• Personal Tax Credits
• Exemption Limits
• Tax Rates and Tax Bands
• Rent-a-Room Relief
• Childcare Services
• Rent Relief for Private Rented Accommodation
• Medical Insurance Premiums
• Revenue Job Assist
• Revenue Approved Permanent Health Benefit Schemes
• Tax Relief on Service Charges
• Home Carer’s Tax Credit
• Trade Union Subscriptions
• Health / Medical Expenses Relief
• Tuition Fees
• Tax Relief Available to Systematic Short-time Workers
• PRSI & Health Contributions - Employers/Employees
• PRSI & Health Contributions - Self-Employed
• VAT
• Stamp Duty

The following chart gives details of the main personal tax credits for the tax years 2007 and 2008.

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Exemption Limits

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Tax Rates and Tax Bands

Note: The increase in the standard rate tax band is restricted to the lower of €25,000 in 2007, €26,400 in 2008 or the amount of the income of the spouse with the lower income. The increase is not transferable between spouses.

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Rent-a-Room Relief
Where a room (or rooms) in a person’s sole or main residence is (are) let as residential accommodation, gross annual rental income of up to €7,620 in 2007 and €10,000 in 2008 is exempt from tax. Relief in respect of mortgage interest relief is not affected. The relevant Capital Gains Tax/Stamp Duty provisions are also not affected.

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Childcare Services
Childcare Services relief is a scheme of tax relief for income arising from the provision of certain childcare services. When the gross annual income from the provision of childcare service does not exceed €15,000 in 2007 or 2008 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.

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Relief can be claimed by completing Form Rent 1.

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Tax Relief at Source (TRS)

Tax relief for medical insurance premiums paid to authorised insurers is granted at source (TRS). 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%).

Employees whose medical insurance premiums are paid on their behalf, by their employer, as a Benefit-in-Kind, will not have been allowed tax relief at source. To claim the relief due it will be necessary to notify your local Revenue Office with the relevant details or by completing your annual tax return.

A special tax allowance at the individual’s highest rate of tax, i.e. 20% or 41% in 2007 and 2008, is available for people who have been unemployed for one year or more and who take up a qualifying job. The allowance in the first year of employment is €3,810 plus €1,270 for each child, reducing to two-thirds of that amount in Year 2 and one-third in Year 3. This allowance is also available for persons who have been in receipt of either Disability Allowance or Blind Person’s Pension for 12 months or more.

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Where an employer deducts the contributions from gross pay the tax relief is given at source. Therefore no further action is necessary to claim relief.

Where an employer does not deduct the contributions from gross pay relief can be claimed, by notifying your local Revenue office of the relevant details.

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.

A tax credit at the standard rate of tax (20%) in the tax years 2007 and 2008 is available for married couples where:

• One spouse (the 'home carer') works in the home caring for one or more dependent persons, i.e. a child for whom they are entitled to Social Welfare child benefit, a person aged 65 or over, or a person who is permanently incapacitated by reason of mental or physical infirmity and the qualifying person normally resides with the couple for the year.
• The home carer’s income is not in excess of €5,080. A reduced tax credit applies where the income is between €5,080 and €6,620 in 2007 and €5,080 and €6,880 in 2008.

The tax credit is not available to married couples that are taxed as single persons. Neither is the tax credit available to married couples with combined incomes over €43,000 in the tax year 2007 and €44,400 in the tax year 2008 and who claim the increased standard rate tax band for dual income couples.

Trade Union Subscriptions
A tax credit of €300 is available for Trade Union subscriptions for 2006 and €350 for 2007. If you are/were a member of a Trade Union, at any time during 2007 or 2008 and you have not been granted relief for subscriptions made, you can phone your Revenue Regional LoCall number.

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Health/Medical Expenses Relief

You may claim tax relief on a Form MED 1, at your highest rate of tax, i.e. 20% / 41% 2007/2008, for certain medical expenses incurred by you, your spouse, your dependent child or a dependent relative. Most medical expenses, with some exceptions e.g. routine dental and ophthalmic care, qualify for relief.

You cannot claim relief for any expenditure which has been or will be reimbursed, e.g. by Quinn Healthcare, VHI, Vivas, a Health Authority, or where a compensation payment is made or will be made.

