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Re New Tax Year 2006

By Raymond Robinson,2014-03-20 14:58
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Re New Tax Year 2006

    Documentation Required by Payroll Office so that correct tax deductions can be made.

    In accordance with P.A.Y.E requirements we are obliged to deduct Income Tax from all emoluments on the emergency basis until we receive one of the following documents:

    ; Certificate of Tax Credits and Standard Rate Cut-Off (referenced to NUIM)

    ; P45 from your previous employer

    ; An Exemption Certificate

    Academic Staff:

    The following grades have a standard flat rate expense allowance. If this does not appear on your Tax Credits and Standard Rate Cut-off Point Notice, you should inform the Inspector of Taxes of your grade and it will be added accordingly. These rates have not changed since January 2003.

    Professor:

    ?471.00 p.a.

    Assoc. Prof., Senior Lecturer, Lecturer, Junior Lecturer and Assistant Lecturer:

    ?402.00 p.a.

    Part-Time Lecturer:

    ?217.00 p.a.

Tax Credits, Reliefs and Rates for the income tax years 2005 and 2006

    The following chart gives details of the main personal tax credits for the tax years 2005 and 2006.

    Personal Tax Credits

    Tax Year Tax Year 2005 2006 Personal Tax Credits

    ? ?

    Single Person’s Tax Credit 1,5801,630Married Person’s Tax Credit 3,160 3,260 Widowed Person’s Tax Credit - qualifying for One Parent 1,580 1,630 Family Tax Credit 1,980 2,130 - without dependent children 3,160 3,260 - in year of bereavement

    One-Parent Family Tax

    Credit

    (with qualifying dependent 1,580 1,630 children) (See Note 1)

    Widowed, Deserted, Separated

    or Unmarried

     Widowed Parent Tax Credit

    Bereaved in 2005 -3,100Bereaved in 2004 2,800 2,600 Bereaved in 2003 2,300 2,100 Bereaved in 2002 1,800 1,600 Bereaved in 2001 1,300 1,100 Bereaved in 2000/2001 800 - Home Carer’s Tax Credit 770 770 (Max)

    PAYE Tax Credit 1,270 1,490

     Age Tax Credit

    205 250 (a) Single/Widowed

    410 500 (b) Married

    Incapacitated Child Tax 1,000 1,500 Credit (See Note 1)

    Dependent Relative Tax 60 80 Credit (See Note 1)

    Blind Person’s Tax Credit

    (single person) 1,000 1,500 (one spouse blind) 1,000 1,500 (both spouses blind) 2,000 3,000

    Additional Allowance for *825 *825 Guide Dog

    Incapacitated Person - Allowance for Employing a *30,000 max *30,000 max Carer

    * Relief in respect of a Guide Dog and for Employing a Carer are

    allowable at the individual’s highest rate of tax i.e. 20% or 42% as appropriate in both years.

    Tax Year Tax Year 2005 2006 Note 1: The child’s/relative’s income ? ? limits are:

    One-Parent Family Tax Credit nil nil Incapacitated Child Tax Credit nil nil Dependent Relative Tax Credit *10,997 *11,913 *In the case of Dependent Relative Tax Credit, if the relative’s income exceeds

    the relevant limit no tax credit is due.

Exemption Limits

    Tax Year Tax Year

    2005 2006 Personal Circumstances

    ? ?

    Single/Widowed under 65 5,210 5,210 65 years of age or over 16,500 17,000 Married under 65 10,420 10,420 65 years of age or over 33,000 34,000 Additional for Dependent Children 575 575 1st and 2nd child (each) 830 830 Each subsequent child 40% 40% Marginal Relief Tax Rate

Tax Rates and Tax Bands

    Tax Year Tax Year

    2005 2006 Personal Circumstances

    ? ?

    32,000 @ 20%

    Balance @

    29,400@ 20% 42% Single/Widowed

     Balance @ 42% without dependent children

    36,000 @ 20%

    33,400@ 20% Balance @ Single/Widowed

    Balance @ 42% 42% qualifying for One-Parent Family tax

     credit

    38,400@ 20% 41,000 @ 20%

    Balance @ 42% Balance @ Married couple

     42% (one spouse with income)

    38,400@ 20%

    (with an 41,000 @ 20% Married couple

    increase (with an (both spouses with income)

    of 19,000 increase

    max.) of 20,400

    Balance @ 42% max.)

    Balance @

    42% Note: The increase in the standard rate tax band is restricted to the

    lower of ?20,400 in 2005/?23,000 in 2006 or the amount of the

    income of the spouse with the lower income. The increase is not

    transferable between spouses.

Rent-a-Room Relief

    Where a room (or rooms) in a person’s sole or main residence is (are) let as

    residential accommodation, gross annual rental income of up to ?7,620 is exempt from tax. Relief in respect of mortgage interest relief is not affected. The relevant Capital Gains Tax/Stamp Duty provisions are also not affected

Rent Relief for Private Rented Accommodation

    Relief is due at the standard rate of tax (20%) in the tax years 2005 and 2006 subject to the following upper limits:

    Tax Year 2005 Tax Year 2006 Personal Circumstances ? ?

    Single

    Under 55 Max. 1,500 1,650

    Over 55 Max. 3,000 3,300

     Widowed

    3,000 3,300 Under 55 Max.

    6,000 6,600 Over 55 Max.

     Married

    3,000 3,300 Under 55 Max.

    6,000 6,600 Over 55 Max.

