# Income tax changes



## Brendan Burgess

€1500 standard rate band increase

Tax credits up by €50


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## PebbleBeach2020

the standard rate will mean an extra €300 per annum for a higher rate of tax payer. Will the tax credits (income and personal) each going up by €50 mean that the higher tax rate payer is better off next year to the tune of €400 per annum???


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## Gordon Gekko

€350 I would have said.

20% of €1,500 plus €50.


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## Purple

Gordon Gekko said:


> €350 I would have said.
> 
> 20% of €1,500 plus €50.


Hardly worth bothering about, is it?


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## PebbleBeach2020

Don't PAYE workers get the personal tax credit (€50 increase) and the employee tax credit (€50 increase). Plus approximately €12 less to pay in USC. So altogether, a €412 increase in nett pay as a result in 2022?

Better than a kick in the nuts off Bobby Charlton I suppose.


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## Purple

PebbleBeach2020 said:


> Don't PAYE workers get the personal tax credit (€50 increase) and the employee tax credit (€50 increase). Plus approximately €12 less to pay in USC. So altogether, a €412 increase in nett pay as a result in 2022?
> 
> Better than a kick in the nuts off Bobby Charlton I suppose.


Every little helps...


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## Firefly

PebbleBeach2020 said:


> So altogether, a €412 increase in nett pay as a result in 2022?


I think it's too high. In my house that means we'll be up nearly 70 euro a month. I can't see the cost of living rising that much....


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## newirishman

Firefly said:


> I think it's too high. In my house that means we'll be up nearly 70 euro a month. I can't see the cost of living rising that much....


It is not the job of tax to make up for cost of living rises, albeit they should be taken into account when adapting the bands.
This is what a (hopefully regular/yearly) pay increase of at least inflation rate should do.

I think the taxes are too high for mid level incomes, and I am very happy that they are being adjusted a bit.


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## PebbleBeach2020

Firefly said:


> I think it's too high. In my house that means we'll be up nearly 70 euro a month. I can't see the cost of living rising that much....


Come back to me when you get a few electricity and gas bills in the door auld stock!


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## bish123

At least they didn't penalize higher earners for working hard and any addition is welcome.


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## Paul O Mahoney

Firefly said:


> I think it's too high. In my house that means we'll be up nearly 70 euro a month. I can't see the cost of living rising that much....


I can and be double that. The figures today said 3.7% by next September ...the reality is itll be double that in what's not in the "inflation basket " like building costs, and every other essential.

€70, a month some income dude


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## Steven Barrett

bish123 said:


> At least they didn't penalize higher earners for working hard and any addition is welcome.


If you are self employed and earn over €100,000, there is a 3% USC surcharge, meaning you pay 55% in tax. That's pretty high already. A lot of professions can't incorporate to avoid this by being under the PAYE system. 

It is grossly unfair when you can be an employee for a multi national and have all the job security of a multi national and not create any employment yourself and pay less tax on a similar salary/ earnings. 


Steven
www.bluewaterfp.ie


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## arbitron

Steven Barrett said:


> If you are self employed and earn over €100,000, there is a 3% USC surcharge, meaning you pay 55% in tax. That's pretty high already. A lot of professions can't incorporate to avoid this by being under the PAYE system.
> 
> It is grossly unfair when you can be an employee for a multi national and have all the job security of a multi national and not create any employment yourself and pay less tax on a similar salary/ earnings.
> 
> 
> Steven
> www.bluewaterfp.ie


That does seem unfair and unproductive - do you know what the reasoning/motive for that tax approach is?


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## Purple

bish123 said:


> At least they didn't penalize higher earners for working hard and any addition is welcome.


Mortgage interest rates and marginal tax rates are the only thing that really matter to me. The rest is window dressing. 
Interest rates are as low as can be expected but the marginal tax rate should never be more than 50%. (PAYE, PRSI and USC are all just taxes).
I also think they should re-name USC as it's not a universal charge.


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## silverfox239

Agreed on the renaming of USC


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## Steven Barrett

arbitron said:


> That does seem unfair and unproductive - do you know what the reasoning/motive for that tax approach is?


The Revenue have a longstanding mistrust of the self employed in that they can put things through as expenses that an employee couldn't. But in saying that, company directors can do that too but they aren't hit by this tax. Probably because they can keep their income at €99,999 and put even more through as expenses. Sole traders aren't able to limit the amount of money they take as income. 


