The figures quoted in relation to taxation are based on the Budget 2012 announcements and information from Revenue website www.revenue.ie.
Income Tax for teachers is levied under the Pay As You Earn system (PAYE). The tax year begins on the 1st January. To calculate the income tax payable on your salary you should deduct your total tax deductable expenses from your total income. The balance, or taxable income, is taxed at the applicable tax-band rate. Relevant tax credits are then deducted from the amount due.
At the end of the tax year the Department of Education and Science will issue a form P60 which gives details of your pay, tax and PRSI for the year just ended. This form is required when filling in tax statements or when determining eligibility for Health Board Services. If you are changing your employer or leaving teaching then a form P45, detailing tax deducted, is required.
Standard rate cut off point
There are two income tax rates, 20% and 41%. You pay tax at the lower rate on income up to the standard rate cut off point. Income over this amount is taxed at the higher rate. The cut off point will depend on whether you are married, single or widowed. Also if you have any allowances which are allowed at the higher rate of tax, e.g. pension contribution, this will increase your standard rate cut off point.
|Standard rate band||2012|
|Married couple (one spouse working)||€41,800|
|Married couple (both spouses working - maximum)*||€65,600|
|One parent family||€36,800|
* The increase in the standard rate tax band is restricted to the lower of €23,800 in 2012 or the amount of the income of the spouses with the lower income. The increase is not transferable between spouses.
Tax credits and standard rate cut off point will vary depending on the circumstances of each individual.
Taxation of married couples
Both spouses can elect to be taxed:
(i) In the same manner as unmarried persons (single assessment)
(ii) In respect of their combined incomes (joint assessment).
(iii) Separate assessment.
For the year 2012 the income tax rates are:
Single/Widowed (no dependents) Married (one income)
First €32,800 20% First €41,800 20%
Balance 41% Balance 41%
Single/Widowed Parent Married (two incomes)
First €36,800 20% Up to €65,600 20%
Balance 41% Balance 41%
Exemption from Income Tax
You will not have to pay income tax for the tax year 2012 if your income before deductions for the year is not more than the amount shown below
65 years of age, or over €36,000
65 years of age, or over €18,000
Persons under the age of 65 can still claim Exemption and Marginal Relief up to 31/12/07.
These amounts are increased by €575 for each of the first two dependent children and by €830 for each subsequent child. For example, for a married couple with 3 children the exemption is €21,980 or €423 per week.
Marginal Relief will continue to apply at 40% where income does not greatly exceed the relevant exemption limit. If you qualify for this relief, you should apply immediately to your Tax Office, unless you were granted it last year (in which case you don’t have to apply again).
If on the basis of the information available to it, the Tax Office considers that you may be entitled to income tax exemption in 2012, your normal Tax-Free Allowances will be replaced by an amount equal to the appropriate exemption limit, if it is higher.
Teachers' incomes are subject to the public service pension levy, introduced in 2009. The levy opperates on a sliding scale, based on your gross income.
A levy of 3% is applied to the first €15,000 earned. A levy of 10% is applied on the balance.
The pension levy is tax deductable meaning that your taxable income is calculated after the pension levy has been deducted.
Universal Social Charge (USC)
The Universal Social Charge is a tax payable on gross income from all sources, including notional pay, after any relief for certain capital allowances, but before pension contributions. The USC is effective on 1st January 2011 and will be on a cumulative basis from 1st January 2012.
The rates and thresholds of the Universal Social Charge are as follows:
Individual under 70 years of age
2% on the first €10,036
4% on the next €5,980
7% on the balance.
However, these standard rates are modified in certain circumstances. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 4% rate applies to all income over €10,036.
There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year, regardless of age. Thus, where such individuals are under 70 years and do not hold a full medical card, a rate of 10% applies to such income and where such individuals are aged over 70 years or hold a full medical card, a rate of 7% applies.
Where an individual's total income for a year does not exceed €10,035
All Dept of Social Protection payments
Income already subjected to DIRT.
