1. SELF EMPLOYED
What Tax do I need to pay if I am Self Employed?
Just like full time employees, self-employed workers must pay tax on their earnings over a certain amount. What is the difference? Unlike PAYE workers, your tax isn’t taken out of your wages at source. Instead, you are responsible for registering and submitting a tax return before the filing deadline. Sounds daunting, struggling to find the time to do it or just finding it all a bit too much – well it doesn’t have to be!
How do I know if I need to register for income tax?
Anyone who receives income not subject to PAYE deductions. To put it plainly, even if you are an employee in the PAYE system you may need to pay tax through the self-assessment if you earn non-PAYE income.
Examples of Non-PAYE income includes:
- Income from a trade, profession or vocation
- Deposit Interest
- Irish Rental Income
- Foreign Income
- Annual payments (example – maintenance payments)
How much Tax will I pay?
The amount of tax you pay each year depends on whether your income exceeds your personal tax allowance, and if so, which tax band you fall into.
What business expenses can I claim back on?
The great thing about being self-employed is that you can actually claim back the cost of certain expenditure - as long as the expense is business related and is used exclusively for business purposes! Some examples include:
- Office Costs
- Travel & Accommodation costs
- Staff & training expenses
- Uniforms/protective clothing
- Advertising & marketing
- Internet & Phone use
What records do I need to keep for Tax purposes?
Record-keeping – this will now become the word that you will hear over and over again. It is a key responsibility being self employed and there is actually a legal obligation to keep your records for at least 6 years following your submission deadline of the relevant tax year, normally 31st October each year.
These records include:
- All sales and income
- All business expenses
- Records regarding personal income
- VAT records (if you are VAT registered)
- Any grants made available via government portals or support schemes
What if I miss the deadline to file the tax return?
By 31 October in a tax year, you must:
pay your preliminary tax for that year
file your tax return and self-assessment for the previous tax year
pay any balance of tax due for the previous year
Filing before the deadline is very important. If you miss these deadlines you may have to pay interest and fines/penalties on top of your tax bill.
You will have to pay a surcharge if you send your tax return after the deadline, as follows:
within two months of the filing date: 5% of the tax due, up to €12,695
over two months: 10% of your tax liability, up to €63,485
However, when you pay and file through the Revenue Online Service (ROS), the 31 October deadline is extended to mid-November.
2. RCT SUBCONTRACTORS
What is RCT?
RCT Subcontractors are self-employed individuals who provide services to the construction, forestry and meat-processing industries and are hired to work for a primary contractor. When the primary contractor pays the subcontractor for their services, a percentage of this payment is deducted and paid directly to the Revenue Commissioners under the RCT system (the percentage rate is based on the individual’s tax compliance records).
Does an RCT subcontractor have to file a tax return?
4. CAPITAL GAINS
How do I know if I am exempt from paying CGT
All individuals are eligible for a personal exemption of the first €1,270 of CGT each year. In addition, there are a number of CGT reliefs that can help to reduce the amount of tax you will pay. Depending on your personal circumstances, the method through which you sold or obtained an asset, and the type of asset itself, you may be eligible for one of these reliefs.
5. Air B&B
Do you earn rental income – either from letting out a property or a room in your home?
If the answer is YES - then you'll no doubt be aware that you're liable to pay tax on your rental income. Staying on the right side of the taxman can be arduous, and those in the industry often struggle to get all documentation in order before the November deadline – never mind claim tax relief.