Easy ways to cut tax
In 2007, Revenue estimated the figure was half a billion euro — staggering for a country this small. Hard times since have prompted more people to claim what’s theirs, though successive budgets have clawed back the more attractive reliefs. Taxation experts say that there’s as much as €840 per taxpayer in unclaimed relief sitting in State coffers. Here, we look at the main reliefs and how you claim them.
If you’re single, live in rented accommodation and you’re under 55, you can claim back tax at the standard rate (20%) on €1,600 of that rent in 2011, and on €1,200 in 2012. If you’re over 55 and single, those thresholds double to €3,200 in 2011 and €2,400 in 2012. For married couples under 55, the figures are €3,200 in 2011 and €2,400 in 2012. So, if you’re under 55, married and renting, you can claim 20% of up to €3,200 in 2011, which is €640. In 2012, when the threshold falls to €2,400, that figure will be €480. A couple over 55 do best. They can claim back 20% of €6,400 in 2011 and 20% of €4,800 in 2012.
If you rent out a room in your home, you don’t have to pay tax on the rent you receive, up to a limit of €10,000 in 2011. Income you receive for providing meals or other services is also exempt, and none of this affects your mortgage-interest relief.
This is tax relief on interest paid on your mortgage, or on a top-up mortgage, a home improvement loan and/or a remortgage or consolidation of qualifying loans. For the last ten years, tax relief on mortgage interest has been granted at source, and most of those who are entitled to it don’t have to do anything to get it.
The banks and Revenue administer the system. The ranges of rates and ceilings are too complex to go into here, but how much you get depends on whether or not you’re married, a first-time buyer, and when you took out the mortgage. Subject to ceilings, you can claim back up to 30% of the interest you pay on your mortgage each year. If you’re not getting this relief, you have to apply online, and it’s possible to claim for up to the last four years.
Mortgages taken out after Dec 31, 2012, won’t qualify, and the relief will be abolished at the end of 2017.
You can get tax relief at source on your VHI Healthcare, Aviva Health or Quinn Healthcare insurance premiums. Relief is given at the standard rate of 20%, which means that you pay 80% of the gross premium. Again, because the arrangement is managed between the health insurance provider and Revenue, you don’t have to do anything to claim it.
If your employer pays your premiums as a benefit-in-kind, there’s no tax relief at source, and you need to contact your local tax office, or claim the relief in your annual tax return.
This relief has been abolished from this year on, but you can still claim for last year and previous years. Relief is given for service charges paid in full, and on time, in the previous calendar year. It covers charges paid to local authorities or private companies for domestic water, refuse and sewerage services, and also group water schemes for domestic supply. As with health insurance, the relief is granted at the 20% rate, up to a maximum of €400.
Depending on how much you spend in the year, this relief could be worth quite a bit. Most medical expenses can be claimed back, and at the higher rate of tax if they were incurred before 2009. Also, if the claim relates to nursing-home expenses, you can continue to claim at the high rate. The big exclusions are routine dental treatment, or any sums that have been reimbursed through your health insurance or a compensation payment. You can claim back for four years after the end of the tax year to which the claim relates, and nor is there any ceiling on the amount that can be claimed. To avail of the relief, you’ve got three options. Claim online using the Revenue’s Anytime service. Alternatively, you can fill in a form MED 1 and submit it to your local tax office, or if you use a Form 11 to file your returns at the end of each tax year, there’s a space to fill in all the details. If the claim relates to non-routine dental work, you’ll need a Form Med 2 — Dental Expenses. There are a number of other conditions and claim options too detailed to go into here. Check out the Revenue site for more information, or contact your local tax office.
From the tax year 2007 on, you can claim back fees paid for third-level courses, as long as the fees themselves have been paid in full. Relief is available at the 20% rate and is capped at €5,000 for the academic years 2007/08 through to 2010/11, and at €7,000 for the current academic year 2011/12. However, from last year on, the first €2,000 of each claim is ‘disregarded for relief’ if any of the students being claimed for are full-time, while the first €1,000 is disregarded where all the students concerned are part-time. There are significant exclusions: If any part of the tuition fee is met by a grant, you can’t claim that amount back. ‘Tuition fees’ can’t be taken to mean administration, registration or examinations fees. From last year on, it can include the student contribution. You can claim the relief either on your year-end tax return, or you can complete an application form available from the tax office and submit that. As with medical/health expenses, you don’t have to submit receipts with your claim, but you are required to hold onto any receipts for a period of six years. The tax office may get in touch to verify your claim at a later date.
Though not a relief as such, employee allowances represent a frequently overlooked reimbursement available from Revenue for a variety of occupations.
Flat-rate expenses are incurred as you do your job, they’re related to the nature of your job and they don’t have to be vouched, meaning you don’t have to turn in receipts to claim them.
Revenue and the representatives of particular classes of employee have agreed a set allowance which you can claim back each year. For example, nurses who are obliged to supply and launder their own uniforms can claim back €733 per year, for up to four years. A shop assistant can claim back €121 per year. For a full list of employee occupations and the flat-rate expenses that apply, check revenue.ie, and, to claim, get in touch with your local tax office.
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