The month for checking your personal tax credits

April, according to TS Eliot, is the cruellest month stirring dull roots with spring rain.

He is dead wrong. The early part of the year — January and February are the cruellest months.

They stir a lot more than dull roots with torrential rain.

For many of us these are months to be endured, their irritations heightened by thoughtless do-gooding declarations of now long dead new year resolutions and an imperative to change.

In the UK, taxpayers are required to file their income tax returns by the end of January.

Doing your tax return is possibly an ideal task.

Get all the nasty stuff out of the way at the top of the year and after that, things can only get better.

The UK Revenue authorities are proponents of nudge theory.

The idea behind nudge theory is that instead of immediately laying down the law as to how people should behave, you encourage them to do what you want by a series of hints or nudges.

They do things like issue press releases outlining excuses used by taxpayers for failed compliance in the past, so that current taxpayers are nudged towards making their tax returns on time.

Some of these excuses are pretty bizarre — it’s hard to blame a broken downwashing machine for not filing a tax return — but these nudges are all about normalising behaviour and getting the message across that normal people usually meet their tax obligations.

The Irish Revenue are rarely as subtle with their nudges and tend to take a more direct line of approach.

Because January and February are at the start of a new tax year as well as a new calendar year, there are some things you might consider doing to keep on the right side of the tax line. Mind you these aren’t new year resolutions — I wouldn’t presume to suggest anything of the sort.

If you are an employee, check your payslip.

Most employers are careful to get payroll right, but after years of little enough change to the PAYE rules there were some fairly major changes to USC and PRSI which take effect for the first time in recent pay slips.

Your certificate of Tax Credits and Standard Rate Cut-off point may have changed as well and there’s no guarantee Revenue would have written to you about this.

Standard credits like personal tax credits, PAYE tax credits are usually given every year as a matter of course, but many allowances or credits have to be claimed.

If you are eligible for theHome Carer’s credit worth €1,000 in 2016 or an allowance for flat rate expenses, you made need to claim these.

The best place to check it is on the Revenue website on the new myAccount facility.

If you haven’t registered for this, it’s worth doing so you can keep track of any changes.

Claims for tax relief on medical or fental expenses incurred in 2015— and back to year 2012 — can be done immediately — the prospect of a 20% rebate of all eligible costs incurred might give a little boost to the coffers.

If you are an employer, you have a deadline looming in the shape of the P35 return for 2015, which is due on February 15.

There are penalties for being late with this, up to €4,000.

You’re paying enough tax already — don’t get caught for an avoidable penalty as well.

In this month of the election campaign, the focus is also on the tax promises.

Whatever promises are made, remember tax changes are rarely made mid-year.

It is unlikely that an incoming government will give immediate effect to tax promises made on the hustings.

The current Government did bring in the reduced rate of Vat for the hospitality industry shortly after taking office, but also introduced a levy on private pensions to fund it.

These changes were the exception rather than the rule.

Tighter control and scrutiny from Europe certainly limits, if not entirely rules out, major changes to the tax regime mid tax year.

With the exception of the Social Democrats, all parties are signalling tax changes or tax reform as part of their manifestos.

Any major election promises about USC or income tax are more likely to be brought to fruition in 2017 rather than in 2016.

Depending on the choices the electorate makes there will be individual political casualties.

For those individuals this February will be the cruellest month. TS Eliot will still be wrong.

Brian Keegan is director of taxation at Chartered Accountants Ireland.


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