20k Bonus

[eoghanlk]

I will be getting a 20k work bonus in the coming weeks. I don't need the cash right now and don't fancy giving 42% to Bertie if I can avoid it. Aside from my pension/AVCs and company share schemes are there any other legal ways of reducing my tax bill?

thanks

 

[ClubMan]

Actually it'll be 42% income tax plus 2% health levy plus 4% PRSI unless you have already exceeded the employee PRSI threshold. Can't think of any obvious way to avoid tax on this other than the pension route. Presumably you're already maximising your SSIA contributions as that is another tax efficient use of €254 a month.

 

[CCOVICH]

Is it still possible to invest in the Business Expansion Scheme?

 

[ClubMan]

BES was extended to the end of 2006 in Budget 2004 if I'm not mistaken. See [broken link removed]. However this obviously involves some speculative investment in a business in order to yield tax relief and I was assuming (for no good reason perhaps!) that eoghanlk might have been looking for something less risky?

 

[CCOVICH]

Yes, obviously BES invloves a degree of risk, and so it's suitability will depend on the individual in question. Doesn't An Post offer tax free savings (albeit at fairly unattractive rates of return)? See http://www.anpost.ie/personal/finance/personal_financial_lump_certificates.html

 

[ClubMan]

No harm in mentioning them alright but ... such tax free accounts from An Post, the Credit Union and some other institutions only avoid DIRT on interest earned and not income tax (and PRSI/health levy) on the original lump sum which seems to be the main intention here.

 

[CCOVICH]

Ah yes, sorry about that, I was just looking at 'tax free' .

Tax free returns don't avoid the issue of tax payable on receipt of the bonus.