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Can I (self employed) claim business expenses against my husband's (PAYE) tax?

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  • 23-06-2020 2:36pm
    #1
    shortie_chik
    Registered Users Posts: 454 ✭✭


    I am considering becoming self-employed. I've been working 2 days per week (as a PAYE employee) for the first 6 months of the year, and would likely to continue doing 2 days per week self-employed. I would not earn enough to pay tax, or very little tax anyway.

    I would need to buy a few things to get started, no particularly high-value assets, but a few small pieces which would add up to a couple of hundred euro (I'd guess max €500). I'm unlikely to earn enough this year to have the tax liability to cover the cost of this equipment, plus insurance and some taxation advice.

    I know losses can be carried forward into the following year and claimed against tax then, but if I'm still just doing 2 days a week, I may not have enough tax paid to benefit from this.

    My husband is in the higher tax band and we are jointly assessed. He works in a different industry / trade to me. Would it be possible for me to buy equipment and claim the cost against his tax?


Comments

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    #2
    StackSteevens
    Closed Accounts Posts: 873 ✭✭✭StackSteevens


    Here ya go! Happy reading.

    https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-12/12-01-02.pdf


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    #3
    IRtax
    Registered Users Posts: 25 ✭IRtax


    Loss in a trade in current year or unused current year capital allowances can be offset against paye income. If losses or capital allowances are carried forward to future year assessment they can only be offset against profits of the same trade


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    #4
    thegolfer
    Registered Users Posts: 346 ✭✭thegolfer


    This below...

    My husband is in the higher tax band and we are jointly assessed. He works in a different industry/trade to me. Would it be possible for me to buy equipment and claim the cost against his tax?

    No. The expenses have been incurred for your trade, not his, thus not allowable against Mr Shortie Chick.

    If the loss was derived under yourself, then yes the loss in the current period could be set against his income. However, this is only after the loss has been set against your other income first, and then the surplus could be set against his income. Finally, this loss allowance would be on the basis that the trade you are carrying on is not a hobby trade and will produce profits in future periods.

    Extracted from Revenue Guidance
    When an individual is carrying on a trade or a profession and that individual incurs a loss for a year of assessment, then relief may be available under section 381 TCA 1997. That section provides that an individual may elect to have the trading/professional loss offset sideways against other income of the individual, or in cases of joint assessment, against income of the individual’s spouse/civil partner


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    #5
    shortie_chik
    Registered Users Posts: 454 ✭✭shortie_chik


    Thanks for your advice! Interesting evening of tax reading ahead!


  • Options
    #6
    Durtburd
    Registered Users Posts: 39 ✭Durtburd


    IRtax wrote: »
    Loss in a trade in current year or unused current year capital allowances can be offset against paye income. If losses or capital allowances are carried forward to future year assessment they can only be offset against profits of the same trade

    Can I hijack and ask a question on this, I just want to make sure I understand as I'm about to make a decision on my business and this could be a huge help.

    Lets say i have a low turnover self employment income of 10k and paye income as well.
    I purchase a car for 20k for business use.
    Its an e car and qualifies for accelerated capital allowance of up to 24k.
    I can only offset 10k of this against my self employment income as that's the full amount of that income
    Can I offset the remaining 14k against my paye income for this year?


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  • Options
    #7
    kenmm
    Closed Accounts Posts: 1,698 ✭✭✭kenmm


    Durtburd wrote: »
    Can I hijack and ask a question on this, I just want to make sure I understand as I'm about to make a decision on my business and this could be a huge help.

    Lets say i have a low turnover self employment income of 10k and paye income as well.
    I purchase a car for 20k for business use.
    Its an e car and qualifies for accelerated capital allowance of up to 24k.
    I can only offset 10k of this against my self employment income as that's the full amount of that income
    Can I offset the remaining 14k against my paye income for this year?

    I don't *think* so (Otherwise there would be a bit of a loophole here where people could set up loss making companies to get a good rate on an eCar..) - but better for an expert to answer!


  • Options
    #8
    Will Yam
    Registered Users Posts: 671 ✭✭✭Will Yam


    shortie_chik wrote: »
    I am considering becoming self-employed. I've been working 2 days per week (as a PAYE employee) for the first 6 months of the year, and would likely to continue doing 2 days per week self-employed. I would not earn enough to pay tax, or very little tax anyway.

    I would need to buy a few things to get started, no particularly high-value assets, but a few small pieces which would add up to a couple of hundred euro (I'd guess max €500). I'm unlikely to earn enough this year to have the tax liability to cover the cost of this equipment, plus insurance and some taxation advice.

    I know losses can be carried forward into the following year and claimed against tax then, but if I'm still just doing 2 days a week, I may not have enough tax paid to benefit from this.

    My husband is in the higher tax band and we are jointly assessed. He works in a different industry / trade to me. Would it be possible for me to buy equipment and claim the cost against his tax?

    Also remember that any expenses incurred in the 3 years before you commence trading can be offset against income in first year of trading.


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