In 2016 the ‘New State Pension’ was introduced. As part of transitional arrangements to the new State Pension, taxpayers have been able to make voluntary contributions in relation to any incomplete years in their National Insurance record between April 2006 and April 2016.
Anyone who is retiring on or after 6th April 2016, under the ‘new State Pension’ rules, requires approximately thirty five qualifying years to claim the full state pension.
The U.K. government has extended the voluntary National Insurance contribution deadline from 5th April 2023 to 31st July 2023. This will allow taxpayers more time to fill gaps in their NI records to maximise the amount they will receive in State Pension.
Therefore, if you’re a man born after 5th April 1951 or a woman born after 5th April 1953 you have until 31st July 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016, providing you’re eligible.
Where there are gaps in an individual’s National Insurance record, voluntary NICs can be paid to be eligible for a higher State Pension or entitlement to other state benefits. Therefore, anyone with gaps in their National Insurance record from April 2006 onwards still has time to fill the gaps and increase their State Pension.
After 31st July 2023 you’ll only be able to pay for voluntary contributions for the past six years which may not be sufficient to qualify for a new State Pension if you have less than four qualifying years on your National Insurance record. Normally, you would require at least ten qualifying years in total.
Please be aware that any payments made will be at the lower 2022 to 2023 tax year rates. In other words, where the rates of voluntary National Insurance contributions were due to go to up from 6th April 2023, payments made by 31st July 2023 will be paid at the lower rate.
To look at your personal tax account to view your National Insurance record and obtain a state pension forecast, without charge, please click link: https://www.gov.uk/check-state-pension
The Future Pension Centre can tell you if paying for extra national insurance years will increase your state pension entitlement. For full details, please click: https://www.gov.uk/future-pension-centre
Based on the information you receive from HMRC, if you have returned to Ireland and you decide to top up your pension contributions before the deadline date, please find link to Application Form: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1102905/CF83.pdf
Please click for full HMRC guidance material which may be relevant to you if you have returned from working in the UK: https://www.gov.uk/government/publications/social-security-abroad-ni38/guidance-on-social-security-abroad-ni38#deciding-whether-to-pay-voluntary-national-insurance-contributions
The ability to buy back years by looking back to 2006 is scheduled to end on 31st July 2023. After the cut-off date, it will only be possible to pay for gaps in your National Insurance record by looking at the past six years. This means that you could lose out on the opportunity to maximise your UK State Pension for gap years before 2017.
From 10th February 2023 the Revenue Commissioners are posting out letters to taxpayers who are currently registered for Income Tax but who have not submitted Income Tax Returns for years of assessment up to and including 2021.
The letters state:
“Based on a review of your Income Tax records, you have not filed any self-assessed Income Tax returns for years up to and including 2021.”
Taxpayers should start receiving such letters from 13th February onwards.
Please be aware that your Tax Agent won’t receive a copy of this notice.
In the event that the taxpayer is no longer deemed to be a “chargeable person” and, therefore, is no longer required to file an Income Tax Returns, he/she/they should cancel the Income Tax registration.
The term “chargeable person” applies to an individual who:
An individual who is in receipt of PAYE income as well as non-PAYE income will not, however, be regarded as a “chargeable person” provided:
A chargeable person is obliged to file an annual Income Tax Return through the self-assessment system.
This can be done online via ROS or by completing a Form TRCN1 which is available on the Revenue website.
If the taxpayer is considered a “chargeable person” but has not filed Income Tax Returns up to 2021, the letter is deemed to be a Final Reminder to file all outstanding income tax returns.
If the taxpayer does not file the outstanding Income Tax Returns or cancel the registration within 21 days of the letter, Revenue will cease the income tax registration without further notice.
Once the Income Tax registration is ceased, if the taxpayer wishes to re-register for income tax he/she/they will be required to submit an online application via ROS.
The Notice states:
“You should note that, where further information comes to Revenue’s attention that you were a chargeable person for any relevant tax year, Revenue reserves the right to reinstate your Income Tax registration.
The non-filing of a required tax return by chargeable persons can result in further contact from Revenue, including a follow-up compliance intervention. Non-filing of a return where required is also an offence for which a person can be prosecuted.”
The Special Assignee Relief Programme (“SARP”) was introduced on 1st January 2012 to provide Income Tax Relief for eligible employees assigned to work in Ireland from abroad. It was due to expire for new entrants on 31st December 2022, however, Finance Act 2022 extended the relief for a further three years, up until 31st December 2025.
Prior to 1st January 2023, an individual was required to earn a minimum basic salary of €75,000 per annum (excluding all bonuses, benefits or share based remuneration) in order to be eligible for SARP.
From 1st January 2023 onwards the employee must have a minimum base salary of €100,000 per annum. This amount excludes all bonuses, commissions or other similar payments, benefits or share-based remuneration.
