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Self Assessment Help!

  • 29-02-2016 9:20am
    #1
    ash_18x
    Registered Users, Registered Users 2 Posts: 312 ✭✭


    Hi, my husband is self employed. I am a paye worker. I am submitting the form 11 for 2015- I always like to get it done the minute I get my p60 so I can forget about it!
    Anyway, hubby took out a small loan last year for the business (he is a barber and bought a new barber chair). I know he can claim the interest on the loan he paid for the year as an 'other expense' and that he can claim 12.5% depreciation for 8 years on the original cost of the chair (have been onto revenue about this and this is what I was advised). My query though, the loan repayments itself. He has say €20k income, €8k expenses (not including the loan repayments but the interest) so then there is €12k profit which is subject to tax, prsi etc. So in effect then am I right in saying he is going to pay tax, prsi etc on the loan repayments?? Say he paid €500 back on the loan last year, so really he has a drawing/wage of €11500 before tax. But does the €500 loan repayment get lumped in on this too? Revenue said that seeing as he is claiming the interest and the depreciation that he has to pay tax, prsi etc on the loan repayment. Doesn't seem right to me... Any advice?
    Thanks in advance. my head is baffled from it and I just want to send it in so I can finish with it!


Comments

  • #2
    emeldc
    Registered Users, Registered Users 2 Posts: 2,598 ✭✭✭emeldc


    The 12.5% depreciation over 8 years covers the full cost of the chair. The chair is now 'written off' in the books. If you were allowed to claim the repayment (minus the interest) as well, you would in effect be claiming for the chair twice. That's the way I see it. It can take a while to get your head around it :)


  • #3
    ash_18x
    Registered Users, Registered Users 2 Posts: 312 ✭✭ash_18x


    Ya, see I know what you mean, it just seems wrong that he will be paying tax etc on the loan lol. Thanks for your reply, I will just get him to put an extra bit aside each week to cover this, plus I think if you are paying tax and all on it you are not really getting the price of the chair back. He will get €187 back on depreciation this year but will end up paying €140 on tax etc on the loan repayments. Next year it will be alot more because he will have paid way more on the loan back! But I do understand what I have to do now, thanks!


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