Michael Noonan today presented us with the 2017 budget measures.

Largely due to the structure of our latest government, many of the tax measures for 2017 have been made public over the last few weeks, leaving little in the way of any big surprise announcements.

The main changes effecting most people are:

• ​Reduction in lower USC rates to 0.5%, 2.5% and 5%
• Increase in the 2.5% USC band to €18,772
• Tax rebate for first time buyers of newly built homes in operation from 19 July 2016
• Mortgage interest deduction for rented residential property increased to 80%
• Rent-a-room relief threshold increased to €14,000
• Home Carer Credit increased to €1,100 per year
• Reduction in DIRT charged on savings to 39%
• Self-employed earned income tax credit increased by €400 to €950
• Increase in all three CAT tax-free thresholds
• Increase in price of a packet of 20 cigarettes of €0.50c (pro-rata increase on other tobacco products)

Meanwhile the Special Assignee Relief Programme (SARP) and Foreign Earnings Deduction reliefs have been extended to 2020. The minimum days for the FED has been decreased from 40 to 30 to make it more accessible for SMEs.

The 9% VAT rate for the hospitality sector has been retained which will be welcomed by the industry especially in view of the impending Brexit.

The Start Your Own Business Relief available to those on certain social welfare benefits has also been extended for another two years. This, in my view, is a very good incentive for making a start in business.

Again, a welcome measure for entrepreneurs sees a further decrease in the CGT rate from 20% to 10% on certain disposals of business assets. There is a lifetime cap on this relief of €1 million.

Farmers having a particularly poor year will be able to step out of the income averaging method and pay their tax on an actual year basis. Meanwhile, the flat-rate addition for farmer's will increase from 5.2% to 5.4% . There has also been an improvement to the accelerated capital allowance scheme for energy efficient equipment for sole traders with the full allowance deductible in year one.

A tax credit has been made available for fishermen to incentivise the industry. The credit is €1,270 which would cover an income of approximately €6,350.

The Home Renovation Incentive scheme has been extended to the end of 2018 while the Living City Initiative has been expanded to include landlords.

Relief from VRT has been extended for both electric and hybrid cars.

The finance minister announced plans to implement an incentive for share based remuneration in next years budget and also indicated that a sugar-tax would be implemented and aligned with the corresponding measure in the UK (c. April 2018).  

Mr Noonan, interestingly in response to the release of the Panama Papers earlier this year, also indicated that Offshore tax defaulters will not be able to avail of the voluntary disclosure regime and he is seeking mandatory criminal procedures for such offenders.

He also announced plans to review the legislation which has controversially allowed so-called 'vulture funds' to pay very little tax under section 110 of the Taxes Consolidation Act. Another item under review is the non-recovery of VAT for the charity sector.

More in depth analysis to follow on some of the more common announcements made today.

​Michael Noonan announced the budget for 2016 today and there were no major surprises.

Download my summary of the taxation measures below.

You may have recently heard that Airbnb have been instructed to pass details to the Revenue Commissioners on income earned through the website by taxpayers. As a result, it is possible that thousands of Irish Airbnb users will be subject to tax on such income at rates up to 52%.

Earlier this year, Revenue clarified that such income earned from short lets of a room in your house or your entire house does not fall under the rent-a-room relief. This relief operates to exempt income from renting a room in your house provided that you receive less than €12,000 in any tax year (previously €10,000).

It seems that Revenue believe that such income cannot fall under the relief because income from short-term lets (e.g. guesthouses, Bed and Breakfast etc.) is considered to be trading income as opposed to rental income. Trading income is taxable under Schedule D Case I while rental income is taxed under Schedule D Case V both of which have different rules for calculating the appropriate tax liabilities.

In order to claim rent-a-room relief, the related income must ordinarily come under the remit of rental income (i.e. Schedule D Case V). Therefore, as Revenue believe that Airbnb income would be viewed as trading income, the relief cannot be claimed and the income is taxable.

Many believe that such income should not be treated as trading income and, therefore, should be available for relief. It remains to be seen if Revenue's interpretation of this is upheld as it has not been through the courts. It should be noted, however, that the more times that you let a room through Airbnb, the more likely it is that the income would be considered trading income.

