10 ways to save money on this year’s tax return

All across Ireland thousands of self-employed individuals, company directors, landlords & others are currently contemplating the arduous task of preparing their 2023 tax return that is due to be filed this autumn. 
 
Everyone wants everything filed accurately minimising the risk of a Revenue enquiry into their tax affairs. However, people also want to reduce their tax bill. They only want to pay what they need to and not a cent more. 
 
Here are 10 simple steps you can take to reduce your tax bill:

 

 

Pensions are a very tax-efficient way of saving. The government provides generous tax relief at your highest tax rate to encourage people to pay into their pension. 
 
Your age and your earnings for the year will determine the maximum amount that you can pay into a pension which will attract this tax relief.
 
If you pay tax at the higher rate of 40% then for every €1,000 you pay into a pension plan you could potentially reduce your tax bill by €400.
 
Another big advantage is that when filing a Form 11 (and you pay and file on ROS), the payment deadline in respect of a pension contribution is extended in line with the income tax pay and file extension date.

 

 

• the date the policy started
• who is covered on the policy and their ages
• a breakdown of the cost of the policy for each person
• the amount paid by your employer

 

• Child for whom Child Benefit is payable
• Person aged 65 or over
• Person with a disability who requires care

 

 

If you got married during 2023 you may be entitled to claim the Year of Marriage Tax Credit. 
 
You will continue to be taxed as two single people in 2023.
 
You may however qualify for a refund. You qualify if you pay more tax for the year, as two single people, than you would if you had been taxed as a married couple. If you are due a refund, it will only be given for the portion of the year that you were married.

 

 

A lot of people know they can save money by paying into a pension but far fewer know that contributions to an income continuance scheme, or income protection scheme as they are more commonly known, may also be eligible for tax relief. 
 
The relief you can claim is limited to 10% of your total income for the tax year.

 

 

 

 

If you are an employee and you worked from a home office in 2023 you can claim an allowance, assuming your employer is not already giving you one.

For 2023 and subsequent years, you can claim 30% of the cost of electricity, heat and broadband. The tax relief is calculated based on number of days worked remotely.

For self-employed people you need to decide where the line between home and work sits. Costs you can partially deduct include lighting, heating, phone, broadband and home insurance. There is no hard-and-fast rule, but make sure what you deduct is reasonable.

The e-working guidelines aimed at PAYE workers who have been working from home during the pandemic offer a good rule of thumb for self-employed workers.

 

7. Claim the rent tax credit

A rent tax credit was recently re-introduced by Revenue, commencing in the 2022 tax year. If you are a tenant in an Irish property you can now claim a rent tax credit to a maximum value of €500. 

And if you are a jointly assessed couple (i.e. spouses or civil partners) you can each claim up to the €500 limit annually. So if you and your wife have been renting across two years this could potentially be worth €2,000 to you!

In order to qualify the tenancy should be registered with the RTB (unless it is a digs type arrangement, or part of the Rent-a-Room scheme). And note you will not qualify if you are in receipt of rent allowance, or HAP payments.

 

 

This credit aims to alleviate the financial burden on homeowners due to increased mortgage interest rates in 2023.

 

The key points to note in respect of the relief are as follows:

 

One of the easiest ways to “save” on your return is to file on time, thereby avoiding penalties or interest. If for some reason you miss the deadline it could cost you a lot of money. 

 

There is a 5% late filing surcharge, calculated based on your 2023 income tax liability, if you file within two months of deadline and this doubles to 10%. 

 

Also failure to keep up to date with your tax obligations will result in your Tax Clearance Certificate being revoked.

 

You also need to make sure you pay your tax liability on time. Failure to do so, may expose you to an interest charge. In recent times we have seen that Revenue are more actively pursuing this interest. 

 

It is also important to note that when an income tax return is filed, where the preliminary income tax has not been paid in full, Revenue may issue a 30-day payment demand letter.

 

 

You should talk to your accountant about how you can claim these credits or others that you may be entitled to. By working with a professional it ensures you get everything right on your tax return and you are making the best savings available to you.

 

At TaxAssist Accountants we have worked with thousands of individuals across Ireland on their tax returns. If you need assistance filing your income tax return you can call us on 01 492 3588 or submit an enquiry online to book your free initial consultation.