How to Pay less PAYE as an Irish Employee

pocketdooz

Well, this is a slightly off-topic issue but as there are so many smart people who visit this forum regularly I thought this issue might get some legs here. As we all know, the dopey bankers and corrupt leaders of this little island as done an excellent job of f**king the place up for the rest of us. As such we are now subject to increasing PAYE taxes, income levies, increasing health and PRSI levies and a bevy of other measures that will basically serve to take more of your hard earned money away from you next year and for the foreseeable future.

As such, I thought I'd start a thread to discuss ways in which PAYE earners can (legally!) decrease the amounts of tax they have to pay. I am by no means a tax expert but I will start this off with a few bits and pieces which I'm aware of and hopefully kick start this thing. Join in, ask questions or make suggestions. I, for one, am sick of working hard only to see those ignorant turnips in Leinster House take more and more of my take-home pay to plug holes in their accounts, rescue inept bankers, developers and zombie banks and fund 13 year old stupid tribunals.

1) Start a pension - pension contributions come out before PAYE taxation and thus lower the starting base on which your PAYE is charged.

2) Get your employer to give you a €250 gift voucher in lieu of cash. Once a year, employers can give their employees a €250 gift (not in cash) which is subject to no tax whatsoever (not even employers PRSI !).

3) Claim all your eligible deductions - you can claim back 20% from the taxman on almost all your medical costs every year by using the Med1 form.

4) Claim your allowances - find out at www.revenue.ie what your are allowed to claim - some ones you may not know about are tuition fees, bin refuse charges, uniforms for certain professions etc. Join PAYE Anytime on revenue.ie for a full list.

This is all I can think of right now but if anyone on here is a tax expert or know of any other means (there must be some pretty inventive ones out there) of lowering your overall tax bill please let us know.

It's not how much you earn, it's how much you get to keep that really matters.

.

mikemac

Get married :pac:

Maybe my Dad was lying to me but I was told a few decades ago, April was the top month for getting married as the tax year started in April

Cute Hoor

feelingstressed wrote: »

Get married :pac:

Maybe my Dad was lying to me but I was told a few decades ago, April was the top month for getting married as the tax year started in April

You're dad wasn't lying, but it was before April 5th, you then got the tax back for a full year. It was also important to have the children before April 5th for the same reason, a little more difficult to plan though. Both no longer apply.

Section 481, can eliminate tax on up to €50k of income (only worthwhile if you're paying tax at 41%) - gives an overall return of roughly 20% over 1 year.

BES - A lot riskier than Section 481, you get your tax back in year one but you have to wait 5 years for a return on your investment.

pocketdooz

Cute Hoor wrote: »

Section 481, can eliminate tax on up to €50k of income (only worthwhile if you're paying tax at 41%) - gives an overall return of roughly 20% over 1 year.

BES - A lot riskier than Section 481, you get your tax back in year one but you have to wait 5 years for a return on your investment.

Can you explain these to those (including me) who aren't familar with them, how they work and who would be eligible?

Thanks.

.

Cute Hoor

pocketdooz wrote: »

Can you explain these to those (including me) who aren't familar with them, how they work and who would be eligible?

Thanks.

.

OK, tough question.

Here's a couple of links that will hopefully explain both, have a look at them and if you have any questions I will try to answer them.

http://www.mazars.ie/Home/News/Latest-News/Section-481-Tax-Relief (I've no connection whatsoever with these, it was just the first site that came up when I googled it)

http://www.revenue.ie/en/tax/it/leaflets/it55.html#section3

Anybody who's paying tax at 41% can avail of these, the BES one would work for the 20% tax rate as well but hardly worth the risk.

murphym7

pocketdooz wrote: »

Well, this is a slightly off-topic issue but as there are so many smart people who visit this forum regularly I thought this issue might get some legs here. As we all know, the dopey bankers and corrupt leaders of this little island as done an excellent job of f**king the place up for the rest of us. As such we are now subject to increasing PAYE taxes, income levies, increasing health and PRSI levies and a bevy of other measures that will basically serve to take more of your hard earned money away from you next year and for the foreseeable future.

As such, I thought I'd start a thread to discuss ways in which PAYE earners can (legally!) decrease the amounts of tax they have to pay. I am by no means a tax expert but I will start this off with a few bits and pieces which I'm aware of and hopefully kick start this thing. Join in, ask questions or make suggestions. I, for one, am sick of working hard only to see those ignorant turnips in Leinster House take more and more of my take-home pay to plug holes in their accounts, rescue inept bankers, developers and zombie banks and fund 13 year old stupid tribunals.

