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Income Tax

Your tax credits and standard rate cut off's are your entitlements within the tax system.

Its a simple fact of life, that if you have income then you pay tax. But with effective tax planning and use of allowances and relief's it may be possible to reduce your tax liability.

We look at the allowances and relief's available to you to help reduce your income tax bill whether you are within the PAYE system or are self-employed.

PERSONAL TAX CREDITS AND RELIEFS 2005
All personal tax credits are allowed only at the standard rate of tax.
The table below gives details of the main personal allowances available.

*PRINCIPAL PERSONAL TAX CREDITS AND RELIEF'S 2005*
(all standard rated at 20%)

Personal credits:

Married couple assessed jointly

€3,160

Single person (including widowed person with dependent children)

€1,580

Additional credit for single parent with dependent children

€1,580

Widowed person (without dependent children)

€1,980

Widowed person in year of bereavement

€3,160

Widowed parent credit (additional): Year 1 after year of spouse's death

€2,800

Widowed parent credit (additional): Year 2 after year of spouse's death

€2,300

Widowed parent credit (additional): Year 3 after year of spouse's death

€1,800

Widowed parent credit (additional): Year 4 after year of spouse's death

€1,300

Widowed parent credit (additional): Year 5 after year of spouse's death

€800

Age credit:

Married persons assessed jointly

€600

Age allowance:

Single/ widowed person

€300

Employee (PAYE) credit

€1,270

Home career's credit Max

€770

Incapacitated child (each)

€500

Employment of carer to take care of incapacitated person Max

€30,000*

Dependent relative credit Max

€60

Blind person

€1,000

Both spouses blind (joint assessment)

€2,000

* This allowance is given as a deduction from total income at marginal rate in arriving at taxable income.

Income tax exemption limits Income before credits:

 

Single/widowed

Married couple

Under 65 years

€6,350

€12,700

Over 65 years

€16,500

€33,000

Exemption limits increase by €575 for each of first two dependant children and by € for each subsequent child.

Personal tax rates:

 

Single/widowed
(without dependent children)

Single/widowed
(with dependent children)

At 20%

First €29,400

First €33,400

At 42%

Balance

Balance

 

Married Couple
(one income)

Married Couple
(two incomes)

At 20%

€38,400**

€58,800

At 42%

Balance

Balance

** This standard rate tax band for a single income married couple can be increased by increasing the earnign capacity of the non earnign spouse. You should be aware that this gives rise to a tax planning opportunity. Should your spouse have income of less than €10,000 you should consider transferring some of your income earning assets to your spouse in order to avail of the maximum increase in the standard tax band.

Lump-Sum Payments

The basic tax free lump-sum payable on termination of employment is now €10,160 plus €765 for each year of service. A lump sum payment made by an employer on retirement or removal from office attract special tax treatment. The lump sum you receive is reduced for the purposes of calculating income tax as follows: -

Basic exemption As and from 1st December 1998 Prior to 31st November 1998 €10,160 + €765 per year of service

plus €10,000 when one is not a member for an occupational pension scheme.

The Standard Capital Superannuation Benefit is calculated as follows:- from the following mathematical formula, deduct any tax free lump sums received from a revenue approved pension scheme:-

(average yearly pay for last three years to termination)
X
( no of completed years of service)
__________________________________
15

Notes:
Statutory Redundancy Payments are tax free.
Payments on account of injury are tax free. Disability Benefit, is, however, taxable.

Lump sum payments from a revenue approved Superannuation scheme are tax free.




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"I run my own business and after years of struggling with a demanding home life and a hectic work schedule I reached a situation whereby I was functioning poorly with both. I’d missed a couple of VAT payments and had intended to catch up at the end of the year. I missed my own deadlines and tried again to catch-up in the following year. Business became a stressful job of ‘fire-fighting’ each day’s demands, eventually pushing the issue of outstanding taxes out of my mind as much as possible, in order to concentrate on work.

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Throughout the process, the fixmytax accountant was hugely supportive to me, dealt directly with the Revenue, reduced the original tax bill considerably and most importantly, had taken the fear out of the situation and given me peace of mind knowing that good progress was being made with the Revenue, rather than hiding from it all.

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My Revenue mess caused me huge amounts of anxiety all the time I did nothing to resolve it. In dealing with fixmytax, they took control of the situation and proceeded to do what had to be done. I would not hesitate to recommend them to anyone worried about any aspect of taxation and financial planning for a business.

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My most valuable lesson in dealing with fixmytax is that it is far more productive and far less stressful to get a good supportive accountant to do what they do best, leaving me free to do business. Thanks, Patrick!

Satisfied Client, name and address with firm. 

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