From rent tax credit to third-level fees, Irish people overpay tax

Third-level students and renters may be missing out 

So far, just over 190,000 rent tax credit claims have been made by PAYE taxpayers. However, about 400,000 people are expected to be eligible for the rent credit.

Most tenants eligible for the newly-introduced rent credit have not taken it up, according to a new survey from Taxback.com.

It found more than 70% of those eligible for the credit have yet to submit a claim.

There were a variety of reasons given for this: 20% say they just have not got around to it; 16% say they do not have the receipts from the landlord that they need to claim; 13% say they are "too uncomfortable" to ask their landlord for the information they need to submit a claim. 

For one in 10, the fact their landlord is not registered with the Residential Tenancies Board (RTB) is preventing them from making a claim.

So far, just over 190,000 rent tax credit claims have been made by PAYE taxpayers. However, about 400,000 people are expected to be eligible for the rent credit.

Consumer tax manager with Taxback.com Marian Ryan acknowledges the rent credit is not worth a fortune.

But €500 or €1,000 is a lot of money to leave on the table. It was a laudable move the Government made by introducing it, but for it to work, it definitely needs some tweaking. 

"The onus cannot be on the shoulders of the tenant to provide such detailed information, and tenants should not be penalised if their landlords are not 100% compliant with private residential regulations.”

Consumer tax manager with Taxback.com Marian Ryan: 'We’re aware of a number of tenants who have hit a wall when they tried to claim the rent credit — simply because their own landlord hasn’t registered the tenancy with the RTB.'

“We’re aware of a number of tenants who have hit a wall when they tried to claim the rent credit — simply because their own landlord hasn’t registered the tenancy with the RTB. Tenants in such positions have their hands tied. 

"A landlord who hasn’t registered a tenancy with the RTB could be receiving their rent in cash and so there may be no trace of that rent being paid, unless a receipt is being provided to the tenant, which may not always be the case.”

She points out that given the current housing crisis, all the power resides in the hands of the landlord. If you are a tenant, you don’t rock the boat by asking the landlord to do the right thing and register the property.

It is unfair that the tenant is playing the fall guy for a situation that is entirely outside their control.”

In order to claim the credit, the tenant has to supply details of the landlord’s residence status along with the landlord’s or the property agent’s tax reference number. While the landlord can choose to supply this information directly to Revenue, if they do not want to do this, the tenant cannot claim.

Ms Ryan concludes, “Failure by the Government to address this conundrum — as well as to remove the rule which prevents tenants from claiming the rent credit if their landlord isn’t registered with the RTB — will see many people continue to unfairly miss out on the rent credit.”

Tax overpaid

We already know that as a nation, we overpay tax. At the end of January, Revenue reported that over 370,000 tax returns had been processed in respect of PAYE taxpayers who had already filed their return for 2022. Of those, almost 75%, or 275,000, overpaid. Revenue has already refunded these taxpayers to the tune of €193m.

Revenue’s national PAYE manager Aisling Ní Mhaoileoin pointed out when these figures were released in January that the major difference in the 2022 tax year was the introduction of the rent tax credit in the budget.

Unlike usual budget tax credit changes which apply for the following year, this credit applies retrospectively for 2022 and can be claimed on an income tax return for the tax year 2022. 

"The value of the credit is up to €500 per year for individual taxpayers and up to €1,000 per year for jointly assessed married persons or civil partners.”

If you are entitled to this credit but have not yet claimed it, you can now do so in real-time through the ‘Manage Your Tax’ option in myAccount on the Revenue website.

Ms Ní Mhaoileoin again: “All PAYE taxpayers now have access to their preliminary end of year statement for 2022 in myAccount. The statement will give them certainty about their pay, tax credits and overall tax position for the year, allowing them to correct or add to information in their record for the year with Revenue. 

"The statement is easy to access and readily understandable, and employees are encouraged to review the information contained therein for completeness and accuracy at the earliest opportunity.”

Medical expenses

The rent credit is not the only one taxpayers routinely miss out on. Surveys show medical expense tax refunds remain the most common relief claimed in the year.

You generally receive tax relief for health expenses at the standard rate of tax (20%). Nursing home expenses are given at the highest rate (up to 40%). Qualifying expenses include, among other things, doctors' and consultants' services, maternity care, diagnostic procedures, IVF, non-routine dental work and those aforementioned nursing home expenses.

The easiest way to claim relief on health expenses is through Revenue’s myAccount or Ros portals.

You can only claim for expenses that you have receipts for, and only for the last four years. If you have private health insurance, you can claim tax relief on the portion of those expenses not covered by your insurer. For more details, check the revenue site.

Third-level tuition fees

We also know third-level tuition fee payers are missing out on very significant refunds. Tax relief is granted at the standard rate of tax, currently 20%, and there is a limit of €7,000 per course on which you can claim relief. 

There is also a ‘disregard amount’, which stands at €3,000 for a full-time course and €1,500 for a part-time course. This figure is deducted from your total qualifying fees — but it is only taken away once a year, no matter how many students you are claiming for.

So which courses qualify? The 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 are also approved, whether you are studying at a distance or attending in person.

You can choose to claim relief on your tuition fee instalments either in the tax year that the academic year began or in the tax year in which you paid the instalment. Note too, that while you can claim relief on the student contribution, there are some third-level fees for which you cannot claim. These include capitation fees, registration and administration fees.

If you have changed job during the year, or if your employment record is punctuated by periods of unemployment, there could well be tax reliefs due to you. 

Similarly, if you or your spouse has been made redundant during the tax year, you might not be getting the full benefit of the transferability of allowances. Take the time to sit down and review your affairs and make sure everything is in order and up to date.