The Irish Tax Institute has advised that those who have been in receipt of such undeclared income should seek to make a Voluntary Disclosure to Revenue in order to mitigate any penalties and punishment which may be imposed as a result of any underpayments of tax arising.

Those affected should consider their position as it is likely Revenue will analyse the data received from Airbnb and contact all those who they believe have not declared the income. At this point, it is likely that there will be less protection available from increased penalties and punishment.

If you have any questions in relation to any of this, please do not hesitate to contact me.

Barry Lennon
01 539 4330
barry@lennonaccounting.ie

It's getting incredibly busy over here so it's time to build a team of accounting geniuses around me!

The position will initially be for two days per week but I see this growing into a full time role in the near future.

I am looking for someone with the following:

• Bookkeeping experience with a good understanding of double entry;
• Basic tax compliance experience;
• MS Excel experience;
• Good writing and communication skills;
• Enthusiasm;
• Punctuality;
• Trustworthy;
• and most of all - a 'can-do' attitude.

If you are interested (or know someone who might be interested), please get in touch.

Send your CV along with a short cover note to info@lennonaccounting.ie.

Michael Noonan made his budget announcements for 2015 yesterday.

There were a number of changes including a drop in the marginal tax rate, an increase in the standard rate tax band, changes to the USC and abolition of the 'Double Irish' loophole.

See my report below for an overview of the changes announced. The Finance Bill will follow in the coming weeks providing the detail for all of the changes.

It's that wonderful time of year again where you get to part with your hard earned cash and hand it over to the good people in the Revenue Commissioners. Or, for some of the luckier folk, you get to get some cash back from them!

The filing deadline for your 2013 income tax return is Friday 31 October 2014. For those of you who file your return and pay on ROS (Revenue's On-line Service), however, you can avail of the extended deadline on Thursday 13 November 2014.

For those of you who have had to submit income tax returns before, you know what it is all about. For those of you who don't know, it is basically the means in which you report any self-assessed income that you earned during the year and calculate the tax payable on it. Basically, it includes any income that you have earned outside a salary which is subject to PAYE such as: 

• self-employment, 
• rental income, 
• foreign income,
• bank interest, 
• dividends etc.
  

Failure to report any self-assessed income to Revenue can result in: 

• penalties for the late filings of tax returns, 
• interest on the late payment of any tax due on the unreported income,
  
• your name published on a tax defaulters list.

In some instances, this income may just need to be reported and no additional tax may arise. In fact, as stated above, some people may often actually even receive a refund of tax which may be due to an under claim of tax credits, a trading loss or a medical expense claim.

If you are in doubt about whether you should be submitting a tax return, leave a comment below or get in touch and I'll be happy to let you know if you need to do so.

The vast majority of us are paid wages by our employers. In most cases, from my experience, people do not know what tax credits are available to them and what they are actually claiming.

I've listed some of the main tax credits available below. There are many others, of course, but you should make sure that you are claiming all available to you. And, don't forget, you can also still make a back-claim for the previous 4 years too.

Personal credit
This credit is available to everyone resident in Ireland. The tax credit available is €1,650 for a single person and €3,300 for a married couple per year. This credit will cover any tax on any income up to €8,250 and €16,500 respectively.

PAYE credit
If you work for someone else, who is not a relation, you are also entitled to a further tax credit of €1,650 per year. The credit is also available to those receiving taxable social welfare payments.

Medical expenses
All qualifying medical expenses can be claimed as a tax credit at a rate of 20%. For example, if you spent €200 in a year on medical expenses, you receive a tax credit of €40.

For dental expenses, they must be non-routine treatments which are listed here.

To claim your medical expenses, you can make the claim on-line through PAYE Anytime or by submitting a Form Med 1 or Form Med 2 (i.e. for dental expenses) to your local Revenue office.

Rent tax credit
Strictly speaking, this credit is no longer available to those seeking to claim it for the first time. However, if you were renting a residential property on or before 7 December 2010, you will be able to claim the credit which currently amounts to €160 per year provided that the rent paid in the year was over €800.

Single person child carer credit
This credit of €1,650 is available to a single parent with a qualifying child living with them.