Steven
www.bluewaterfp.ie


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## Purple

Steven Barrett said:


> The Revenue have a longstanding mistrust of the self employed in that they can put things through as expenses that an employee couldn't. But in saying that, company directors can do that too but they aren't hit by this tax. Probably because they can keep their income at €99,999 and put even more through as expenses. Sole traders aren't able to limit the amount of money they take as income.
> 
> 
> Steven
> www.bluewaterfp.ie


I think Revenue would take a hard look at any company director earning €99,999 a year.
Expenses are also examined closely by Revenue.
Are you saying that Sole Traders can't leave working capital in their businesses? (I really know nothing about sole traders)


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## Steven Barrett

Purple said:


> I think Revenue would take a hard look at any company director earning €99,999 a year.
> Expenses are also examined closely by Revenue.
> Are you saying that Sole Traders can't leave working capital in their businesses? (I really know nothing about sole traders)


All of their net relevant earnings are taxed as income each year.  A director can decide what he takes out as income and leave the rest in the company account and not subject to income tax. A sole trader can't do that. They have to pay income tax on it.


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## Purple

Steven Barrett said:


> All of their net relevant earnings are taxed as income each year.  A director can decide what he takes out as income and leave the rest in the company account and not subject to income tax. A sole trader can't do that. They have to pay income tax on it.


So how does a sole trader maintain working capital?


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## Steven Barrett

Purple said:


> So how does a sole trader maintain working capital?


Don't know. they may use taxed income? Don't know how it is taxed in subsequent years. Maybe an accountant on here can answer it.


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## Steven Barrett

...if the Pension Commission recommendations are implemented, self employed earning over €100,000 will pay a top rate of 61% by 2030, going up to 64.25% by 2040 and settling at 65.35% by 2050. 

God help us all if any government feels this is equitable to tax people at that rate. You will see a shortage of doctors, dentists and other professions as it would not be worth their while to work here.


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## Purple

Steven Barrett said:


> Don't know. they may use taxed income? Don't know how it is taxed in subsequent years. Maybe an accountant on here can answer it.


I'm not doubting you, it just seems strange that a doctor can't hold working capital for supplies, an extension, that sort of thing.


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## Purple

Steven Barrett said:


> ...if the Pension Commission recommendations are implemented, self employed earning over €100,000 will pay a top rate of 61% by 2030, going up to 64.25% by 2040 and settling at 65.35% by 2050.
> 
> God help us all if any government feels this is equitable to tax people at that rate. You will see a shortage of doctors, dentists and other professions as it would not be worth their while to work here.


But taxing the rich is the solution to all our problems. Haven't you heard?


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## C3PO00

Steven Barrett said:


> ...if the Pension Commission recommendations are implemented, self employed earning over €100,000 will pay a top rate of 61% by 2030, going up to 64.25% by 2040 and settling at 65.35% by 2050.
> 
> God help us all if any government feels this is equitable to tax people at that rate. You will see a shortage of doctors, dentists and other professions as it would not be worth their while to work here.


If anyone is earning 100k+ self employed could they not just set themselves up as a ltd company?


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## newirishman

C3PO00 said:


> If anyone is earning 100k+ self employed could they not just set themselves up as a ltd company?


Indeed, but that would mean 10 point something percent employer PRSI.


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## Sarenco

C3PO00 said:


> If anyone is earning 100k+ self employed could they not just set themselves up as a ltd company?


Certain professionals (dentists, solicitors, etc) are prohibited by statute from incorporating their businesses.


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## arbitron

Steven Barrett said:


> The Revenue have a longstanding mistrust of the self employed in that they can put things through as expenses that an employee couldn't. But in saying that, company directors can do that too but they aren't hit by this tax. Probably because they can keep their income at €99,999 and put even more through as expenses. Sole traders aren't able to limit the amount of money they take as income.
> 
> 
> Steven
> www.bluewaterfp.ie


I thought of this thread recently when I dealt with 3 tradespeople doing some home improvement. Each of them (unprompted) offered a discount for cash in hand. I didn't think this was still so common.


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## Steven Barrett

arbitron said:


> I thought of this thread recently when I dealt with 3 tradespeople doing some home improvement. Each of them (unprompted) offered a discount for cash in hand. I didn't think this was still so common.


Don't charge the customer VAT, so a 19% discount for you. They get cash in hand. If they are sole traders and earning over €100,000, they'd be paying 55% at top rate tax. 

It has always continued to go on. Maybe the job you were getting done was small enough for them to hide it rather than a job that would take weeks to do?


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## Purple

Steven Barrett said:


> Don't charge the customer VAT, so a 19% discount for you. They get cash in hand. If they are sole traders and earning over €100,000, they'd be paying 55% at top rate tax.
> 
> It has always continued to go on. Maybe the job you were getting done was small enough for them to hide it rather than a job that would take weeks to do?


