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Tax credits available to the self-employed - only 1/2 that of employees???

  • 27-11-2009 7:47pm
    #1
    Mrs OBumble
    Registered Users, Registered Users 2 Posts: 26,286 ✭✭✭✭


    I'm sure this is a basic question that gets asked regularly, but I'm not getting anything helpful when I search. So here goes:

    Mr Just has received his notice of assessment for 2008, and is horrified to find that the amount of tax he has to pay has virtually doubled.

    (He's self-employed, and has a habit of earning just as much as he needs to live on and no more, so the profit (ie taxable income) for the year is about $10k. We're not married, so our tax situation is totally separate, no sharing of tax-credits applies.)

    I've had a quick look, and one thing that sticks out is that his only tax credits are the Personal-credit. Is that right?

    Is it really right that as an employee, I get the Personal credit and the PAYE credit, whereas he gets only the Personal credit? Meaning that if I earned the same amount as an employee as his business makes in profit, I would pay substantially less tax on it?

    And if it's right, how is that considered fair???


Comments

  • #2
    SaschaKyiv
    Closed Accounts Posts: 29 ✭SaschaKyiv


    This is correct. As a non-PAYE taxpayer Mr. Just is not entitled to the PAYE tax credit.

    Self-employed taxpayers benefit in other ways however, a lower rate of PRSI (social security) is applicable, more expenses in employment can be offset against tax and the whole area of pension contributions is more favourable.

    Other credits that you, or Mr. Just, may be entitled to are the Rent Credit if paying for private rented accommodation or a Service Charge credit if paying for refuse collection etc.

    Hope this has been of help.


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