Employment tax credits and reliefs

Information

The amount of tax you pay depends on your income. You can find out more about how your income tax is calculated. Income tax reliefs reduce the amount of tax that you have to pay. Here are some of the tax reliefs that relate to employment.

Budget 2012: There are no changes to personal tax credits in 2012.

PAYE Tax Credit

If you are in employment, tax on your income is deducted by your employer on behalf of the Revenue Commissioners. This system of deduction is known as the Pay As You Earn (PAYE) system. All PAYE taxpayers are entitled to a tax credit known as the PAYE Tax Credit. This is worth €1,650 in 2012. If you are married and taxed under joint assessment, then you and your spouse may both claim the PAYE Tax Credit.

Trade Union Tax Credit

If you were a member of a trade union during the tax year and paid a membership subscription, then you could claim a tax allowance in 2010 of up to €350, equal to a maximum credit of €70 (this allowance was abolished from 2011).

If you have been a member of more than one trade union during the year you can only claim one credit.

Benefits from employment

In Ireland, most benefits from employment that are provided in addition to pay are subject to income tax. This also applies to benefits-in-kind. Benefits-in-kind are benefits received by an employee that cannot be converted into cash but that have a cash value. Examples include provision of a company car, loans given at a special rate or provision of accommodation. Some benefits-in-kind are exempt from tax or can be received tax efficiently. You can find information on benefits-in-kind and how they are taxed.

If you are teleworking, that is, using a computer to work from home, your employer may provide you with a computer, printer or other equipment. In this case, the equipment provided is not assessed for tax as a benefit-in-kind so long as it is used primarily for business use. If your employer provides expenses to cover costs such as heating and light, these can be paid without being taxed. See Revenue leaflet IT 69 (pdf) for more information on working from home.

Expenses

Some work expenses can be deducted from your income before it is assessed for tax. To qualify, the expenses must have been necessary in order to do your work and must have been spent entirely for that purpose and no other.

A mileage allowance that you receive for the use of your car for business purposes is not taxable if it does not exceed the civil service mileage rates.

There is no tax relief on expenses for getting to or from work.

See Revenue information for more details on expenses that can be deducted for tax purposes.

Pension contributions

Contributions to a pension are eligible for tax relief at the marginal rate. Find out more about occupational pensions, personal pensions, and Personal Retirement Savings Accounts (PRSAs).

Cross-border workers

If you are resident in Ireland and commute daily or weekly to your place of work in another country where you pay tax, then you may qualify for Trans-border Workers Relief. This reduces your tax in Ireland to take account of the tax that you have paid abroad. It does this by reducing the tax you pay in Ireland on your total income so that it is in proportion to the amount of income from Irish sources.

For example, take the case where your total income was €50,000, of which €5,000 was earned in Ireland and the remainder (€45,000) was earned and taxed abroad.

The proportion of your total income that is Irish income is 1/10 (5,000 divided by 50,000).

Your Irish income tax liability is calculated as usual on the full amount of your income, €50,000 .

But under Trans-border Workers Relief, this amount of tax is then divided by ten to give the tax that you have to pay in Ireland.

There are certain conditions on the duration and place of employment. More information on Trans-border Workers Relief is available.

Seafarer's Allowance

If you are employed on board a ship and spend at least 161 days in a calendar year at sea travelling to or from foreign ports, then you may qualify for Seafarer's Allowance. The allowance is €6,350 and it is an allowance available at your highest rate of tax.