Income tax question for self employed. Paying too much tax?

RangeR

I'm not a taxation expert but I'm pretty sure a friend of mine is over paying tax. He is self employed and taking €525 every two weeks gross [€450~ net]. He has no other income other than Mileage.

I did some calculations and they just don't add up to his NET.

• €550 Gross [bi weekly] = €13650 annually.
• Liable to €13 USC bi weekly [€345~ annually]
• €0 tax liability, I'm sure.

My mate should be coming out with about €512 NET bi weekly [Gross minus USC only].

He has been doing this for the past few years.
Are my calculations correct or am I totally wrong? Admittedly, I used taxcalc.eu for my findings.

Would appreciate a cursory look over.

EDIT : He's actually a director to a small limited company, earning a salary, if that makes a difference.

srsly78

Yes being a director makes a difference, lower taxfree allowance. Also he may be leaving money in the company. It's a completely different situation to a normal PAYE worker.

mari2222

What about PRSI

srsly78

Directors pay PRSI at a slightly reduced rate than normal employees. Directors = class S. Not as good as it sounds, since directors get feckall taxfree allowance. But there is no employers prsi contribution either.

KildareGeorge

If he is director of small company then he would have reduced tax credits which would result in higher tax. Also is he single? If he is director of company and using his own car, he could claim milieage which would be tax free ie reduce taxable salary, claim mileage and he would still have same nett pay but pay less tax. hope this helps.

namenotavailablE

The values given by the OP tally with my calculations for a proprietary director.

Gross pay per fortnight     525.00
[B]Less[/B]
PAYE                         41.54
PRSI [S0 class]              21.00
USC                          [U]13.28[/U]
Net                         [U]449.18[/U]

Source: My spreadsheet at http://taxcalc.eu/monthlyss

barneystinson

KildareGeorge wrote: »

If he is director of small company then he would have reduced tax credits which would result in higher tax. Also is he single? If he is director of company and using his own car, he could claim milieage which would be tax free ie reduce taxable salary, claim mileage and he would still have same nett pay but pay less tax. hope this helps.

OP has stated that the individual is already claiming mileage, unless you're suggesting that he artificially increases the mileage claim (which would be tax evasion).

RangeR

namenotavailabl wrote: »

The values given by the OP tally with my calculations for a proprietary director.

Gross pay per fortnight     525.00
[B]Less[/B]
PAYE                         41.54
PRSI [S0 class]              21.00
USC                          [U]13.28[/U]
Net                         [U]449.18[/U]

Source: My spreadsheet at http://taxcalc.eu/monthlyss

Your spreadsheet is just marvelous. Got me out of another hole. Thanks.