Some 30% of PAYE taxpayers overpaid tax in 2020. This means that for this year alone 706,000 of us are due a refund.
Tax refund specialists Taxback.com have just published the Taxback.com Customer Index 2020. This shows exactly what you could — and should — claim in the months ahead.
The Index, which looks at the refunds that Taxback.com’s clients applied for and received over the last 12 months, found that the older the applicant, the higher the average refund, while tax refunds on medical expenses was the most common relief which PAYE workers claimed in 2020.
Marian Ryan is consumer tax manager at the company. She says that in a year where many families and households have had to get to grips with job losses or a loss of income due to the Covid restrictions, every penny counts.
“It’ll come as a welcome boost to many to hear that the overall average tax refund claimed through Taxback.com in 2020 came in at approximately €1,076 over four years.
"The usual suspects of tax credits for medical and dental expenses, flat rate expenses and tuition fees dominated refunds yet again, but we would expect to see some change in this in 2021, as more people avail of the eWorker relief and perhaps take part in the Stay and Spend Scheme.”
The flat-rate expenses to which Ms Ryan refers are a little-known relief available to certain categories of worker to cover the cost of things such as tools, uniforms, and stationery. For more details and a list of workers that can avail of this relief, check Revenue.ie.
Given the changed working conditions which the pandemic has foisted on so many, the remote working relief is also worth checking out.
It was announced in Budget 2021 that you can claim back 30% of broadband costs for days worked at home, as well as ‘other vouched expenses’ where they are ‘wholly, exclusively and necessarily’ part of your work. You can only claim for these expenses if your employer doesn’t already pay something towards them. Revenue.ie has a video which shows how to upload receipts and make a claim through the myAccount service.
Ms Ryan also points out that while Revenue figures suggest that approximately 706,000 taxpayers are due refunds for 2020 alone, if you take into account the fact that you can claim for the four preceding years, the actual number of people due a refund could be far higher.
The older you are, the greater the level of relief you’re likely to be entitled to.
“We found this year that applicants over 35 stood to gain the most by claiming their tax entitlements, particularly if they hadn’t submitted a claim in the last four years," Ms Ryan said.
"As people’s salaries increase, so too does the amount paid in tax, so it stands to reason that there are more lucrative refunds available for those in higher age, and likely pay, brackets."
The retail sector was the most active in claiming refunds last year, followed by builders and related trades, then those working in the hotel and bar trade. Next came engineering and electrical workers. The broad spectrum of industries in Taxback’s top ten indicates that no matter what you do for a living, there’s a good chance the taxman owes you something by way of a relief or refund.
Ms Ryan says that the numbers applying for a tax refund has increased over the last few years. For example: 522,800people applied for medical expense relief in 2018, up 8% on the 2017 figure of 482,200. When you consider the volume of taxpayers in the country however, this is actually quite a low figure.
It’s highly likely then that there are large numbers who have incurred substantial medical expenses over the last four years but who haven’t claimed a cent of what they’re due.
“Many people are still unwilling to apply for a tax refund possibly because they believe it’s a difficult process or a hassle,” says Ms Ryan, “but the reality is it’s very straightforward, and only requires a little prep in terms of keeping receipts, or following up with your health practice or dentist to obtain the ones you don’t have.
"In terms of any apprehension regarding contacting Revenue: if you are tax compliant, which the majority of the taxpaying public is, there is absolutely nothing to fear by submitting a tax refund application.”
“Claiming your tax refund is one of the easiest ways to provide a welcome boost to the coffers…With claims going back over four years, there can be a significant amount to collect, and we would encourage everyone to check their tax status and see what they may be owed.”
We also know that third-level tuition fee payers are missing out on significant refunds. Not everyone will qualify for relief, but if you do, the payoff can be substantial. Tax relief is granted at the standard rate of tax, currently 20%, and there is a limit of €7,000 per course per person per academic year.
The other key factor here is the fact that each claim is subject to what’s called a ‘single disregard amount’ in each tax year. This sum is taken away from your total qualifying fees, meaning you can’t receive relief on the disregarded portion of the fees. In that respect, it’s a lot like an excess on an insurance policy.
However, if you’ve paid fees for more than one course or student, you only subtract the disregard amount once. The effect of this is that claimants get full tax relief on qualifying fees and payments for subsequent students.
The disregard amount for a full-time course is €3,000 and €1,500 for a part time course.
So which courses qualify? The vast majority of them, it seems. All courses in Ireland that are provided by publicly funded universities, colleges and institutes of higher education are approved for tax relief. Nor is the relief restricted to Ireland.
Courses provided by publicly funded or accredited universities and institutions in other EU member states, and the UK, are also approved, whether you’re studying at a distance or attending in person.