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+353 (0)1 457 8138Income Tax is tax charged on personal income. Employees are charged income tax through the PAYE system operated by their employer. Self-employed individuals are charged income tax through the Self-Assessment system when they file an annual
Income Tax return.
The obligation is on a self-employed individual to register for Income Tax and file an annual Tax return if they have self-employed income. A businesses annual trading profits when adjusted for tax purposes form the taxable amount in an Income Tax return. Capital allowances (a % of business fixed assets annually) are deducted from the taxable profit figure in order to arrive at the taxable amount. Tax credits including personal tax credit and earned tax on income credit are
used to reduce the amount of tax payable.
| Standard Rate Cut-off Points | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | 2021 – 2019 | ||||
| 20% | 40% | 20% | 40% | 20% | 40% | |
| Single person | €40,000 | Balance | €36,800 | Balance | €35,300 | Balance |
| Married couple/civil partners, one income | €49,000 | Balance | €45,800 | Balance | €44,300 | Balance |
| Married couple/civil partners, two incomes | Up to €80,000 * | Balance | Up to €73,600 * | Balance | Up to €70,600 * | Balance |
| * increase limited to the amount of the second income – see example below | ||||||
| One parent family | €44,000 | Balance | €40,800 | Balance | €39,300 | Balance |
Calculation of Income Tax
Employees paid weekly or monthly have this income tax calculated by their employer using a Revenue recognised payroll software. The standard rate of tax of 20% is applied to the income within the employee’s weekly/monthly rate band. Both
amounts of tax as calculated are added together. The employee’s weekly/monthly tax credits are deducted from this total.
A ‘cumulative basis’ of calculation is normally used when calculating employee taxes. This system ensures that all of an employee’s income and tax credits from the previous January 1st to the date the payroll is processed are accumulated to ensure
the correct tax is paid.
Self-employed people have their (Income) Tax calculated annually by an accountant. The income tax is computed by applying the standard tax rate of 20% to the portion of taxable business profit taxable at the standard rate for the individual and applying the higher rate of 40% to the balance of the income. Both amounts of tax calculated and tax credits applicable to the individual are deducted from this amount to arrive at the amount of Income Tax payable for the tax year.
Irish Rental Income
Overview
Income from the rental of a property is taxable and must be declared to the Revenue Commissioners in an Tax return for the tax year in which the income arises.
Rental income includes the following:-
- Payment received for rent of a house, apartment, flat or farmland;
- Payments received for the use of a property for advertising signs or communication transmitters;
- Payments received for allowing a right of way through a property;
- Payments received from an insurance policy which covers against non-payment of rent;
- Payments received flor allowing sporting rights on a property.
Allowable deductions
- Mortgage interest on the rental property.
- Insurance premiums for cover on the rental property;
- Repairs to the rented property during lettings.
Non-allowable deductions:-
- Expenses incurred pre or post lettings;
- Expenses relating to structural upgrading of the rented property;
- Local property tax on the rented property.
Calculating taxable rental income:-
Taxable rental income is calculated by deducting allowable deductions from total rent received in the year . Capital allowances are allowed at 12.5% per annum on fixtures and fittings.
Tax on the rental income is calculated after taking into account all other income in the year including employment income and self-employed income.
Rental losses & unused capital allowances:-
Where the renting of a property creates a loss (where allowable deductions exceed rent received) in a year, this loss can be carried forward to future years and offset against rental income in a future year. The rental loss cannot be offset against other
income in the year of the loss or in future years. Where capital allowances are not fully utilised in a year, they can be carried forward and utilised against rental income in future years.
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