Prior to 2007 the first €125 (one person) or €250 (two or more people) of any medical expenses incurred was borne by the claimant. This no longer applies for 2007 and following years.

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Tuition Fees

Tax relief at the standard rate of tax (20%) in the tax years 2007 and 2008 is available for certain tuition fees. The maximum limit on such qualifying fees for the academic years 2007/2008 and 2008/2009 is €5,000.

The exemption from income tax for Unemployment Benefit paid to systematic short-time workers has been extended idefinitely.

PRSI & HEALTH CONTRIBUTIONS

Class A (Normal rate at which contributions are made)

Note: For 2007 and 2008 an additional 0.5% Health Contribution has been introduced on earnings exceeding €1,925 per week (equivalent to €3,850 per fortnight and to €8,342 per month)

Employees are exempt from PRSI on the first €127 per week or €26 per week for employees on a modified PRSI rate.

Employees earning €352 or less per week in 2008 (€339 in 2007) are exempt from PRSI and Health Contribution. However, where earnings exceed €352 per week in 2008 (€339 in 2007), the employee’s PRSI Free Allowance remains at €127 per week or €26 per week for employees on a modified PRSI rate.

Employees earning €500 or less per week in 2007 (€480 in 2007) and are exempt from Health Contribution of 2%.

Note: Recipients of a Social Welfare Widow’s or Widower’s Pension, Deserted Wife’s Benefit/Allowance or One-Parent Family Payment are exempt from paying the 2% Health Contribution. All Medical Card holders (including people aged 70 or over) are also exempt from this contribution.

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Class S (Self-Employed)

Self-employed persons are exempt from Health Contribution of 2% where the annual income is €24,960 or less in 2007 and €26,000 or less in 2008. The minimum annual PRSI contribution is €253.

VAT Registration Threshold for SMEs
The VAT registration thresholds for small businesses are being increased from €35,000 to €37,500 in the case of services, and from €70,000 to €75,000 in the case of goods. These increases will take effect from 1 May 2008.  

Reduced VAT rate for certain agricultural inputs used to produce bio fuel
The VAT rate on the supply of seeds, and of roots, bulbs, rhizomes and similar supplies used for the agricultural production of bio fuel crops, e.g. elephant grass, will be reduced from 21% to 13.5% with effect from 1 March 2008. 

Review of VAT on Property Transactions
Provision will be made in the Finance Bill for the introduction of a new system for applying VAT to property transactions.  The changes are designed to simplify the rules, while ensuring a more equitable treatment for taxpayers.  The new rules will apply to both residential and commercial property supplied in the course of business.  The VAT charge on sales of residential property remains unchanged.  The new system will take effect from 1 July 2008.

Reverse charge mechanism in the Construction Sector
A reverse charge mechanism for VAT on supplies made by a subcontractor to a principal contractor in the construction sector is being introduced with effect from 1 September 2008. 

A reverse charge means that instead of the subcontractor charging VAT on his supply to a principal and accounting to Revenue for the VAT, the principal contractor will account to Revenue for the VAT.  Both the subcontractor and the principal will continue to claim input credits.

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STAMP DUTY

Residential Property - New Rate Structure
A simplified system, incorporating an exemption of €125,000 with 2 rate bands of 7% and 9%, is being introduced for instruments executed on or after 5 November 2007.  The 7% rate applies up to €1,000,000 and it is charged on the excess of the consideration over €125,000.  The 9% rate applies where the consideration exceeds €1,000,000 and it is charged on the excess of the consideration over €1,000,000.

*To fully preserve the existing exemption, transactions, where the consideration (or aggregate consideration) does not exceed €127,000, are exempt from stamp duty.

Reduction of Claw back Period

The claw back period for first-time buyer relief and owner-occupier relief is being reduced from 5 years to 2 years in certain circumstances.

Site to Child Exemption

The exemption threshold for a site, which is transferred from a parent to a child for the purposes of constructing the child’s principal private residence, is being increased from €254,000 to €500,000.  A similar change will apply for CGT purposes.  These changes will be contained in the 2008 Finance Bill.

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