief becomes very useful because the threshold amount is subtracted only once from the total college fees paid in the year.

The person being supported through college doesn’t have to be a child or even a relative. Nor indeed must the fees be paid to an Irish college. 

Many universities and institutions in other European Union member countries and in the United Kingdom are approved for the purposes of tax relief.

There may be other allowances to which you could be entitled but which might not be reflected on the end of year statement. 

These include tax reliefs for the cost of caring for an incapacitated individual, or a tax credit towards the cost of working from home.

Many of the allowances and reliefs which might be missing off the preliminary end of year statement can be claimed by logging on to the Revenue MyAccount service. 

Claims are self-assessed, which means that Revenue will assume that your claim is legitimate but reserve the right to investigate and verify them later. 

That makes it important to retain receipts and evidence for any of the reliefs being claimed.

By and large, the PAYE system is fairly efficient. 

It operated to good effect during the pandemic lockdowns when it was used as a conduit for the various wage supports which helped keep so many businesses afloat. 

That said, its primary purpose is tax collection. It is up to individuals to ensure that tax is not over-collected from them; Revenue will not do that for you.

• Brian Keegan is Director of Public Policy at Chartered Accountants Ireland