Home carer's credit
A credit of €810 is available to a married person who principally stays at home to mind a dependant (i.e. a child or older person). The claimant cannot have income in excess of €5,080 in the year and the joint income of the married couple cannot exceed €41,800.

The above are the main credits availed of, however, there are many others including Start Your Own Business Relief, Tuition Fees, Blind persons credit, Age credit credit etc. Most of these can be claimed on PAYE Anytime but also by calling your local Revenue Office.


So, you should check your tax credit certificate to ensure that you are receiving all the credits available to you. If you have any questions on any of these, let me know in the comments below.

There are literally thousands of online tools available online or via your smart phone and tablet. There are some really great ones out there that will help with your productivity and organisation in your business. Below, I've outlined a few that I have used and find them to be very useful.

Xero

Being an accountant, of course, this is top of my list. 

Xero is a cloud-based accounting package that takes a lot of pain out of business accounting. It is a very user-friendly software that can be accessed anywhere that you have an internet connection. You can use the package to create invoices for your customers, easily complete your bank reconciliation and generate numerous performance reports. In addition, you can add your accountant as an adviser and they can have full access to the software to complete VAT returns and prepare year end accounts.

Xero offer a free 30 day trial period and I would suggest giving it a go if you are on the lookout for accounting software for your business. After that, they have a few different pricing levels ranging from $20 (approx €15) to $40 (approx €30) per month.

I am a certified advisor with Xero so if you have any questions about the software and its uses, drop me a mail and I'll help yu decide if it's the right package for you.

Google Apps

A lot of us will already be fairly familiar with Gmail. Google Apps is pretty much just an extension of Gmail for businesses. For a small monthly fee, you can set up your own personalised email address like mine (i.e. info@lennonaccounting.ie).

But it is more than just email, it offers loads of great tools for your business such as Google Drive, Calendar and other great 3rd party apps that can be added on. You might say that this is all available in the standard free Google account but with Google Apps, you can customise a lot more and bring a level of professionalism to your email address. 

Skype

Most will also know Skype from calling their loved ones overseas who have emigrated over the last few years. However, it is fast becoming a very useful business communication tool too.

Many business meetings are now held over Skype calls and they also offer the option of purchasing a local land line number if you want to give your business a professional and local feel.

Weebly

There are plenty of good online platforms allowing you to create your own website at a fairly low cost. I've tried a few of them and I've found that Weebly was the best, for me anyway. After spending a few hours playing around, you will be able to build you own basic website. It more than likely won't look as good as a site designed by a professional but, it's a good start to get yourself a presence on the web.

I designed this site on Weebly. Although the design of it might not be great, it's given me a presence on the web at a low cost at this early start of the business. I do have future plans to have a professionally designed site that, hopefully, will look much better.

Others

There are a few others which deserve a quick mention but I couldn't provide enough detail on them as I have only used them very briefly.

Shopify allows you to create an online shop for selling your goods / services. 
Receipt Bank is a good tool for capturing all those small business receipts and expenses. 
Evernote is a useful app for taking notes on any ideas and projects that you may have ongoing.

If you have any other suggestions of useful business programmes or apps, let me know in the comments section below.

Receiving a gift or inheritance can often be a confusing time for people. On one hand they may have lost a family member or close friend while on the other hand they may have received a lump sum of cash, a property or even a business perhaps.

As with everything, getting a gift or inheritance comes with tax implications. In general, the person receiving the gift / inheritance will be subject to Capital Acquisitions Tax on its value. The rate of tax is currently 33%. 

However, there are some reliefs to reduce the tax burden in certain circumstances. The most common reliefs are set out below.

Thresholds
You only become taxable on the gift/inheritance received if the value of the total assets received in your lifetime from a particular group exceeds that groups threshold.

• Group A - a gift / inheritance from a parent - you can receive up to the value of €225,000 tax-free.
  
• Group B - a gift / inheritance from a son, daughter*, brother, sister, uncle, aunt or grandparent - you can receive up to the value of €30,150 tax-free.
  
• Group C - a gift / inheritance from anyone else - you can receive up to the value of €15,075 tax-free.

