Tax:

 

 

Standard rate cut off income 2011 -

 

Under the Tax Credit system for Income Tax, Gross Tax minus Tax Credits = Tax Payable. Gross tax liability is calculated on your total income by applying 20% to income up to your standard rate cut-off point and 41% on the remainder. The cut off point will be:

 

	WEEKLY	12 MONTH VALUE
Single / Widowed	€630.77	€32,800
One Parent Family	€707.69	€36,800
Married ( one income )	€803.85	€41,800
Married ( two incomes )	€1,261.54	€65,600

 

 

Standard Rate Cut-off Income -

 

 

Separated spouses may be taxed singly or jointly.

 

 

Tax credits -

 

Your Tax Certificate will replicate the annual value of all your Tax Credits and the equivalent weekly or monthly amount which are subtracted from this gross liability to yield the tax payable on the following amounts:

 

Single Person	€1,650	Age (65) Allowance (each)	€245
Married Couple	€3,300	Incapacitated Child	€3,300
Widowed	€2,190	Homecaring Spouse	€810
One Parent Family	€3,300	Dependent Relative	€70
PAYE Allowance ( each )	€1,650

 

 

One Parent Family Credit applies to a single or widowed person if you can prove that your child resided with you for at least part of the year. This relief is not available to an unmarried couple cohabiting together.

 

** Dependent Relative Credit can be claimed if you support a widowed mother or incapacitated relative whose income does not exceed the contributory OAP.

 

 

Mortgage interest -

 

Mortgage relief is being phased out. New loans taken out before 1st July 2011 will get the following entitlement:

 

• A new loan for a first-time buyer qualifies for seven years of relief on interest up to €10,000 (single), €20,000 (married) and is allowable at 25% for year 1 and 2, 22.5% for year 3, 4 and 5, and 20% in year 6 and 7.

 

• A new loan to trade up will get 7 fresh years of relief on the entire loan, but a loan to extend will only get 7 years relief on the “top-up” element of the loan. In both cases relief is on a maximum interest of €3,000 (S) and €6,000 (M) and is capped at 15%.

 

Loans taken out between 1 July 2011 and 31 Dec 2012 will have the relief capped at 15% (first-time buyers) and 10% (others).

 

Mortgages taken out since 1st Jan 2004 hold relief at 20% until 2017.

 

 

Universal social charge -

 

A Universal Social Charge will replace the Health and income levies. It will apply to gross income, from whatever monetary source (excluding only Social Welfare Payments) and without deduction of pension contributions.

 

• 2% up to €10,036 (€193 per week)

 

• 4% on the next €5,979 (next €115 per week)

 

• 7% on the remainder

 

An exemption applies to persons whose total income is under €4,404 (€85 per week)

 

 

Redundancy -

 

You do not have to pay tax on Statutory Redundancy, nor on termination payments due to injury or disability. Tax is payable on any other lump sums but after the deduction of the more favourable of:

 

• €765 for each complete year in the job, plus €10,160 and a further €10,000 is allowable if you are not a member of an Occupational Pension Scheme, or

 

• 1/15th of your annual income (average of the last 36 months) for each year less any tax-free lump sum from the pension scheme.

 

This deduction cannot exceed €200,000. The balance is taxable either as extra income for that year or at the average rate of tax you paid in the previous years.

 

 

Pensions -

 

A specific portion of gross earnings under €115,000 can be put into a pension tax free. It is up to 15% (under 30%) rising in steps to 40% (60 years or over), allowable at your top rate of tax. However, it is proposed to move gradually to a standard rate allowance before 2014.

 

The following are the pension options:

 

• If not in a Pension Scheme you may put the money into a Personal Retirement Savings Account (PRSA) where the fund will accumulate free of tax on income or on gains. You cannot withdraw money before the age 60. On retirement you may take out 25% tax-free.

 

• If in a Pension Scheme you can top up contributions in your own Scheme or a linked PRSA by making tax free Additional Voluntary Contributions (AVCs) up to the income ceiling and maximum benefi ts permitted by Revenue. You can spread back AVCs for up to 10 years to provide for dependant’s benefits.

 

• Retirement lump sum payments in excess of €200,000 will be taxable in 2011, at the standard 20% rate.

 

• A Self Employed person can put contributions into personal pension schemes, in which there is no limit to the pension or death benefit, but the tax free lump sum at retirement is limited to 25% of the accumulated fund.