Help, What are my tax credits and reliefs for 2006?

• Personal Tax Credits
• Exemption Limits
• Tax Rates and Tax Bands
• Rent-a-Room Relief
• Rent Relief for Private Rented Accommodation
• Tax Relief for Loan Interest (Secured and Unsecured)
• Amount of Relief Available Medical Insurance Premiums
• Revenue Job Assist
• Revenue Approved Permanent Health Benefit Schemes
• Home Carer’s Tax Credit
• Trade Union Subscriptions
• Tax Relief on Service Charges
• Health / Medical Expenses Relief
• Tuition Fees
• PRSI & Health Contributions - Employers/Employees PRSI & Health Contributions - Self-Employed
• Tax Relief Available to Systematic Short-time Workers

Details of the main personal tax credits for the tax years 2005 and 2006.

* No tax credit is due in the case of Dependent Relative Tax Credit, if the relative’s income exceeds the relevant limit.

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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.

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

Relief can be claimed by completing Form Rent 1.

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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:

First Time Buyers:

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

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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 notify your your local Revenue office of the relevant details or by completing your annual tax return.

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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.

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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 completing details in your annual tax return.

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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.

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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.

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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.

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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.

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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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Self employed persons are exempt from Health Contribution of 2% where the annual income is less than €20,800 or less in 2005 and €22,880 or less in 2006. The minimum annual PRSI contribution is €253.

Note: Recipients of a Social Welfare Widow’s or Widower’s Pension, Deserted Wife’s Benefit/Allowance or One-Parent Family Payment are exempt from paying the 2% Health Contribution. All Medical Card holders (including people age 70) are also exempt from this contribution.

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The exemption from income tax for Unemployment Benefit paid to systematic short-time workers is available until the end of December 2006.

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