Income Tax will apply in cases where you set up your business as a sole trader or in partnership with one or more other people: i.e. not through a company.
If this is the route you decide to take, you will then be self-employed for tax purposes and will need to file an Income Tax return for each year that you are in business, including the year you start your business and the year you cease to be in business.
Income tax is charged on income arising in a tax year. The tax year coincides with the calendar year, for example, the tax year 2022 runs from 1 January 2022 to 31 December 2022.
|Personal Tax Credits||€||€||€|
|Employee PAYE Credit (Note-1)||1,700||1,650||1,650|
|Earned Income tax Credit (max)||1,700||1,650||1,650|
|Widowed Person or Surviving Civil Ptnr (no children)||2,240||2,190||2,190|
|Additional tax Credits in years following bereavement:|
|Home Carers Credit||1,600||1,600||1,600|
|Incapacitated Child Credit (Max)||3,300||3,300||3,300|
|Age Credit - Single||245||245||245|
|Age Credit - Married or Civil Ptnr||490||490||490|
|Single, Widowed or a Surviving Civil Partner 65 years of age or over||18,000||18,000|
|Married or in a Civil Partnership 65 years of age or over||36,000||36,000|
|Single, Widowed or a Surviving Civil Partner without qualifying children||€36,800 @ 20%, Balance @ 40%||€35,300 @ 20%, Balance @ 40%|
|Single, Widowed or a Surviving Civil Partner qualifying for Single Person Child Carer Credit.||
€40,800 @ 20%, Balance @ 40%
€39,300 @ 20%, Balance @ 40%
|Married or in a Civil Partnership - one Spouse or Civil Partner with income||€45,800 @ 20%, Balance @ 40%||€44,300 @ 20%, Balance @ 40%|
|Married or in a Civil Partnership - both Spouses or Civil Partners with income||€45,800 @ 20% (with an increase of €27,800 max), Balance @ 40%||€44,300 @ 20% (with an increase of €26,300 max), Balance @ 40%|
Employee Remote Working
Deduction in respect of certain expenses of remote working The current tax arrangements for working from home will be enhanced and formalised from 2022 onwards.
An Income Tax deduction amounting to 30% of the cost of vouched expenses for electricity, heating and internet services for those days spent working from home can be claimed by remote workers. Revenue’s online system will enable individuals to claim tax relief in real time throughout the year.
Pre-letting expenses of vacant residential premises
The deduction for pre-letting expenses of a revenue nature incurred on a property that has been vacant for a period of 12 months or more has been extended by three years. The expenditure must be incurred within the 12-month period before it is let as a rented residential premises.
A miserly cap on allowable expenses of €5,000 per property will apply, and the relief will be subject to clawback if the property is withdrawn from the rental market within four years. The relief will be available for qualifying expenses incurred up to the end of 2024.
Help to Buy (HTB)
In 2020, the July Stimulus plan introduced a temporary enhanced HTB relief from 23 July 2020. Under the enhanced scheme, increased Income Tax relief is available, to the lesser of:
• €30,000 (up from €20,000)
• 10% (up from 5%) of the purchase price of the new home or of the completion value of the property in the case of self-builds
• the amount of Income Tax and DIRT paid over the four years prior to making the application.
This enhanced relief will be been extended to 31 December 2022.
Employment Wage Subsidy Scheme (EWSS)
The EWSS provides a wage subsidy to eligible employers in respect of qualifying employees. EWSS will close to new employer registrations from 1 January 2022 and will conclude on 30 April 2022.
Eligibility for the scheme will continue to require a 30% reduction in turnover/customer orders in the full year 2021 as compared to the full year 2019.
Businesses that qualify for entry to the scheme as at the last day of December 2021 may continue to avail of the EWSS until 30 April 2022.
The following rates will apply:
|Weekly Pay||Rate from 20 Oct 2020 to 30 Nov 2021||Rate from 1 Nov 2021 to 28 Feb 2022||Rate from 1 Mar 2022 to 30 Apr 2022|
|Less than €150||Nil||Nil||Nil|
|Between €150 and €202.99||€203.00||€151.5||€100.00|
|Between €203 and €299.99||€250.00||€203.00||€100.00|
|Between €300 and €399.99||€300.00||€203.00||€100.00|
|Between €400 and €1,462||€350.00||€203.00||€100.00|
Deposit Interest Retention Tax (D.I.R.T.), The interest you receive is subject to a tax called Deposit Interest Retention Tax (DIRT). Since 2020, DIRT is charged at 33% on all interest payments. In 2019, the rate was 35%, in 2018, the rate was 37% and in 2017, the rate was 39%.
