How to reduce amount of tax paid as an employee?

WhyTheFace

Hi,

I hope this doesn't sound like anything dodgy.

I've just started a new job and received by first pay cheque. As I'm in the higher tax bracket I was taxed in total 39% of total earnings.

Is there anything LEGALLY that can be done to reduce slightly the amount of tax I pay. I know that self employed people can claim lots of things against tax to minimise their bill etc.

Is it possible for my boss to restructure my salary or anything?

As I have stated, I am not looking to break the law, just be more efficient in how I pay tax.

It's kind of gutting to be given a job with a lot more responsibility and pressure and to come out with only a marginal increase in pay.

Thanks in advance

dudara

There's a point in salary when you move into the higher bracket where you see all the benefits of a pay rise disappear.

You should make sure that you are getting all the tax credits to which you are entitled. If you are married and your spouse earns less, then you could look into transferring some of their tax credits to you.

fxotoole

WhyTheFace wrote: »

Hi,

I hope this doesn't sound like anything dodgy.

I've just started a new job and received by first pay cheque. As I'm in the higher tax bracket I was taxed in total 39% of total earnings.

Is there anything LEGALLY that can be done to reduce slightly the amount of tax I pay. I know that self employed people can claim lots of things against tax to minimise their bill etc.

Is it possible for my boss to restructure my salary or anything?

As I have stated, I am not looking to break the law, just be more efficient in how I pay tax.

It's kind of gutting to be given a job with a lot more responsibility and pressure and to come out with only a marginal increase in pay.

Thanks in advance

You can claim tax back at the end of the year on certain medical expenses.

If you're married, and you earn more than your spouse, you can arrange to distribute your and your spouse tax credits in a way that minimises the tax paid for the higher earner

WhyTheFace

I am single unfortunately.

I don't have a pension thou. Is there something about that being tax deductible?

srsly78

Yes, pension contributions are one way to get tax relief. In reality the tax is just deferred until you draw down the pension tho!

RealistSpy

I am very interested in this as well.

Stheno

WhyTheFace wrote: »

I am single unfortunately.

I don't have a pension thou. Is there something about that being tax deductible?

Yea pensions are deductible. Have you checked you are not on emergency tax?

WhyTheFace

Stheno wrote: »

Yea pensions are deductible. Have you checked you are not on emergency tax?

I'm not on emergency tax!

I might look into starting a pension.

whomitconcerns

39%....I wish....Try paying 48% total tax related deductions (prsi, social charge, etc).... but back to your question just make sure you do a p21 at the end of the year and claim back any tax relief medical expenses

rahmalec

whomitconcerns wrote: »

39%....try 48% total tax (prsi, social charge, etc).... but just make sure you do a p21 at the end of the year and claim back any tax relief medical expenses

Flat rate employment expenses as well.

Kristopherus

WhyTheFace wrote: »

I'm not on emergency tax!

I might look into starting a pension.

Your employer has to offer you the option of contributing to a pension within a month of you starting employment with them. Also the new tax free allowances will kick in from 1st January. Together with the reductions in USC, you should be around €80 a month better off from then.

mickdw

WhyTheFace wrote: »

Hi,

I know that self employed people can claim lots of things against tax to minimise their bill

Slightly of topic but self employed people get a much smaller tax credit than employed people meaning they need to claim expenses just to stand still against employed people.
I think the additional credit for paye is 1600 to 1800. Someone on 20 percent tax would need to claim 8 to 9000 as expenses just to stand still versus an employee.

WhyTheFace

Kristopherus wrote: »

Your employer has to offer you the option of contributing to a pension within a month of you starting employment with them. Also the new tax free allowances will kick in from 1st January. Together with the reductions in USC, you should be around €80 a month better off from then.

Does that mean they transfer, say, 500e per month into a pension directly and that is not taxed. I then receive the rest net of tax in my pay slip?

mickdw wrote: »

Slightly of topic but self employed people get a much smaller tax credit than employed people meaning they need to claim expenses just to stand still against employed people.
I think the additional credit for paye is 1600 to 1800. Someone on 20 percent tax would need to claim 8 to 9000 as expenses just to stand still versus an employee.

Sorry, wasn't having a go at self employed whatsoever!

whomitconcerns

you pay into your pension before tax. So if you pay 200 euro into an approved pension, its 200 from your gross salary not your net.

Alan Shore

WhyTheFace wrote: »

Hi,

I've just started a new job and received by first pay cheque. As I'm in the higher tax bracket I was taxed in total 39% of total earnings.

On the basis that you can earn €32,800 at 20% the balance at 41% with PRSI and USC and then deduct the personal credits you should not be paying 39% in tax.

There is a difference between paying 39% in tax and having a marginal rate of 52%.

Unless of course you earn about €100,000.

WhyTheFace

Alan Shore wrote: »

On the basis that you can earn €32,800 at 20% the balance at 41% with PRSI and USC and then deduct the personal credits you should not be paying 39% in tax.

There is a difference between paying 39% in tax and having a marginal rate of 52%.

Unless of course you earn about €100,000.

39% was overall charge including USC, PRSI etc.

Will be paying 75-80k.

thomasm

Try section 481 relief, this is the last year its running but you can shelter up to 50k of your income that you pay 41% tax on and get a return of circa 2-3k. Plenty of examples if you Google it

allibastor

WhyTheFace wrote: »

39% was overall charge including USC, PRSI etc.

Will be paying 75-80k.

Can you get me a job?

WhyTheFace

allibastor wrote: »

Can you get me a job?

Sorry that should read "Will be paid" not will be paying. Ha!

seamus

Edit: Scrap all that.

39% seems a bit high, should be more like 35%. Are you being taxed on the correct basis?

toadfly

Check if your employer has the option of paying your pension as salary sacrifice, you then save on PRSI as well as tax.

Stheno

WhyTheFace wrote: »

39% was overall charge including USC, PRSI etc.

Will be paying 75-80k.

Your credits are wrong so, call the Revenue