A number of conditions need to be satisfied for this relief to apply, as follows:
Mark arrived in Ireland from USA on 17th October 2019 on a 5-year contract.
He was not Irish tax resident in 2019.
As Mark was tax resident in Ireland in 2020, he was entitled to claim relief under SARP.
His first year of claim was, therefore, 2020.
He can continue to claim SARP up to and including 2025 if he continues to satisfy the relevant conditions for the Relief.
The relief operates by:
Relief is not extended to Universal Social Charge (USC) so the individual must pay USC on the full amount of his/her/their salary.
The specified amount is not exempt from PRSI, unless the employee is relieved from paying Irish PRSI under either an EU Regulation or under a bilateral agreement with another jurisdiction.
The relief operates by providing a deduction for income tax purposes from remuneration based on the following formula:
(A-B) X 30%
A = Qualifying Remuneration i.e. total remuneration. This includes:
B = €100,000 (prior to 1st January 2023 it was €75,000)
Thomas arrived in Ireland on 1st January 2023 and meets all the above conditions to qualify for SARP relief.
His salary is €120,000, his bonus is €15,000 and he receives a benefits in kind (e.g. medical insurance) valued at €3,000.
A = €138,000 i.e. €120,000 + €15,000 + €3,000
B = €100,000 i.e. qualifying Income Threshold
SARP Deduction = (€138,000 – €100,000) = €38,000 @ 30% = €11,400
Thomas’s marginal Income Tax rate in Ireland is 40%, therefore his Income Tax saving is €4,560 i.e. €11,400 x 40%
It’s important to keep in mind that 8% USC and 4% PRSI, if applicable, will apply to this employment income.
SARP relief can be claimed by the employee in one of two ways:
An employee who receives SARP Relief is considered to be a “chargeable person” for Income Tax purposes. He/she/they is/are required to submit an Income Tax Return to the Irish Revenue Commissioners in respect of each year for which relief is claimed. The Form 11 Tax Return may be filed by way of a paper form or through the Revenue’s On-Line Service (ROS).
Employees who have registered and qualify for SARP must file a Form 11 Tax Return by 31st October following the end of the tax year.
By completing Part C of Form SARP 1A and submitting it to Revenue, SARP Relief can be granted at source through the employee’s payroll.
The employer is required to make this application only once.
Relief can be granted at source through payroll for the duration of the assignment, up to a maximum of five years, providing the employee continues to satisfy all the relevant conditions.
Today the Irish Revenue Commissioners published eBrief No. 197/22 in relation to emergency accommodation and ancillary services. For full information, please click: https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part03-taxable-transactions-goods-ica-services/Services/services-emergency-accommodation-and-ancillary-services.pdf
If you are providing Emergency Accommodation it is essential for you to consider the VAT implications.
The most important points are as follows:
The publication of Draft Residential Zoned Land Tax Maps by local authorities was announced today by the Minister for Finance, Paschal Donohoe T.D. and the Minister for Housing, Local Government and Heritage, Darragh O’Brien T.D.
Landowners have until 1st January 2023 to make a submission to the relevant local authority as to whether or not their land, on the map, satisfies the criteria to be liable to the tax.
This is part of the implementation of the Residential Zoned Land Tax (RZLT).
What is RZLT?
As you may remember, Residential Zoned Land Tax (RZLT) was introduced by Finance Act 2021 as part of the Government’s ‘Housing for All – a New Housing Plan for Ireland’.
Land within the scope of RZLT will be liable to an annual 3% tax based on its market value from 1st January 2024 onwards.
RZLT will apply to land that on, or after, 1st January 2022, is:
In other words, where the land is zoned as suitable for residential development and serviced after 1st January 2022, tax will be first due in the third year after it comes within scope.
The primary objective of RZLT is activate land for residential development and not to increase the Government’s tax revenue.
It will operate on a self-assessment basis, which places the filing and payments obligations on the landowners. You must retain detailed records to enable the Revenue Commissioners to verify the correct amount of RZLT due and payable.
What should you do?
If you own land liable to RZLT, you must register for the tax.
You will be able to register for RZLT from late 2023.
You will be required to file an annual return to Revenue and pay any liability on or before 23rd May of each year, beginning in 2024.
Please be aware that interest, penalties and surcharges will apply in relation to cases of non-compliance, for example:
There are a number of exclusions from RZLT.
Certain properties are excluded from RZLT such as existing residential properties.
Homeowners will not have to pay the RZLT if they own a dwelling which appears on the local authorities’ RZLT Maps, and this property is subject to Local Property Tax (LPT). In other words, residential properties liable for Local Property Tax (LPT) are not subject to RZLT.
If, however, your garden/yard/land is greater than 0.4047 hectares (one acre) then you must register for RZLT.
No RZLT, however, is payable by owners of these properties.