*In some cases, a parent receiving a gift from their child can qualify for the Group A threshold

Small Gift Exemption
Every individual can receive a gift of up to €3,000 per year from any one person completely tax-free. So get out there and start asking everyone for €3,000, you might just make a nice sum from it without paying any tax!

If a gift is covered by this exemption, that gift does not reduce your lifetime threshold, as outlined above.

Agricultural Relief
If you receive a gift / inheritance of agricultural assets, you may be entitled to this relief. Basically, if you qualify for the relief, the value for tax purposes will be reduced by 90%. Massive savings can be achieved if planned correctly.

Business Relief
Similar to agricultural relief, the value of the qualifying assets received as a gift or inheritance may be reduced by 90% for tax purposes. Again, there are plenty of conditions that must be satisfied but, with planning, the transfer can take place in a tax-efficient manner.

Favourite Niece / Nephew
This relief works to allow a niece / nephew avail of the higher Group A thresholds when receiving a gift / inheritance of business assets from an uncle / aunt. There are conditions that need to be satisfied to qualify.

Dwelling House Exemption
A person can receive a gift / inheritance of a house completely tax-free providing certain conditions are fulfilled. Basically, the person receiving the house must have lived in the house for three years prior to receiving it and must not own, or be entitled to, another dwelling house. The person giving the house must also have owned the property for the previous three years.

If you have received a gift / inheritance recently, or if you are planning one, get in touch to discuss the most tax-efficient way of receiving it. Otherwise, start sucking up to all your friends and family to see if they'll hand over that €3,000 tax-free!

I'm sure that anyone who has ever looked for an accountant has typed the above question into Google. I know I have done similar searches when looking for solicitors or even doctors! You will often incur the same answer too......it really all depends on what you want done.

I hope that this can help some of you who are trying to figure out how much they need to budget for their new business.

With accountancy firms, there are essentially three tiers:

1. Big 4 - PWC, Deloitte, KPMG and EY
2. Medium sized firms - Mazars, BDO, Grant Thornton etc
3. Small firms - like me

If you want the combined experience of one of the Big 4 firms, you will expect to pay a nice little price for it. Mid sized firms can also provide a substantial knowledge base at a slightly lower cost. Whereas with small firms, we generally specialise in a number of areas and can provide a personal touch at a substantially lower cost than your bigger firms.

From my experience, the basic cost of a simple tax return is approximately €1,000, €800 and €500 with these firms respectively. Obviously, these costs can vary depending on the level of work involved. 

So, what kind of costs are involved for a small business?

Without trying to make this into a sales pitch, I have outlined below the basic costs involved in the various tasks usually required from a small business in a year. These would be an idea of the costs involved if you were to engage me as your accountant to your business.

Tax registration and accounting set-up
The basic cost of this is approximately €150 - €200 (ex VAT). There would be additional charges for setting up a company, determining VAT rates etc.

Monthly bookkeeping
This really depends on the level of transactions (i.e. sales and purchases) that your business has. On a basic level, it would be approximately €75 per month (ex VAT).

Bi-monthly VAT returns
The preparation and submission of bi-monthly VAT returns, assuming all of the bookkeeping has been done correctly, would cost approximately €80 per return (ex VAT). 

Payroll & PAYE returns
To calculate your employee's net wages, produce payslips and submit your monthly PAYE returns would cost approximately €60 per month (ex VAT). This is based on a maximum of five employees, any additional employees would be a further cost.

End of year accounts
The cost of preparing end of year accounts will largely depend on the quality of bookkeeping throughout the year and whether statutory accounts are required. Again, on a basic level, it will cost approximately €450 (ex VAT).

Income / corporation tax return
Lastly, the end of year tax return. Once again, it will depend on the quality of bookkeeping undertaken during the year but on a basic level, the cost will be in the region of €500 (ex VAT).

Obviously some of these tasks can be carried out by yourself or someone else in your business, such as the bookkeeping and the payroll. This may certainly save you some money on accounting fees but, if not done correctly, it can end up costing you as much if the accountant needs to fix a lot of mistakes. 

The above is also very much a guideline. The only way I could tell you how much the fees are would be to sit down and discuss your needs with you. My initial consultation with a person or a business is always free. I like to get to know potential clients to ensure that we can work well together and let them know what I can bring to the table before I start charging for anything.