I spoke to a guy running a small fabrication company recently. It's a 5 man operation. He said he's looking for jobs that he can invoice and pay tax on because everyone is looking for a cash discount and he's bugger all income to declare. It's hard to spend €115k on a new BMW X5 while officially earning €40k a year. He's a good republican so I wouldn't report him.


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## arbitron

Steven Barrett said:


> Don't charge the customer VAT, so a 19% discount for you. They get cash in hand. If they are sole traders and earning over €100,000, they'd be paying 55% at top rate tax.
> 
> It has always continued to go on. Maybe the job you were getting done was small enough for them to hide it rather than a job that would take weeks to do?


Yes, all jobs less than a week. One of the discounts offered was about 30%, others were less. I was surprised they just came out with it - I could have been a Revenue inspector for all they knew!


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## PebbleBeach2020

arbitron said:


> I could have been a Revenue inspector for all they knew!


if you were a revenue inspector, you would have asked for it straight away!!!!


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## Purple

arbitron said:


> Yes, all jobs less than a week. One of the discounts offered was about 30%, others were less. I was surprised they just came out with it - I could have been a Revenue inspector for all they knew!


Yea, but you could have been a Gardaí for all they knew.


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## mtk

Sarenco said:


> Certain professionals (dentists, solicitors, etc) are prohibited by statute from incorporating their businesses.


Is there some way around this ?
As from memory pretty sure one medical consultant I saw say" joe blogs" had joe blogs ltd or variation thereon on the  receipt
and also recall that on the  tax defaulters list which usually has a few medical consultants had one person with the same variation .


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## Sarenco

mtk said:


> Is there some way around this ?


I don't believe there is any prohibition on a medical doctor practising through a limited company.


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## HollowKnight

Sarenco said:


> I don't believe there is any prohibition on a medical doctor practising through a limited company.


I work in healthcare and refer regularly to medical/surgical consultants - all of them have a LTD company that they 'work for'.


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## mtk

Sarenco said:


> I don't believe there is any prohibition on a medical doctor practising through a limited company.


Sorry I thought you were saying they could not . Perhaps I misunderstood?


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## time to plan

Steven Barrett said:


> If you are self employed and earn over €100,000, there is a 3% USC surcharge, meaning you pay 55% in tax. That's pretty high already. A lot of professions can't incorporate to avoid this by being under the PAYE system.
> 
> It is grossly unfair when you can be an employee for a multi national and have all the job security of a multi national and not create any employment yourself and pay less tax on a similar salary/ earnings.
> 
> 
> Steven
> www.bluewaterfp.ie


Self-employed people like me don't have to pay Employers PRSI @ 8.8% on weekly earnings up to €398 and 11.05% on weekly earnings over €398. This is a massive saving in comparison to the 3% USC surcharge. The multinational employee has the Employers PRSI hidden from their payslip but it's still a tax on their wage.

So the true marginal rate for the multinational employee is (40 + 8 + 4 + 11.05) / 111.05 = 56.8%. And that's a marginal tax rate that kicks in at 70k, not 100k.


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## Shirazman

HollowKnight said:


> I work in healthcare and refer regularly to medical/surgical consultants - all of them have a LTD company that they 'work for'.



Revenue came after them big time a few years ago!  









						Revenue collects €19m owed by 128 consultants
					

Revenue Commissioners have collected more than €19m in tax, late payment interest charges and penalties following an audit of 128 hospital consultants.




					www.rte.ie


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## Purple

Shirazman said:


> Revenue came after them big time a few years ago!
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Revenue collects €19m owed by 128 consultants
> 
> 
> Revenue Commissioners have collected more than €19m in tax, late payment interest charges and penalties following an audit of 128 hospital consultants.
> 
> 
> 
> 
> www.rte.ie


Isn't it hard to believe that Doctors are subject to the same human frailties as the rest of us.


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## Shirazman

Purple said:


> Isn't it hard to believe that Doctors are subject to the same human frailties as the rest of us.



To be fair to them, most of them had set up those limited companies on the advice of their professional advisers!    Unfortunately for them, Revenue then seems to have either tightened up, or changed its interpretation of the rules!       Ouch!


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## Purple

Shirazman said:


> To be fair to them, most of them had set up those limited companies on the advice of their professional advisers!    Unfortunately for them, Revenue then seems to have either tightened up, or changed its interpretation of the rules!       Ouch!


Wow, so Professional Accountants are also subject to the same human frailties as the rest of us?!
Next you'll be saying all Professional are no more or less moral than the rest of us!


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