The majority of self-employed individuals should have filed their 1998/1999 tax returns for the year ending April 5th, 1999, by now. If not, they and their tax advisers have the weekend to finalise doing so. The relevant paperwork will be accepted until 5.30 p.m. on Monday by the Revenue Commissioners. While concluding the figures, keep in mind that the allowable expenses and reliefs for 1998/ 1999 income tax for self-employed and proprietary directors are:
Medical expenses that have not been reimbursed by Bupa, VHI or the health board may be claimed using a MED-1 form. Medical expenses that were paid on behalf of a sick or elderly relative may also be claimed as a tax deduction.
Personal pension contributions for the self-employed or for individuals in non-pensionable employment. The cap on contributions is 15 per cent net relevant earnings for those under 55 and 20 per cent of net relevant earnings for those over age 55. Remember that every £1 (€1.27) spent on a personal pension or AVC contribution is worth 46p in tax relief.
An age allowance is provided for a single person at £400 and £800 for a married couple.
There are several types of allowances that people often forget to claim says Ernst & Young's director of personal taxes, Mr Jim Ryan.
Permanent health insurance plan premiums may be claimed as a tax deduction on up to 10 per cent of an individual's total income.
Rent relief may be claimed for rent paid up to the following limits: single and under age 55, £500 at the standard tax rate of 24 per cent. Married couples £1,000 at the standard rate. Those over 55 and single are limited to £1,000 relief and married couples £2,000.
Mortgage interest relief may be claimed at a max of £2,500 at standard rate for a single, first-time buyer. This is defined as someone who is within five years of the initial purchase of their house. Single, non-first time buyers may claim a maximum of £1,900 at the standard rate. Married couples may claim double the amount or £3,800 at the standard rate.
Bridging loan interest may be claimed in addition to mortgage interest.
Third-level education fees within the tax year may be claimed at the standard rate.
Foreign earnings deductions are available to employees who spend more than 90 days outside the State during the tax year or over 12 months. They may claim the relief in respect of tax paid on income earned while outside the state.
The benefit-in-kind (BIK) provision of a company car may be reduced. If an employee spends more than 30 days outside the State and the car is not available for their spouse or family, the BIK may be reduced by reference to the number of nights the individual has spent outside the State.
BES or film investments relief must be claimed relief within two years of the tax year in which the initial investment was made or the relief is lost.
Some categories of PAYE employees and self-employed workers who have only worked a short time during the year may claim a flat rate of expenses to cover items needed in the course of their business such as uniforms and work-related tools or items. There is no fixed figure but Revenue has published list of expenses that may be allowed for certain professions including nurses, plumbers and airline pilots.
If self-employed tax returns are filed any later than January 31st, the taxpayer may face interest penalties and surcharges. Surcharges are 5 per cent if filed between February 1st and March 31st and 10 per cent if filed after the end of March, says Mr Ryan. Penalties are payable regardless of the percentage of the return paid.