    Relief can be claimed by completing Form Rent 1.

Tax Relief for Loan Interest (Secured and Unsecured)

    Tax Relief at Source (TRS) on Secured loans

    Tax relief for home mortgage interest (secured loans) is not given through the tax system but is instead granted at source (TRS). Mortgage repayments are reduced by the amount of the tax credit due. For example, if the interest element of your mortgage repayment per month is say ?100, your mortgage lender will reduce your monthly mortgage payment by ?20 per month. This reduction is the same as giving tax relief at the standard rate of tax (20%).

    Any future adjustments in your tax relief will be made automatically by your mortgage lender. It will therefore not be necessary to claim relief on your annual tax return or to contact your local Revenue office.

If, however, you are making mortgage repayments and not receiving Tax Relief

    at Source, you should contact TRS Section, Collector-General's Division at LoCall 1890 46 36 26 who will arrange for the relief to come into effect.

Unsecured Home Loans

    Relief for interest payments made on unsecured Home Loans used for qualifying purposes i.e. repair or improvement of your sole or main residence can be claimed by review at the end of the tax year.

    If, however, you are paying interest on a qualifying private residence mortgage in excess of the ceiling for relief, and you are receiving Tax Relief at Source on this interest then there will be no additional relief due in respect of a qualifying unsecured home loan.

Amount of Relief Available

    Relief is due at the standard rate of tax (20%) in the tax years 2005 and 2006 subject to the following upper limits:

    Tax Year 2005 and 2006 Single ? Widowed ? Married ?

    First Mortgage*

    Ceiling 4,0008,0008,000

    Tax Credit 800 1,600 1,600

    Others

    Ceiling 2,5405,0805,080

    Tax Credit 508 1,016 1,016

    First Time Buyers:

    * The period for which the relief is available is seven years.

Medical Insurance Premiums

    Tax Relief at Source (TRS)

    Tax relief for medical insurance premiums paid to authorised insurers is granted at source (TRS). Subscribers will pay a reduced premium (80% of the gross amount) to the authorised medical insurer. This reduction is the same as giving tax relief at the standard rate of tax (20%).

    Employees whose medical insurance premiums are paid on their behalf, by their employer, as a Benefit-in-Kind, will not have been allowed tax relief at source. To claim the relief due it will be necessary to call your Revenue Regional LoCall number,notify your your local Revenue office of the relevant details or by completing your annual tax return.

Revenue Job Assist

    A special tax allowance at the individual’s highest rate of tax, i.e., 20% or 42% is available for people who have been unemployed for one year or more and who take up a qualifying job. The allowance in the first year of employment is ?3,810

    plus ?1,270 for each child, reducing to two-thirds of that amount in Year 2 and

    one-third in Year 3. This allowance is also available for persons who have been in receipt of either Disability Allowance or Blind Person’s Pension for 12 months or

    more.

Revenue Approved Permanent Health Benefit Schemes

    Where an employer deducts the contributions from gross pay the tax relief is given at source. It will therefore not be necessary to claim relief on your annual

    tax return or to contact your local Revenue office.

Where an employer does not deduct the contributions from gross pay relief can

    be claimed, by calling your Revenue Regional LoCall number (see page 8), by notifying your your local Revenue office of the relevant details or by completing details in your annual tax return.

Home Carer’s Tax Credit

    A tax credit at the standard rate of tax (20%) in the tax years 2005 and 2006 is available for married couples where:

    ; One spouse (the ‘home carer’) works in the home caring for one or more

    dependent persons, i.e., a child for whom they are entitled to Social

    Welfare child benefit, a person aged 65 or over, or a person who is

    permanently incapacitated by reason of mental or physical infirmity and

    the qualifying person normally resides with the couple for the year.

    ; The home carer’s income is not in excess of ?5,080. A reduced tax credit

    applies where the income is between ?5,080 and ?6,620.

    The tax credit is not available to married couples that are taxed as single persons. Neither is the tax credit available to married couples with combined incomes over ?38,400 in the tax year 2005 and ?41,000 in the tax year 2006 and who claim the increased standard rate tax band for dual income couples

Trade Union Subscriptions

    A tax credit at the standard rate of income tax (20%) is available for Trade Union subscriptions. The amount of the tax credit is ?40 for 2005 and ?60 for 2006. If you are/were a member of a Trade Union, at any time during the tax years 2005 or 2006 and you have not been granted relief for subscriptions made, you can phone your Revenue Regional LoCall number.

Tax Relief on Service Charges

    Income tax relief is available for individuals who pay local authority and other service charges. Relief is given for service charges paid in full and on time in the previous calendar year.

Health/Medical Expenses Relief

    You may claim tax relief (on a prescribed form, i.e., Form MED 1 or Form 11) at your highest rate of tax, i.e., 20% or 42%, for certain medical expenses incurred by you, your spouse, your dependent child or a dependent relative. Most medical expenses, with the exception of routine dental and ophthalmic care qualify for relief.

    You cannot claim relief for any expenditure which has been or will be reimbursed, for example by BUPA, the VHI, Vivas, a Health Authority or where a compensation payment is made or will be made.

    You must also bear the first ?125 of any medical expenses incurred in any tax year yourself, or the first ?250 if you are claiming relief in respect of two or more persons.

Tuition Fees

    Tax relief at the standard rate of tax (20%) in the tax years 2005 and in 2006 is available for certain tuition fees. The maximum limit on such qualifying fees for the academic years 2005/2006 and 2006/2007 is ?5,000.

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