NPPR Charge Due 31 March 2011
The annual charge on investment properties and holiday homes for 2011 falls due today 31st March 2011. The non-principal private residence (NPPR) charge is administered by local authorities. The onus is on the property owner to determne whether they are liable for the tax. Care should be taken to pay on time otherwise you could face hefty penalties. Property owners have from March 31st until June 30th to pay the 2011 tax and avoid late payment fees. A surcharge will apply from July 1st. The tax can be paid online at www.nppr.ie.
Radical Changes to Relevant Contracts Tax (RCT) 2 March 2011
Significant changes were announced on Budget day(7th December 2010) by the Minister of Finance to the operation of the RCT Tax system. The key elements of the new scheme are:
- The new system will have three distinct rates, 0%, 20% and 35% as opposed to the old single 35% rate The rate that is applied to a subcontractor will depend on the subcontractor’s tax compliance record.
- Mandatory electronic filing for the transfer of information, payments and returns.
- The current monthly repayments system will be replaced by an offset system and an annual repayment.
- The principal contractor will be required to notify Revenue in advance of any payment being made to the subcontractor.
- Revenue will then notify the principal contractor as to what rate of RCT tax will apply.
The scheme has yet to come into operation and Revenue are currently working on the design of the new scheme. However both principal contractors and subcontractors should be aware of the far reaching changes that will be coming into effect regarding the operation of RCT. We will keep you updated on any further updates received from Revenue and should you wish to discuss any of the above issues please feel free to contact us.
Rental Income Tax Liabilities 10 February 2011
It came to our attention when completing the 2009 tax returns that many landlords failed to appreciate the impact of recent changes when budgeting for their 2009 rental income tax liabilities, and were even surprised to find that their tax bill increased even where their rental income had not. Below are a summary of issues you might want to consider:
- The 2009 Finance Act restricted the allowable deduction for loan interest on rental residential properties to 75%. Landlords should be aware of the potential impact this will have for 2010.
- The income levy (or new Universal Social Charge for 2011) is calculated on net rental income before capital allowances.
- A landlord cannot claim any loan interest deduction unless he/she has properly registered all relevant tenancies with the Private Residential Tenancy Board (PRTB). It is essential that tenant registrations are kept up to date, e.g. when tenants are replaced during the year.
- A separate rental account should be prepared for each individual property as this will help highlight non-performing properties.
- The Revenue accept that the premiums paid on certain mortgage protection policies are allowable deductions for rental purposes. Many people fail to include such premiums thus over-stating the taxable rental income.
- Pre-letting revenue costs are not allowable, but ‘in-between lettings’ costs might be deductible.
It is a difficult time for landlords who are experiencing falling rents, increasing tax costs, and greater administration burden and costs in the form of NPPR, PRTB, BER rating etc. Please contact the office early in 2011 to allow us to calculate your 2010 rental income well in advance of the October deadline for payment of any liabilities.
Third Level Tuition Fees – New Changes to Tax Relief 7 February 2011
The existing tax relief for third level fees has been amended to provide that the first €2,000 in fees will be ineligible for tax relief for students in full time education. For students in part time education, only the first €1,000 in fees will be ineligible.
It is important to note that this restriction applies per claim and not per student. So for example parents paying tuition fees for two or more children, it is the first €2,000 of the total tuition fees paid for all their children that will be exempt, rather than the first €2,000 per child. Tax relief remains at the standard rate of tax of 20%.
February 2011 Newletter 4 February 2011
Have a look at our latest newsletter.
Derek Madden & Co – News Letter – February 2011
2011 Budget 8 December 2010
Brian Lenihan, Minister for Finance, has announced the 2011 budget and as expected it contains some very harsh measures. Some of the main changes include:
- Reducing the tax credits and standard income bands by 10%
- Introducing a new Universal Social Charge to replace the current Health Levy and Income levy Taxes.
- A number of reliefs have been abolished or restricted.
- Changes to the operation of Stamp Duty.
- Various changes and tax restrictions to pensions
- Changes to the operation of Relevant Contracts Tax.
- Changes to excise taxes such as air travel tax, VRT, petrol and diesel.
The main summary can be viewed here: Budget 2011
Check out this calculator to see how the budget changes will affect your pocket: PWC Calculator