1) Start a pension - pension contributions come out before PAYE taxation and thus lower the starting base on which your PAYE is charged.

2) Get your employer to give you a €250 gift voucher in lieu of cash. Once a year, employers can give their employees a €250 gift (not in cash) which is subject to no tax whatsoever (not even employers PRSI !).
3) Claim all your eligible deductions - you can claim back 20% from the taxman on almost all your medical costs every year by using the Med1 form.

4) Claim your allowances - find out at www.revenue.ie what your are allowed to claim - some ones you may not know about are tuition fees, bin refuse charges, uniforms for certain professions etc. Join PAYE Anytime on revenue.ie for a full list.

This is all I can think of right now but if anyone on here is a tax expert or know of any other means (there must be some pretty inventive ones out there) of lowering your overall tax bill please let us know.

It's not how much you earn, it's how much you get to keep that really matters.

.

Not legal to do this.

Max Power1

murphym7 wrote: »

Not legal to do this.

I think you will find that it is.

homer911

Max Power1 wrote: »

I think you will find that it is.

I think the limit for BIK purposes is now €100

Staff meals are a deductable expense - maybe the boss could take you out for a meal once a month?

nice1franko

Great idea for a thread IHMO (although may not be the ideal forum... nevermind).

My contribution:

Step 1) http://www.bikescheme.ie/
Step 2) sell bike
Step 3) profit

dearg lady

nice1franko wrote: »

Great idea for a thread IHMO (although may not be the ideal forum... nevermind).

My contribution:

Step 1) http://www.bikescheme.ie/
Step 2) sell bike
Step 3) profit

or use the bike instead! Thus also saving on petrol/bus tickets etc.

You've to sign soemthing to say the bike will be used for commuting anyway

bugler

homer911 wrote: »

I think the limit for BIK purposes is now €100

Not sure it's treated as a BIK.

The €250 in vouchers is an annual event in my company as partial payment of your bonus. It's optional, obviously, but makes sense to take €250 this way. Unless this has changed very recently this is still possible.

nice1franko

The vastly increased calorific requirements necessary to propel the bike in a forward thrusting motion would be precisely the same as the car fuel + maintenance + tax + purchase costs. Therefore, selling the bike is a winning strategy.

Trust me; did a spreadsheet up.

Part two of money saving plan: purchase inline skates with bike profits and skut lifts from motorway traffic. Strongly advise wearing glasses and keeping mouth closed when travelling at speeds >= 120 km p/h by skate.

Dan_Solo

Cute Hoor wrote: »

http://www.mazars.ie/Home/News/Latest-News/Section-481-Tax-Relief (I've no connection whatsoever with these, it was just the first site that came up when I googled it)
http://www.revenue.ie/en/tax/it/leaflets/it55.html#section3

Wow, they sound like scams to keep rich people happy. Nice if you've a few k to spare though.

pocketdooz

murphym7 wrote: »

Not legal to do this.

I think it is .....

http://corporate.giftvouchershop.ie/(S(vtaazjarezh5xm550iwissvu))/One4all_Benefit_in_Kind.aspx


.

murphym7

pocketdooz wrote: »

I think it is .....

http://corporate.giftvouchershop.ie/(S(vtaazjarezh5xm550iwissvu))/One4all_Benefit_in_Kind.aspx


.

My understanding is that it is fine to give a once off payment (bonus) which is tax free, I get one myself every year. This is not meant to be used (abused) to pay part of an employees salary/wages, it is supposed to be in addition I would have thought.

I must be wrong.

nice1franko

murphym7 wrote: »

My understanding is that it is fine to give a once off payment (bonus) which is tax free
...

This is not meant to be used (abused) to pay part of an employees salary/wages
...
I get one myself every year.

Count yourself lucky that your employer is a bit more creative then yourself!

homer911

murphym7 wrote: »

My understanding is that it is fine to give a once off payment (bonus) which is tax free, I get one myself every year. This is not meant to be used (abused) to pay part of an employees salary/wages, it is supposed to be in addition I would have thought.

I must be wrong.

How can you get a once-off payment every year?

alanceltic

murphym7 wrote: »

My understanding is that it is fine to give a once off payment (bonus) which is tax free, I get one myself every year. This is not meant to be used (abused) to pay part of an employees salary/wages, it is supposed to be in addition I would have thought.

I must be wrong.

You are indeed correct!!! The 250 payment is disallowable from tax if it is a discretionary gift to an employee. What you are not allowed to do technically is defer part of your wage in lieu of the voucher.....= tax evasion rather than tax avoidance

thomasm

pocketdooz wrote: »

Can you explain these to those (including me) who aren't familar with them, how they work and who would be eligible?
Thanks.
.

