Loss of PAYE tax credits for wife of Proprietary Director

leghorn said:
Isn't this the whole idea of joint assessment (assigning tax credits accordingly)
Click to expand...

The PAYE tax credit is not assignable in any case but the personal tax credit is transferable.

Most company directors that I know never have any problem claiming way more than 1830 a year in various 'expenses' and 'travel' (just like our TDs!) even at the same time as they are freezing their employees pay. So I assume this rule is to prevent what would be an open invitation for tax evasion.

You could make your wife a proprietary director of the company that way she would have the benefit of lower PRSI but she would then lose some SW benefits.
 
Just like to update this thread.
I saw this post:
http://www.askaboutmoney.com/showpost.php?p=181110&postcount=12

and did a bit more research. I found this:
http://www.revenue.ie/en/personal/circumstances/marriage.html


How will we be taxed in subsequent years?

The following options are available:

  • Joint Assessment
  • Separate Assessment
  • Assessment as a Single Person (Separate Treatment)
You may choose the method of taxation which is best suited to your circumstances.
What is assessment as a single person?

Assessment as a Single Person, (also referred to as Separate Treatment) should not be confused with Separate Assessment. Under Assessment as a Single Person each spouse is treated as a single person for tax purposes.
Both spouses:

  • Are taxed on their own income
  • Get tax credits and the standard rate cut-off point due to a single person
  • Pay their own tax
  • Complete their own Return of Income form and claim their own tax credits.
One spouse cannot claim relief for payments made by the other and there is no right to transfer tax credits or standard rate cut-off point to each other.
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How do I claim Assessment as a Single Person?

Assessment as a Single Person must be claimed in writing. Either spouse can make the claim and the election lasts until withdrawn by the spouse who claimed it. A claim for Assessment as a Single Person, if required, must be made within the tax year (preferably at the beginning).
This basis of assessment can be unfavourable in some circumstances because you cannot transfer unused tax credits or standard rate cut-off point. Home Carer's Tax Credit cannot be claimed in respect of a spouse who cares for a dependent person and who may otherwise qualify for the relief. See examples in Leaflet IT2 - Taxation of Married Persons.



So it looks like we will be claiming for assessment as single people.
 
it gets better - if she's made redundant she's not entitled to jobseekers allowance either - she has to apply for the means tested option...
and this applies for x number of years to come even if she works for somebody else (not sure exactly how many years)
 
I am a PAYE employee and get all my due tax credits. Now I plan to start a company with another friend (a part time venture), while keeping my current job, so if I hold more than 15% of the share and become a proprietary director, does that mean I will miss out on the tax credits on the income from my current employer, even if I dont have any income from my new company?
 

You keep the PAYE credit once you have income from a non-proprietory PAYE employment. If you did not have that employment, i.e. only had the proprietory directorship then you would lose the PAYE credit.
 
You do keep the PAYE credit but that credit can only be applied to tax on PAYE income. It cannot be used to offset tax on other income.
 
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