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Topical Tax Tips

Refund of Income Levy

For any ROI employers with NI resident employees a refund of income levy should be processed through the payroll for December 2010 on production of the NI medical card to the employer. A copy should be kept on file. These changes can be made up until P60 and Income Levy Statement are being issued to the employee ie before 2010 payroll is closed off for P35 purposes - due date 14 February 2011.

The refund arises as a result of the abolition of prescription charges in Northern Ireland in April which turned NI medical cards into full medical cards for income levy exemption purposes. This is one off refund entitlement for 2010 there is no exemption from the Universal Social Charge which replaces income levy from 1 January 2011 for medical card holders.

Maximise Capital Gains Tax/Capital Acquisitions Tax reliefs

There were no changes to Capital Gains Tax (CGT) in the recent budget and the only change to Capital Acquisitions Tax (CAT) was a reduction in the tax-free thresholds by 20 per cent.
However, it has been signalled that there are to be significant reforms to both CGT and CAT in 2012. The changes will involve a broadening of the tax base along with a reduction in the levels of reliefs and exemptions. A new system of tax rates is also to be introduced with differing rates to be applied for different levels of gains and asset values.
Therefore, depending on your circumstances, 2011 may be a good time for business owners and family owned companies to review their affairs to take advantage of the current tax reliefs in place. For example, retirement relief for CGT purposes and business property relief for CAT purposes.

If you were made redundant during 2010, you may be due a tax refund

If you were made redundant during 2010 and paid tax on your redundancy payment, you should file your top slicing claim as soon as possible in order to obtain a refund of any tax overpaid.
Top slicing essentially looks at your previous income and the amount of tax paid. The purpose of this relief is to ensure that your redundancy payment is not taxed at a rate in excess of your average tax rate for the previous three years.
Similarly, if you were not working for the full year you may be due a refund of income tax, particularly if you are not in employment at the end of the year, as you would not have received the benefit of your tax credits for months out of work.

Review your Tax Credit Certificate

Revenue has now issued the certificates of tax credits and standard rate cut-off point for 2011 to all employees. You should review this certificate to ensure you have been granted the correct rate of credits and standard rate band, and also ensure that all credits to which you are entitled have been included e.g. employee flat rate expenses, service charges etc. If your credits are incorrect, it will result in an over or underpayment of PAYE at the end of the year.
If you are married and jointly assessed, you should also review the allocation of credits between each spouse to ensure it suits your circumstances, e.g. if one spouse is self-employed and the other is an employee, you can dictate whether most of the tax due is paid under PAYE or in a lump sum on assessment by the manner in which the credits are allocated.

Key upcoming Irish Tax Deadlines

31st January Capital Gains Tax Tax due in respect of any gains arising on disposals in December 2010

14th February P30 & RCT30 monthly returns for January 2011

15th February P35 & RCT35 Returns 2010 filing deadline (extended to 23rd February via ROS)

Dermot McCrystal FCA is the principal in the firm Dermot McCrystal & Co., Chartered Accountants & Registered Auditors, Monaghan who provide business advice and tax solutions to all types of businesses. Dermot can be contacted on 047 81333 or at dermot@dmccrystal.com

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