Self Employed Tax Credits

19driver83

I recently set-up my own ltd company. I am a contractor and I am one of two directors and I own 100% of the shares in the company.

I wanted to know how this affects what tax credits I am entitled to compared to when I was a PAYE employee.

Am I still entitled to 1650 PRSI tax credits and 1650 PAYE tax credits?

I am asking because when I use the online deloitte tax calculator, two of the questions they ask are;

Are you a proprietary director?
Are you a controlling shareholder?

And depending on the answer you give this affects your tax credits.

capefear

Firstly best of luck with the new business

Am I still entitled to 1650 PRSI tax credits = Yes

and 1650 PAYE tax credits? = No as you are a director with more than 15% shareholding you lose your PAYE Tax credit unless you have a separate job which you have PAYE income.

Are you a proprietary director? Yes
Are you a controlling shareholder? Yes as you own 100% of the shares

As you are self employed you move from Class A PRSI to Class S PRSI which means you dont have the same entitlements when it comes to social welfare etc.

HTH

19driver83

Thanks Capefear.

As I only started my own company In July and I was a PAYE worker until then I assume I can claim the full PAYE credits for this year???

srsly78

Capefear is not quite correct, you still get the PAYE credit because you are paying your tax by paye even as a Director. Don't forget to claim all your other credits too (accountant will do this for you if they are any good) - bins, rent, medical credits - and various reliefs available (mortgage/pension etc).

The paye credit itself is an "all or nothing" type thing, you either get it in full or you get nothing. Am open to correction -.-

You are a proprietary director because you own >15% (or >50%??? not sure) of the shares and are a director.

Yes you are both paye and self-employed, confusing isn't it? This also means you have to file a form11 each year (self assessment). I am in same situation and have to do this even though 100% of my income is paye. Note the other director doesn't have to do this because they have 0% shares.

I think only proprietary directors fall into this situation? I also think you must operate paye, but you could of course pay yourself minimum wage if you wanted. Then big bonus at year end with lump sum payment to taxman.

The rest of what Capefear posted seems correct, you can only get means tested dole once your previously made stamps/contributions run out.

capefear

srsly78 wrote: »

Capefear is not quite correct, you still get the PAYE credit because you are paying your tax by paye even as a Director. Don't forget to claim all your other credits too (accountant will do this for you if they are any good) - bins, rent, medical credits - and various reliefs available (mortgage/pension etc).

The paye credit itself is an "all or nothing" type thing, you either get it in full or you get nothing. Am open to correction -.-

You are a proprietary director because you own >15% (or >50%??? not sure) of the shares and are a director.

Yes you are both paye and self-employed, confusing isn't it? This also means you have to file a form11 each year (self assessment). I am in same situation and have to do this even though 100% of my income is paye. Note the other director doesn't have to do this because they have 0% shares.

I think only proprietary directors fall into this situation? I also think you must operate paye, but you could of course pay yourself minimum wage if you wanted. Then big bonus at year end with lump sum payment to taxman.

The rest of what Capefear posted seems correct, you can only get means tested dole once your previously made stamps/contributions run out.

srsly78 - A director of a company with 100% shareholding is not entitled to the PAYE credit unless he also is an employee of another company where he is paying tax.
http://www.revenue.ie/en/tax/it/credits/paye-employee-credit.html


The OP is entitled to the paye tax credit for this year as he was an employee of a company up until July of this year and he is not entitled to this credit next year unless he is an employee of another company.

19driver83

capefear wrote: »

srsly78 - A director of a company with 100% shareholding is not entitled to the PAYE credit unless he also is an employee of another company where he is paying tax.

The OP is entitled to the paye tax credit for this year as he was an employee of a company up until July of this year and he is not entitled to this credit next year unless he is an employee of another company.

Thanks Capefear. I think you are correct as most of the evidence I can find supports what you have said. Thanks again.

srsly78

edit: Ok thanks for the revenue link, my bad! Directors are PAYE but without the benefit

capefear

No Worries

Some reading for you over the xmas I would recommed is the revenue leaflets IT51 & 54 they explain all about the civil sevices expenses that you can claim because it can be an area where some contractors need some help with.

Again best of luck with the new business.

srsly78

My accountant looks after that in the annual return for me luckily I do remember now noticing the paye credit was the only difference in the tax calc for directors.