Earned income tax credits

Tax credits can reduce your overall tax liability. Self­employed taxpayers can claim an earned income tax credit of €1,650 (in 2021/2022).

The credit you will get is the lower of either €1,650 or 20% of your qualifying earned income Both trading income (under Schedule D) and pay earned by proprietary directors qualifies for earned income tax credits

Note that you cannot claim tax credits against rental income or deposit interest income.

Flat­rate expense allowances

Flat­rate expenses cover the cost of equipment an employee needs for work This equipment may include tools and uniforms and stationery, etc.

These costs must be incurred wholly and exclusively to perform the duties of employee’s work, and the costs must be directly related to the nature of the business or their employment The flat­rate expenses list covers a wide range of professions and is a good guide to what is and is not an allowable expense

The deductions are agreed between Revenue and representatives of groups or classes of employees (usually trade union officials) All employees of the class or group in question can then claim the agreed deduction in their own tax credits

Flat rate expenses can be claimed by completing a self­assessment or income tax return

If paid via PAYE, you can find the form in Services in myAccount

Allowable expenses

Allowable business expenses can reduce the overall tax bill for self­employed taxpayers, but the expense must be business related To be allowable as a business expense it must be:

Incurred ‘wholly and exclusively’ for the purpose of the trade

It must be a ‘revenue expense’ and not a ‘capital expense’ Note the difference: a capital expense is normally a one­off purchase of an asset (e g a vehicle, furniture, computer), while a revenue expense typically relates to expenditure incurred on an ongoing basis (e.g. electricity or stationery).

Must not be an expense specifically disallowed in tax legislation.

Items that can typically be put down as allowable expenses, so long as they directly relate to running your business, include:

Purchase of goods for resale

Employees’ pay

Rent and bills for your business premises / or home office (proportioned between private and business)

Running costs for vehicles or machines used in your business

Lease payments for vehicles or machines used in your business

Legal fees, bookkeeping and accountancy fees, insurances

Interest payments for money borrowed to finance your business

Proportioning expenses

For expenses that relate to both business and private use you must proportion the cost that relates to business activity and only put this portion down as an expense Things such as phone, rent, motoring expenses fall into this category

For more about expenses see the list on Revenue website https://wwwrevenue ie/en/starting­abusiness/claiming­a­deduction­for­expenses/index aspx

FAQs Self­Assessment

What taxes and charges do you pay in Ireland?

Who must register for self­assessment in Ireland?

How do you register for self­assessment in Ireland?

Do you need to register for self­assessment in Ireland even if you are not resident in the state?

What is relevant contracts tax (RCT)?

What is a tax rate band?

How do tax rate bands work?

What is an increased rate band?

Can you carry over unused tax rate bands?

How do I know whether I need to pay PRSI – pay­related social insurance?

What happens if I am late paying what I owe for self­assessment?

What if I realise an error has been made on my tax return?