For full information, please click:
Today, Minister for Finance, Paschal Donohoe T.D., and Minister for Public Expenditure and Reform, Michael McGrath T.D. presented Budget 2023.
Minister Donohoe announced an extension to a number of existing personal tax reliefs including:
Key measures include:
The scheme will continue at current rates for another two years and will expire on 31st December 2024
Vacant Homes Tax (“VHT”)
A VHT will apply to residential properties which are occupied for less than 30 days in a 12 month period.
Exemptions will apply where the property is vacant for “genuine reasons.”
The applicable tax rate is three times the existing local property tax (“LPT”) rate
Residential Development Stamp Duty Refund Scheme
The stamp duty refund scheme will continue until the end of 2025.
The stamp duty residential land rebate scheme allows for a refund of eleven-fifteenths of the stamp duty paid on land that is subsequently developed for residential purposes. was due to expire on 31 December 2022. It has been extended to the end of 2025.
Pre-letting Expenses on Certain Vacant Residential Properties
The limit for landlords claiming allowable pre-letting expenses is to be increased from €5,000 to €10,000.
The vacancy period is to be reduced from 12 months to 6 months.
Levy on Concrete Blocks, Pouring Concrete and other Concrete Products
A 10% levy was announced in response to the significant funding required in respect of the defective blocks redress scheme. A 10% levy will be applied to concrete blocks, pouring concrete, and certain other concrete products
This levy applies from 3rd April 2023.
9% VAT rate for hospitality and tourism sector
The 9% VAT rate currently in place to support the tourism and hospitality sectors will continue until 28th February 2023.
9% VAT rate on electricity and gas supplies
The temporary reduction in the VAT rate applicable to gas and electricity supplies (from 13.5% to 9%) will be extended to 28th February 2023.
Farmers’ Flat-Rate Addition
The flat-rate addition is being reduced from 5.5% to 5% in accordance with criteria set out in the EU VAT Directive.
This change will apply from 1st January 2023.
From 1st January 2023 VAT on newspapers, including digital editions will be reduced from 9% to 0%.
On 5th August 2022 the Irish Revenue Commissioners issued a new Tax and Duty Manual Part 04-06-03, which provides guidance on the tax deductibility of Digital Services Taxes (DSTs).
For full information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-06-03.pdf
The guidance provides that certain Digital Services Taxes (DSTs) incurred wholly and exclusively for the purposes of a trade (taxable under Case I and Case II Schedule D) are deductible in calculating the income of that trade for the purposes of computing Irish corporation tax.
The Revenue’s position is that Digital Services Taxes are a turnover tax.
They are levied on revenues associated with the provision of digital services and advertising and not on the profits.
The guidance provides that, in circumstances where the following DSTs have been incurred wholly and exclusively for the purposes of a trade, the Irish Revenue Commissioners will accept that they are deductible expenses in calculating the income of that trade:
The Guidance material doesn’t distinguish between the two forms of equalisation levy under the Indian regime. At this time there is no clear guidance available however, it would be expected that that since both types of levy are so similar that both should be covered. If this situation applies to you, it is advisable to contact the Irish Revenue Commissioners to seek clarification via MyEnquiries.
This Guidance should be interpreted as an initial list. According to The Revenue Commissioners “The list of DSTs above may be updated as required.”
On 19th July 2022 the Irish Revenue Commissioners published eBrief No. 148/22.
For full information please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-22a/22a-01-01.pdf
Residential Zoned Land Tax (RZLT) applies to land that, on or after 1st January 2022, is zoned as being suitable for residential development and is serviced, with certain exclusions.
It does not apply to existing residential properties.
Where land is within scope of the tax on 1st January 2022, the tax will be charged from 1st February 2024 onwards.
RZLT is an annual tax, calculated at 3% of the market value of the land within its scope.
Owners of residential properties with yards and gardens greater than 0.4047 hectares will be required to register for RZLT, but will not need to pay it.
Each local authority will be required to prepare and publish a map identifying land within the scope of the tax. This must be updated annually.
An owner of land which is zoned as being suitable for residential development and serviced on 1st January 2022 and where this development has not commenced before 1st February 2024 will be liable to file a return and pay the Residential Zoned Land Tax on or before 23rd May 2024, with certain exclusions.
Where land comes within the scope of the RZLT after 1st January 2022, the tax will be first due in the third year after it comes within scope.
The tax will continue to be payable each year in respect of the land unless a deferral of the tax applies or the land ceases to be liable to the tax.
RZLT will operate on a self-assessment basis.
From 2024 onwards, owners of the land in scope will be required to register for RZLT and then (i) make an annual return to Revenue and (ii) pay any tax liability in May of each year.
Interest, penalties and surcharges will apply in cases of non-compliance, including undervaluation of the land in scope and late filing of returns, etc.