Self Employed Vs Paye Tax

A: Currently if you are in employment you are entitled to an additional tax credit referred to as the PAYE credit (€1,650). Self – employed people cannot claim this. Additionally there is a 3% USC surcharge on individuals who have non-PAYE income that exceeds €100,000.

For example a PAYE single person earning €50,000 will pay €10,312 in PAYE, whilst a self-employed person with a profit of €50,000 will pay the extra €1,650, in total €11,962.

It has been argued by some that self-employed individuals can reduce their taxable income, by claiming additional expenses that maybe and an employed person cannot, for example travel costs.

The government have stated they wish to close this gap, whilst also cutting USC and income tax rates. We can therefore only assume that the intention is to provide an additional tax credit to self-employed individuals, similar to the PAYE credit. Any potential changes will more than likely not be confirmed  until budget 2016.

Date published 6 Mar 2015

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.