It’s a cliché, but it’s true that there are two things in this life that are unavoidable; death and taxes.
There are however ways to manage the latter.
Catherine McGovern Tax Partner at PKF O'Connor informs Irish Tatler of the six steps you can take to significantly reduce your tax bill.
Pension conversations are never going to be a dinner party favourite, but they are consistently one of the best ways to save on your tax bill. The contribution you put into a pension is tax-deductible, up to a limit.
If you are a higher rate taxpayer – paying €200 per month into your pension – it will save you an income tax of €80 per month. Pensions are a double whammy of paying less to the taxman and lining up more tax-efficient reserves for the future as pensions funds are exempt from Income Tax and Capital Gains Tax.
2. Rent a room scheme
While it is an opportunity that unfortunately doesn’t apply to everyone, there is very generous tax relief for those home-owners who rent out a room. If you are lucky enough to own your own home and also happen to have a spare room, you can earn €14,000 in rent tax-free.
3. Get on your bike
The cycle-to-work scheme was first introduced to encourage people to get out of their cars and on their bikes. An employer can purchase the bike and equipment and you as a taxpayer pay back over 12 months from your gross salary without any further tax.
4. Claim your tax credits
Make sure you are claiming all the tax credits which are available to you. All taxpayers are entitled to a tax credit depending on their personal circumstances. See IT1 - Tax Credits, Reliefs and Rates on the revenue website for more information.
5. Medical expenses tax relief
You can claim for medical expenses provided that you haven’t already claimed these backs through your health insurer.
6. Home Renovation Incentive (HRI) Scheme
Have you carried out repairs, renovations or improvements to your home or rental property between 25th October 2013 and 31st December 2018? Did your contractor complete the HRI Revenue questionnaire before commencing the work? If so, you may be entitled to a tax credit of 13.5% for the qualifying work that was completed.
For those with further questions, Catherine and her team at PKF we would be delighted to review your tax position with you. Get in touch with them at 01 496 1444 or [email protected]
Main image by @tylynnnguyen