Loss of PAYE tax credits for wife of Proprietary Director

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z103

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I phoned the revenue for them to Update my wife's tax credits to include PAYE tax credits. They informed me that she wouldn't now be entitled to these credits because she is now married to the director of the company she works for. I was pretty shocked to hear this, so I did a bit more research and found this:
http://www.revenue.ie/en/tax/it/credits/paye-employee-credit.html

It just doesn't sound correct to me. Are revenue now discriminating against people because of their marital status?

To be clear, my wife does a full 40 hour week and gets paid full wages from a limited company. I am a proprietary director of this company.

Can anyone confirm that she is not entitled to PAYE tax credits?
 
Thank you for confirming that Hamslicer.
Not the answer I wanted to hear.

It does not sound right that the revenue can discriminate against someone soley on the basis of who they choose to marry. If we didn't marry, we would be far better off financially.

I am not going to let this rest. Any ideas how the government punishes those it deems to have defaulted?
I'm furious and am considering the following;
1. Simply not paying.
2. Moving country.
3. Just giving up and joining the dole queue.
 
Just read this:

"Married couples have a constitutional right to be taxed no more harshly than two single individuals would be. That was the ruling of the Supreme Court back in 1980 - it still stands"

Source:Family Finance 2005; Author, Colm Rapple; Page 288
 
Would I be right in thinking that your case to the Revenue would be that the loss of your wife's PAYE tax-credit is solely on the basis that she married a / the proprietary director of her employer's company?

Is your wife also listed as a director of the company?
 
Yes, mathepac.
Prior to our marriage my wife would be entitled to PAYE tax credit. Now she is not.
She is not a director of any company.
 
If she worked elsewhere she'd be entitled to the credits - you could challange it in the courts on the grounds of discrimination (and lose); yuour choice.

If you weren't a proprietary director - she'd be entitled to the credit. What otherwise would there be to stop you reducing your own salary and increasing hers to take advantage of her credits ?

Of the options you present, I advise you leave the country.
 
Pay your taxes under the current system, but see if you can get help to take a legal case against Revenue. I imagine there'd be groups out there that would support you in such a case.
 
If you weren't a proprietary director - she'd be entitled to the credit. What otherwise would there be to stop you reducing your own salary and increasing hers to take advantage of her credits ?
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Isn't this the whole idea of joint assessment (assigning tax credits accordingly)

Pay your taxes under the current system, but see if you can get help to take a legal case against Revenue. I imagine there'd be groups out there that would support you in such a case.
Click to expand...
Anyone out there want to support my case?
 
Spouses working for their sole trader partners are not allowed the PAYE credit either. The effect of this is some €9,180 ( tax credit of €1,830 x the std rate ) of income being taxed which otherwise would not, even though the wife is on PAYE with their husband ( or v.v. ) The employee credit was ( I believe) originally intended to compensate employees for being taxed regularly (weekly/monthly) unlike self-employed persons who have the "luxury" of paying only once a year.
 
This truly is shocking. Both of us are PAYE employees, on not that much money to start with.

Any solicitors know how I would go about a legal challenge? Is this incredibly expensive or would I be entitled legal aid?
 
leghorn said:
... Anyone out there want to support my case?
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I'll be shouting for you both from the sidelines if that's any good.

The circumstances you describe certainly sound discriminatory; jointly you are financially worse off than as singletons.

But I don't envy you if you take them on - Revenue, barristers, courts, possible appeals, years - ouch. Unless a few other AAMers in similar circumstances were to join with you, its gonna get lonely and expensive out there .
 
I am not sure of the validity of the following- caveat emptor:

Could your wife set herself up as a self-employed consultant (a sole trader, not a limited company) and charge a fee to your limited company for the work she undertakes? This wouldn't entitle her to the Employee tax credit but she may be able to reduce the gross 'consultancy fees' by c. €9150 expenses [travel/stationery etc]. This would ensure that she effectively benefits by the value of the tax credit as she'd only pay tax on the gross amount less expenses. There may be issues with VAT if the fees exceed the VAT threshold for services (approx €37500) and also withholding tax/ cash flow implications/ third party returns by your company re fees paid to her etc so any decision to go with this needs to be professionally evaluated.

As I said: Caveat emptor...get advice about this!
 
Thanks for the suggestion Deadlyduck.
A couple of points:

1. Why should she have to try to circumvent the system like this? (we try to do everything above board - maybe this is our mistake!)

2. Would the revenue not see through this rouse?
She also legitimately incurs expenses anyway (travel etc) so I'm not sure how this arrangement would be to our advantage.
 
deadlyduck said:
... Could your wife set herself up as a self-employed consultant ...
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Either I have missed the point of the thread or you have.

I thought this about about losing PAYE tax-credits due to marriage not about finding a possibly dubious and financially circuitous route around the loss.
 
I accept that my suggestion is an attempt to avoid the loss and that the principle at issue here- the discriminatory nature of the proprietary directorship rule- is open to challenge. However, you could consider it as a (possible) immediate term fix to your financial loss.

As a means of mitigating the loss, my idea may/ may not work. If (and it is an "if")- having researched the possibility- the idea is deemed acceptable and permissible from a tax planning view [I'm not condoning tax evasion- this suggestion would be tax avoidance which is legal though open to abuse] then it would be open to you to decide whether or not to run with it.

However, your main point- that the rule is discriminatory and open to challenge- absolutely stands. My idea is a 'possible quick fix' whereas your challenge- if successful- would be a superior permanent and transparent fix.
 
deadlyduck said:
Could your wife set herself up as a self-employed consultant (a sole trader, not a limited company) and
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A Sole Trader with only 1 client (in this case her husband's company) can be deemed to be an employee of that pseudo-client (her husband's company) by Revenue. This would apply even if the company was not related to her husband.

See "Code of Practice for Determining Employment or self-Employment Status of Individuals":
http://www.revenue.ie/en/tax/it/leaflets/code-of-practice-on-employment-status.pdf
 
leghorn said:
This truly is shocking. Both of us are PAYE employees, on not that much money to start with.

Any solicitors know how I would go about a legal challenge? Is this incredibly expensive or would I be entitled legal aid?
Click to expand...

It would be cheaper to get a divorce and give her back her credits than it would to take on the revenue, the rev know that no one is going to challenge them for the sake of 1800 odd a year
 
It would be cheaper to get a divorce and give her back her credits than it would to take on the revenue, the rev know that no one is going to challenge them for the sake of 1800 odd a year
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Maybe one single person might not challenge them. I intend gathering support. This must impact quite a few people across the country.
If anyone would like to help, please post here (or PM me)

(PS. For me, 1830 is a huge chunk of money.)
 
Eblanoid said:
I imagine there'd be groups out there that would support you in such a case.
Click to expand...

When I said groups, I meant existing groups. I'm sure there are political parties or pro-equality, pro-family groups that would be interested in this anomaly.

Sheesh - if you can get money for being told to get your hair cut...
[broken link removed]
 
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