Section 481 is one of the lesser known reliefs. If you have 50k of inocme that is currently taxed at higher rate and not subject to relief from pensions, BES etc you can make circa €3,500 in the space of 3-4 months with no outlay on your part.

Essentially you are investing in a film production that is produced under 481 rules (simply put the money is spent in this country). Under the agreement 50k is drawn down in two loans. One for €33,400 is repaid by the film company and one for €16,600 is repaid by you from your tax refund which is 41% of the 50k.

The loan you repay is €16,600 plus 4-5 months interest. You pocket the difference between this and the tax refund of circa 21k. No tax paid on this gain either.

As no brainers go this one appears to be right up there.

Wavey

thomasm wrote: »

Section 481 is one of the lesser known reliefs. If you have 50k of inocme that is currently taxed at higher rate and not subject to relief from pensions, BES etc you can make circa €3,500 in the space of 3-4 months with no outlay on your part.

Essentially you are investing in a film production that is produced under 481 rules (simply put the money is spent in this country). Under the agreement 50k is drawn down in two loans. One for €33,400 is repaid by the film company and one for €16,600 is repaid by you from your tax refund which is 41% of the 50k.

The loan you repay is €16,600 plus 4-5 months interest. You pocket the difference between this and the tax refund of circa 21k. No tax paid on this gain either.

As no brainers go this one appears to be right up there.

This definately a no brainer. Is there agents to handle this or is the consumer (me) expected to deal with the film company directly?
Just to be clear, is this only available to people paying 41% on 50K? ie a base salary of over 70K?
Thanks.

Cute Hoor

Wavey wrote: »

This definately a no brainer. Is there agents to handle this or is the consumer (me) expected to deal with the film company directly?
Just to be clear, is this only available to people paying 41% on 50K? ie a base salary of over 70K?
Thanks.

You have to do very little yourself except for coming up with the dosh. There are a number of companies who specialise in this and they look after everything, I probably can't mention names but if you google Section 481 they should pop up for you.

It only makes sense for people who can deflect their 41% taxable income. You can go for lower than €50k, although companies will probably have their own minimum amount for administration purposes.

Fighting Irish

pocketdooz wrote: »

. As we all know, the dopey bankers and corrupt leaders of this little island as done an excellent job of f**king the place up for the rest of us.
.

the bankers and politicians gave the people what they wanted

murphym7

homer911 wrote: »

How can you get a once-off payment every year?

Its called a bonus.

thomasm

Wavey wrote: »

This definately a no brainer. Is there agents to handle this or is the consumer (me) expected to deal with the film company directly?
Just to be clear, is this only available to people paying 41% on 50K? ie a base salary of over 70K?
Thanks.

There are 4 options,
The minimum salary is €48,900 or more up to €61,400, this will produce a return of circa €866.
Next is €61,400 up to €73,900 which gives a return circa €1,731.
Then its €73,900 up to €86,400 which gives a return of €2,597
Above €86,400 is shown in previous post.

The base salary of 70k above would not be paying 41% on 50k. It would be paying 41% on €33,600 as standard rate cut of is €36,400.

As previously stated it is income that is not in recepit of relief from any other source.

Cyrus

yep, the easiest way to figure out how much you can shelter at 41% is :

take your gross salary
+ any bonuses that you have received in that calender year (regardless of whether they relate to the previous year)
- your pension contributions

and finally take away 36,400.

most agents will give you an investment pack tailored to this number if they can, a lot of the accountancy practices are involved in this, ive done one the last 3 years, im sure it will be taken away soon

thomasm

There was a commitment to leave this in place until at least 2012 in the last budget but who knows what will happen now

pocketdooz

Fighting Irish wrote: »

the bankers and politicians gave the people what they wanted

Let's keep it on topic?

This other topic has been done to death.

.

pocketdooz

thomasm wrote: »

Section 481 is one of the lesser known reliefs. If you have 50k of inocme that is currently taxed at higher rate and not subject to relief from pensions, BES etc you can make circa €3,500 in the space of 3-4 months with no outlay on your part.

Essentially you are investing in a film production that is produced under 481 rules (simply put the money is spent in this country). Under the agreement 50k is drawn down in two loans. One for €33,400 is repaid by the film company and one for €16,600 is repaid by you from your tax refund which is 41% of the 50k.

The loan you repay is €16,600 plus 4-5 months interest. You pocket the difference between this and the tax refund of circa 21k. No tax paid on this gain either.

As no brainers go this one appears to be right up there.

Thanks for this info. Exactly the type of thing I started this thread to learn.

Keep it coming.

.