This tax is being deducted at source by deposit takers (e.g. banks, building societies, Credit Unions, Post Office Savings Bank, etc.) from interest paid or credited on deposits of Irish residents.
The current DIRT rate for 2022 is 33% of your total interest. The DIRT rates for past years are:
DIRT does not apply to:
A claim for tax relief may be made on a Form MED 1, at the standard rate of tax (20%), (with the exception of nursing home expenses for which tax relief is still available at your highest rate of tax) for certain medical expenses incurred by you, on your own behalf or on behalf of another person. Most medical expenses, with some exceptions e.g. routine dental and ophthalmic care, qualify for relief.
A claim for tax relief cannot be made for any expenditure which has been or will be reimbursed, e.g. by VHI, Laya Healthcare, Aviva Health, etc., or where a compensation payment is or will be made.
The Home Renovation Incentive provides a tax credit for homeowners (owner-occupiers and Landlords) for qualifying expenditure incurred on repair, renovation or improvement work carried out on a property. The HRI is paid in the form of a tax credit at 13.5% of qualifying expenditure, which can be set against your income tax over 2 years. This effectively reduces the rate of VAT to zero on qualifying work, up to a value of €30,000.
You cannot claim for any work carried out or paid for after 31 December 2018.
The only exception to this closing date is if planning permission was in place by 31 December 2018. If so, work carried out between 1 January 2019 and 31 March 2019 will qualify for the relief.
The Home Renovation Incentive (HRI) is a relief from Income Tax (IT) for homeowners, landlords and local authority tenants. You can claim the HRI Tax Credit for repairs, renovations and improvements to your home or rental property.
To be eligible for HRI:
The HRI is an online only scheme for homeowners and landlords. If you pay tax through PAYE, use myAccount to claim the HRI Tax Credit. If you pay tax through self-assessment, use Revenue Online Service (ROS) to claim the HRI Tax Credit.
If you pay medical insurance directly to an approved insurer, tax relief is available.
Qualifying medical insurance policies can be for:
health and dental insurance combined.
You do not need to claim the tax relief from Revenue. The relief is given as a discount on the cost of the policy, regardless of who the policy is for. This is known as tax relief at source (TRS).
The relief available depends on whether the policy is for an adult or a child.
Relief available is equal to the lesser of either:
20% of the cost of the policy
20% of €1,000 (equal to a credit of €200).
Relief available is equal to the lesser of either:
20% of the cost of the policy
20% of €500 (equal to a credit of €100).
For the purposes of this relief, a child is any individual under 21 years of age.If you pay medical insurance directly to an approved insurer, tax relief is available.
Employees whose medical insurance premiums are paid on their behalf by their employer, as a Benefit-in-Kind, will not have been allowed tax relief at source. To claim the relief due it will be necessary to notify your Revenue office with the relevant details or by completing an annual tax return.
Tax relief for medical insurance premiums paid to authorised insurers is granted at source. Subscribers pay a reduced premium to the Insurer. This is the same as giving tax relief at the standard rate of 20% and is claimed as Tax Relief at Source.
Where an individual lets a room (or rooms) in his or her sole or main residence as residential accommodation, the income may be exempt from income tax where the aggregate of the gross rents and any sums for meals or other services supplied in connection with the letting is below a certain threshold.
The ceiling for exemption from income tax under the Rent-a-Room scheme was increased from €12,000 to €14,000 for 2017 and subsequent years.
From 1 January 2019, the relief does not apply to income arising from letting periods which do not exceed 28 consecutive days.
The exemption does not affect any entitlement to mortgage interest relief or to Capital Gains Tax exemption on the disposal of the residence.
Where an employer deducts the contributions from gross pay the tax relief is given at source. Therefore no further action is necessary to claim relief.
Where an employer does not deduct the contributions from gross pay relief can be claimed, by notifying your Revenue office of the relevant details or by completing an annual tax return.
Tax relief at the standard rate of tax (20%) is available for tuition fees which includes the Student Contribution but does not include examination fees, registration fees and administration fees. The qualifying fee is the amount you pay for tuition fees (including the student contribution). The maximum amount you can claim is €7,000 per person per course.
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