Ireland’s taxation system is not exactly easy to navigate, nor is tax a subject we like to think about too much. Nevertheless there are plenty of tax reliefs and credits that you should know about. With that in mind here are some quick and easy tips on how to pay less tax.
Pension Contributions – The double whammy of income tax relief on contributions and tax free investment growth make pensions a no-brainer. See also my Pensions Made Simple blog.
CGT Exemptions – The first €1,270 of annual capital gains are tax free (and don’t forget to offset any qualifying current or legacy losses).
CAT Exemptions – Avoid capital acquisitions tax of 33% on gifts by availing of the €3,000 per person per gift tax exemption.
Tax Credits – Make sure you get the correct credits (thereby reducing your income tax) if you are a PAYE worker, or married, or blind, or a single parent, or over 65, or widowed, or care for a dependent relative, or care for an incapacitated child.
Work Expenses – If self-employed, keep records/receipts and ensure you maximise profits by deducting all allowable expenses. If employed, claim for Flat Rate Expenses if you are a healthcare professional, engineer, tradesperson, teacher, lecturer, hairdresser, beautician, or retail worker.
Medical Expenses – You can get 20% tax back (if not reimbursed by private health insurance) on a whole range of health and medical expenses and also non-routine dental expenses. You can also claim 20% tax back on private medical insurance premiums paid by your employer.
Nursing Care – You can claim tax relief at the higher rate of 40% for nursing home fees or if you employ an in-home professional carer, either for yourself or a dependent.
Rent A Room – If you rent out one or more rooms in your home you can take in up to €14,000 each year free of tax.
EII Scheme – Get immediate tax relief on an approved investment at 30% with a further 10% relief available three years later if the company meets employment or R&D targets.
Cycle To Work – Your employer can purchase a bike for up to €1,000 on your behalf and the net cost to you (assuming 52% total Tax/ USC/PRSI) will be €480.
Tax Saver Commute – Your employer can buy your monthly or annual bus/train/Luas/DART travel pass for you, and save you up to 52% of the normal cost of your travel ticket.
College Fees – You can claim tax relief at 20% on third level tuition fees paid, over and above €3,000 (full-time) and €1,500 (part-time), up to a maximum of €7,000 per student per course.
This is a summarised version of the most common ways people can pay less tax – for more information have a look at the official Revenue Guide to Tax Credits, Reliefs and Exemptions.