Halloween is fast approaching and the 31stof October makes a lot of us nervous not just because of ghosts and ghouls! This date is also the deadline for those tax payers in the self-assessed category to submit their 2010 annual return to the Revenue Commissioners.
If you are one of these tax payers, be it a self-employed tradesman, a taxi driver, a company director or a PAYE worker with untaxed income above €4004 this article may be of benefit to you.
Outlined below are some brief points below which try to reduce your tax bill and possibly your accountancy fees as well.
It’s an obvious one to start with but not paying your tax bill on time will result in penalties and surcharges from the Revenue Commissioners.
Remember you have until 31st October 2011 to pay your IT (income tax) liability for 2010. You must also pay your preliminary tax for 2011 by the same date. To help with cash flow considers direct debits. Revenue allows IT, VAT, PRSI and capital gains to be paid by direct debit to make tax more manageable.
-Pensions.
Depending on your age and profession, you can invest up to 40% of your net relevant earnings into a personal pension and avoid tax at the top rate of 41% although this will be reduced from next year. Note you have until 31st October 2011 to invest in a pension to reduce your 2010 tax liability.
-Claim for household expenses
If you work from home for your business either partly or fully, remember some of the house hold bills can be written off as a business expense.
This could include light and heat, insurance, telephone bills, broadband etc etc. One must be reasonable in the percentage used and don’t forget to keep all receipts.
-Church and other charitable donations.
If you donate money to your church on a weekly basis remember you can claim this cost as a taxable expense.
The minimum donation must be €250 over 12 months and relief can be got from other charities which are revenue approved.
-Seed capital Relief Scheme
This scheme which runs to 2013 is designed to encourage those set up in business after they cease employment. Relief is given as a refund of PAYE for the 6 years previous to ceasing employment and the maximum relief is €91,440.
-Credit check lists
Always check you are availing of the standard tax credits that are out there for the self employed.
They include personal tax credits, refuse collection, medical / dental expenses, mortgage interest to name but a few.
-E Learning expenses.
Revenue Commissioners allow you to pay someone €3.20 a day for working at home for your business. – that adds up to €1,168 per annum and that €478 of a tax saving if you are in the higher bracket.
Your accountant at this stage will be knee deep in returns so try and make life easy for him/her. Try to avoid the shoe box method of book keeping and organise your paperwork properly. Ideally you can use an accountancy package – there are free packages on line like Tasbooks basic. Alternatively you can use spreadsheets or the ledger books you can buy in the shops.
Completing the basics yourself should reduce your accountancy fees and it also gives you an insight into where your costs are. Reviewing these costs is essential in knowing how your own business is performing.
ShareAUG