Your Questions: You may be entitled to tax relief based on the type of job that you do

 


Picture posed
Picture posed

Q: I work in the Defence Forces and my wife works as a teacher. My aunt, who is a retired teacher, said to me recently that I should check if I qualify for some type of tax relief which is based on my job, and the same for my wife. She was light on detail, but she said that as a teacher for years she was able to get tax relief.

A: What your aunt is referring to is flat rate expense relief. And your question is timely because, while it wasn’t in place for the Defence Forces previously, it has become available in the last number of weeks.

Flat rate expenses are a type of tax relief for PAYE workers in specific trades and professions and if you have a job in one of these areas you can reduce the amount of tax you pay each year by the designated amount, according to commercial director of Taxback.com Eileen Devereux.

She estimates that less than 10pc of employees are aware of the flat rate expense allowance.

Many are missing out on this “free money” as a result.

The amount you can claim really depends on what job you have because the rates are set by Revenue each year for various classes of employee. You can find a full list of jobs and associated reliefs on the Revenue.ie website.

In your case you can now claim flat rate deduction of €150 per year. This means you reduce your taxable income by this amount. Your wife is entitled to a deduction of €518 as a teacher.

But you do not automatically get the flat rate expenses deduction. You have to claim it yourself.

Q: My son is starting college this month. We live in Meath and he is going to college in Dublin. As rental prices for accommodation are proving extortionate, we have decided to get him a car and let him commute. Given that he is 19 and he has only been driving a year and is insured on my car, I know that insurance is going to be a big issue. While I’m ready for a hefty premium quote I’m wondering is there anything we can do to push the premium down?

A: Your son will probably be quoted an expensive premium, but there are things you can both do to bring this down. Year one is likely to be relatively expensive, but if your son takes certain steps within the year then more affordable premiums should be available in year two. The steps include getting 12 professional lessons, attaining his full licence and earning a one-year, no-claims bonus. Managing director of CoverInAClick.ie Jonathan Hehir says taking these measures could see the premium slashed by 76pc or more.

Consider the impact your car choice will have on your son’s insurance. Cars that are older than 10 years tend to be harder to insure. Try to choose one that is maybe no older than seven years. When it comes to engine, a smaller one is better.

Don’t be tempted to be the primary policyholder on your son’s car. Insurers take a zero tolerance approach to this in the event of a claim, Mr Hehir warns.

Another sure-fire way of reducing premiums is to obtain a full licence. If he passes the test mid-policy, certain insurers will even refund some of the premium.

Finally, choose your insurer wisely. Some companies only want a certain type of driver on their books, while other specialise in getting the best value for other cohorts of drivers.

Q: I’m taking in two student lodgers this month. Should I let the taxman know? I just want to make sure that I do everything above board. I’m retired so I’m not sure if that makes a difference.

A: Since you are letting to students for the academic year/term in your own home, then this rental income will fall under the rent-a-room relief and you won’t need to pay tax on it. Your gross income from rent and related services must not be over €14,000 per year (which is 2018 threshold).

You still need to let the taxman know and you can do this online and enter the amount of exempt income on a Form 12. You will then receive the relief due, according to commercial director with Taxback.com Eileen Devereux.

The fact you’re retired doesn’t affect this. You may claim rent-a-room relief even if you are not in receipt of income from any other source.

Deirdre McCarthy of InsureMyHouse.ie stresses that it is important to disclose any material fact about the use of your property to your insurers so that you are not to be caught out in the event of a claim. She suggests that anyone thinking about renting out a room or doing AirBnB contact a broker that has access to a panel of underwriters who take on risks such as these.

Irish Independent

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