Personal reliefs and tax credits

The personal reliefs and tax credits you can use to reduce your income tax liability are:

As a deduction when computing taxable income

No limit: Gifts to the Minister for Finance (s 483).

€150,000: Enterprise investment scheme (s 490).

€50,000: Film investment (s 481).

€35,000: This is the maximum deduction available to employees working in Brazil, Russia, India, China or South Africa (s 823A). It is proportionate to the number of qualifying days spent working in those countries.

€50,000: Carer for incapacitated person (s 467).

€6,350: Expenditure on heritage buildings/gardens (s 482).

€6,350: Seafarer allowance (s 472B).

€3,810 with €1,270 increase for each child: Previously long-term unemployed person (s 472A). In the second tax year of employment, it is €2,540 with €850 increase for each child, and in the third tax year, €1,270 with €425 increase for each child.

As a tax credit against tax liability

No limit: Medical expenses (s 469).

€3,600: Widowed parent in the first year after bereavement; €3,150 (second year); €2,700 (third year); €2,250 (fourth year); €1,800 (fifth year).

€3,300: Incapacitated child (per child) (s 465).

€3,300: Married couple, basic personal tax credit (s 461).

€2,700: Health insurance premiums (s 470B), where the insured is aged 85+ on contract date or renewal date; €2,400 (aged 80 – 85); €2,025 (aged 75 – 79); €1,400 (aged 70 – 75); €975 (aged 65 – 69); €600 (aged 60 – 65);

€1,650: Individual, basic personal tax credit (s 461).

€1,650: One parent family (s 462).

€1,650: Blind person (s 468).

€1,650: Employee (s 472).

€1,650: Widowed person (bereavement year) (s 461).

€1,280: Rent paid by married couple/widowed person aged 55 or over.

€1,000: College fees (s 473A) (max),

€810: Home carer (s 466A),

€640: Rent paid by individual aged 55 or over.

€640: Rent paid by married couple/widowed person aged under 55.

€540: Widowed person (other years) (s 461A).

€490: Married couple one of whom is aged 65 or more (s 464).

€320: Rent paid by individual aged under 55.

€254: Training course fees (s 476) (max).

€245: Individual aged 65 or more (s 464).

€70: Dependent relative (per relative) (s 466).

Other reliefs

The other main reliefs from income tax are:

(a) Home loan interest (s 244) Loans taken out after 31 December 2012 do not qualify unless approved before that date and drawn down in 2013.

Loans taken out between 2004 and 2008 continue to obtain relief, loans taken out between 2009 and 2012 are also relieved at 30%, but relief is abolished from 1 January 2018. During 2013 to 2017 inclusive, the interest ceiling for married couples and widowed individuals is €6,000, and for single persons it is €3,000, and the maximum rate at which relief will be given is 15% for first-time buyers and 10% for non-first time buyers.

(b) Bridging loan interest (s 245) and interest on money borrowed to invest in a company (s 248) or partnership (s 253) – but not a rental company.

(c) Compensation for change in work practices (disturbance money) (s 480).

(d) Pension contributions. The contribution limits, whether through an employer scheme (s 776) or Personal Retirement Savings Account (PRSA), or a self-employed retirement annuity scheme (s 787), are:

(i) aged under 30: 15% of earnings,

(ii) aged 30-39: 20% of earnings,

(iii) aged 40-49: 25% of earnings,

(iv) aged 50-54: 30% of earnings,

(v) aged 55-59: 35% of earnings, and

(vi) aged 60 or more: 40% of earnings.

This 40% limit also applies to a sportsman or sportswoman.

The overall annual earnings limit for pension contributions is 115,000 (s 787B).

Unless you have a personal fund threshold (PFT), the standard fund threshold is €2,300,000 and the maximum tax-free lump sum on retirement is €200,000.

(e) Covenants. To be tax effective, a covenant must be payable to:

(i) a human rights body, or to a recognised college to carry out research, and exceed, or be capable of exceeding three years, or

(ii) an individual who is aged 65 or over, or permanently physically or mentally handicapped, and exceed, or be capable of exceeding six years.

The maximum income that can be tax-effectively covenanted is 5%, but this limit does not apply to income covenanted to an individual who is permanently physically or mentally handicapped (s 792).

(f) Stock relief (farmers). This is given at 25% of the increase in stock value (s 666), 100% in the case of a young trained farmer (s 667), and 100% to the extent that proceeds of compulsory livestock disposals are reinvested in replacement livestock (s 668).

(g) Donations to Revenue-approved bodies. From 01.01.2013, the approved body gets the donation relief, whether the donor is an employee or self-employed.

More

Introduction to Income Tax

Income Tax rates

Benefit in Kind

Income Tax exemptions

Income Tax schedules

> Capital Allowances

Handling losses

> Double taxation

Self Assessment

Revenue Powers

Withholding taxes

Penalties

Appeals