Tax is calculated at the appropriate tax rates on gross pay and this tax is then reduced by any tax credits due, in order to arrive at the net tax payable. See below for more information on your tax credits.
Personal tax credits
The following chart gives details of the main personal tax credits for the tax year 2011
|Married or Civil Partner||3,300|
|Widowed - qualifying as one parent||1,650|
|Widowed parent - 1st year after death||3,600|
|Widowed parent - 2nd year after death||3,150|
|Widowed parent - 3rd year after death||2,700|
|Widowed parent - 4th year after death||2,250|
|Widowed parent - 5th year after death||1,800|
|One parent family - single||1,650|
|One parent family - widowed||1,650|
|Aged tax credit - single||245|
|Aged tax credit - married||490|
|Home carers (maximum)||810|
|Blind person - one spouse blind||1,650|
|Blind person - both spouses blind||3,300|
|Additional for guide dog||825|
|Incapacitated person employing a carer*||50,000 (max)|
|Rent credit under 55|
|Rent credit over 55|
* Relief in respect of employing a carer (2008, 2009,2010,2011 and 2012) are allowable at the individual’s highest rate of tax i.e. 20% or 41%
Certain expenses are tax deductable. These expenses, subject to limits, are deducted from gross income to determine taxable income. See below for details.
Employee PRSI on pension contributions
From 1st January 2011, employee contributions to occupational pension schemes and other pension arrangements will no longer be exempt from employee PRSI. Such contributions will also be subject to the Universal Social Charge which comes into effect on 1st January 2011.
Employer PRSI on pension contributions
Employee contributions to occupational pension schemes and other pension arrangements are exempt from employer PRSI which would otherwise apply at a rate of 10.75%. the extent of this relief will be reduced by 50% from 1st January 2011.
The annual earnings limit which ( along with age-related percentage limits) determine maximum tax-relievable contributions for pension purposes is being reduced from €150,000 to €115,000 for 2011. The annual earnings limit for 2010 will also be deemed to be €115,000 for the puropse of determining how much of a pension contribution paid by an individual in 2011 will be treated as paid in 2010, where an individual elects under existing rules to have it so treated.
The maximum relief available is dependent on the age of the contributor as follows:
|Under 30||15% of relevant earnings|
|30-39||20% of relevant earnings|
|40-49||25% of relevant earnings|
|50-54||30% of relevant earnings|
|55-60||35% of relevant earnings|
|60 years and over||40% of relevant earnings|
Certain medical expenses incurred by a tax payer for the benefit of himself/herself, spouse or any other individual for whom he/she is allowed a tax allowance are allowable for tax relief provided that none are subsequently reimbursed from another source. This applies to the children of taxpayers provided the children are under 16 years of age or are receiving full-time education up to the age of 22 years.
The following limitations apply:
(i) Sight testing and the supply of spectacles
(ii) Extraction and filling of teeth. Normal dental treatment
(i) Provision and repairs of artificial teeth
(ii) Crowns permanently cemented to the existing tooth tissue are allowable.
Allowable expenses are:
(i) Doctor’s fees
(ii) Hospital, nursing home expenses
(iii) Drugs and medical appliances
(iv) Physiotherapy and ambulance charges
(v) Expenses in relation to routine maternity care
(vi) Cost of gluten free foods for coeliac
(vii) Glucometer machine for a diabetic.
You should use Claim Form Med. 1 when claiming. Use Form Med. 2 if your claim is for dental expenses.
Medical insurance premiums
Tax relief for medical insurance premiums paid to authorised insurers is granted at source. Subscribers will pay a reduced premium (80% of the gross amount) to the authorised medical insurer. This reduction is the same as giving tax relief at the standard rate of tax (20%).
Teachers’ flat rate expenses
School Principals €608
Permanent teachers €518
Part-time teacher (on full-time hours) €518
Part-time teacher (not on full-time hours) €279
(a) employed full-time in second-level schools €518
(b) engaged mainly in teaching general subjects but also doing part-time guidance
counselling (additional allowance) €126
The above should be claimed at the end of each tax year.
