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Tax return treatment of flat rate expenses

Yorky · 2011-01-16 17:08:39

For a PAYE worker flat rate expenses are applied to the Standard Rate Cut Off Point (SRCOP) and then to the tax credits at the standard rate. Therefore if the flat rate expenses are €550 . Therefore the SRCOP is increased by €550 and the tax credits are increased by €110 (€550 x 20%) Although the flat rate expenses are…

16-01-2011 5:08pm

#1

Yorky

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For a PAYE worker flat rate expenses are applied to the Standard Rate Cut Off Point (SRCOP) and then to the tax credits at the standard rate. Therefore if the flat rate expenses are €550 . Therefore the SRCOP is increased by €550 and the tax credits are increased by €110 (€550 x 20%)

Although the flat rate expenses are applied by Revenue to the SRCOP and credits as outlined above , in a joint-assessment (one party is self-employed) income tax computation the flat rate expenses are deducted before taxable income is assessed but then is not shown as a tax credit.

By my reckoning this has the same effect i.e. reducing the income assessable at the marginal rate by the flat rate expense amount rather than providing 21% through the increase in the SRCOP and then 20% through the tax credit.

Is this summation correct?

Thanks in advance

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