Teaching Council registration
Income tax relief on the Teaching Council's annual registration renewal fee remains in place. The tax cresit is added to the teacher's flat rate expense allowance. This means that the fee in real terms is closer to €53 per annum for those paying the higher rate of tax.
From March 2011 onwards your Teaching Council fee can no longer be paid by deduction at source. The fee can now be paid online with credit or laser card or by cheque, postal order or bank draft made payable to the Teaching Council.
Mortgage interest relief
Since 1st January, 2002, tax relief for home mortgage interest is given at source by your lender at the standard rate. This means that your mortgage lender will reduce your monthly mortgage repayments by the amount of tax relief you are entitled to.
In the Supplementary Budget April 2009 it was announced that from 1 May 2009 mortgage interest relief would be discontinued for any mortgage over 7 years. This means that tax relief is available on the interest payments for the first 7 years of your mortgage but it is not available for the 8th and subsequent years of your mortgage.
In Budget 2010 it was announced that qualifying loans taken out before 1 July 2011 will continue to get relief for 7 years. Transitional measures will be provided for qualifying loans taken out between 1 July 2011 and end 2013. People whose entitlement to relief is due to expire in 2010 or after, continue to qualify for relief at the applicable rate up until the end of 2017. Mortgage Interest Relief will be abolished entirely by the end of 2017.
You can find further details on the Revenue website – www.revenue.ie
Tax relief on trade union subscriptions
An annual flat rate allowance of €350 at the standard rate of tax 20% (tax credit €70) is due for Trade Union Subscriptions paid in 2009 and 2010. The full allowance is available annually regardless of the actual amount of the subscription paid. If you are /were a member of a Trade Union at any time during 2009 or 2010 and you have not been granted relief for subscriptions made, you can phone your Regional Lo call revenue number.
Note: This relief has been abolished for 2011.
Tax relief on commuter tickets
Tax Saver Commuter Tickets produce savings of up to 48% in travel costs to commuters through tax and PRSI benefits. Department of Education and Science Circular Letter 0096/2007 sets out the terms of the scheme as it applies to Teachers.
Childcare services relief is a scheme of tax relief arising from the provision of certain childcare services. When the gross annual income from the provision of childcare services does not exceed €15,000 in 2011 or 2012 the income is exempt from tax. The childcare service must be provided in the carer’s home, not the children’s home and no more than 3 children may be cared for at any time.
Tax relief on service charges
Income tax relief is available for individuals who pay local authority and other service charges. Relief is given for service charges paid in full and on time in the previous calendar year.
Tax relief at the standard rate of tax (20%) in the tax years 2011 and 2012 is available for certain tuition fees. The maximum limit on such qualifying fees for the academic years 2011/2012 is €7,000.
Capital Gains Tax: self assessment
Capital Gains Tax is chargeable on gains on the disposal of assets, other than that part of a gain that arose in the period prior to 6th April 1974. Any form of property (other than Irish currency) including an interest in property (as, for example, a lease) is an asset for CGT purposes.
The standard rate is currently 25%. The first €1,270 made by a single person or €2,539 by a married couple are exempt from Capital Gains Tax.
See www.revenue.ie for more information.
Deposit Interest Retention Tax (D.I.R.T.)
A retention tax, at the rate of 25% is deducted at source from interest paid or credited on deposits of Irish residents by deposit takers as follows:
- The Licensed Banks
- Building Societies
- Trustee Savings Banks
- The Post Office Savings Bank
- The Agricultural Credit Corporation
- The Industrial Credit Corporation.
No further tax is due on deposit interest even if the recipient is liable to his/her income tax rate.
People who are not liable for income tax and are either over 65 or disabled can claim the tax back. Claims can be made on forms available from the tax office, larger post offices or financial institutions.
For more information, see www.revenue.ie.