Bernard Durkan (Kildare North, Fine Gael)
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262. To ask the Minister for Finance the extent of the different types of tax relief available to both PAYE employees and self-employed persons; and if he will make a statement on the matter. [11571/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that income tax on both PAYE employees and self-employment income is calculated by reference to the same rate bands, which will vary depending on the personal circumstances of the individual. A range of tax credits may also apply, again depending on the personal circumstances of the individual.

Income up to a certain limit is taxed at the ‘standard rate’ of income tax, which is currently 20%. This is known as the standard rate band. Any income above this band, is taxed at the higher rate of income tax, which is currently 40%. The standard rate band for a single person for the 2023 year of assessment is €40,000. Depending on the personal circumstances of the individual this may be further increased.

The amount of income tax due is then reduced by certain tax credits. An overview of some of the main tax credits or reliefs is set out below.

Personal Tax Credit

A Personal Tax Credit of €1,775 applies to each individual for the 2023 year of assessment. For a jointly assessed couple or civil partners the amount is €3,550.

Employee Tax Credit (PAYE employees)

The Employee Tax Credit is available to individuals in receipt of income taxable under the Pay as You Earn (PAYE) system. This includes wages, benefit-in-kind, occupational pensions and Department of Social Protection (DSP) income.

Certain foreign wages and pensions may also qualify for this credit.

The Employee Tax Credit is equal to the lesser of 20% of the individual’s yearly income or the specified amount. The specified amount for the 2023 year of assessment is €1,775. This credit can only be claimed once, regardless of how many employments are held. Civil partners or a married couple are both entitled to claim this credit.

The Employee Tax Credit is not available to a range of individuals such as proprietary directors and spouses/civil partners on directorship income; a spouse, civil partner or child of the person paying the income or a partner in a partnership.

Earned Income Tax Credit (self-employed individuals)

The Earned Income Tax Credit is available to an individual whose income in a tax year includes, or is made up of, qualifying earned income.

Qualifying earned income means earned income which does not qualify for relief under the Employee Tax Credit. This includes, for example, self-employment income from a trade or profession and employment income earned by a proprietary director and his or her spouse or civil partner.

The Earned Income Tax Credit is equal to the lesser of 20% of the individual’s qualifying earned income or the specified amount. The specified amount for the 2023 year of assessment is €1,775.

In some cases, where an individual has earned income from various sources, he or she may be entitled to both the Employee Tax Credit and the Earned Income Tax Credit in a tax year. In such cases the combined value of both tax credits cannot exceed €1,775.

Remote Working Relief (PAYE employees)

Remote workers may incur certain expenditure in the performance of their duties from home, such as additional heating, electricity and broadband expenditure. Revenue operates an administrative practice which allows an employer to make payments up to €3.20 per day to employees, subject to certain conditions, without deducting PAYE, PRSI or USC. There is no legal obligation on the employer to make such payment and the payment is at the discretion of the employer.

Section 114A TCA 1997 allows remote working individuals, in respect of 2022 and subsequent years of assessment, to claim 30% of electricity, heat and broadband costs, apportioned on the basis of the number of days worked from his or her home during the year. A legislative requirement for this tax relief is that receipts must be submitted with the claim. This can be done by uploading the relevant receipts and images of the utility bills using the ‘receipts tracker’ in myAccount.

This relief is granted by deducting the specified amount from the taxable emoluments arising from the individual’s office or employment. The relief is therefore given at the individual’s marginal rate of tax (i.e. the highest rate at which he or she pays tax).

The remote working relief is not available to self-employed individuals, however any remote worker employed by them is entitled to this relief.

The Rent Tax Credit

The Rent Tax Credit was introduced by Finance Act 2022 and will be available in respect of qualifying payments made during the 2022 to 2025 years of assessment inclusive. The maximum value of this credit is €1,000 in the case of a jointly assessed couple or civil partners and €500 in all other cases.

The Rent Tax Credit will, subject to a number of conditions, be broadly available in the following three circumstances:

- where the claimant makes a qualifying payment in respect of a residential property which he or she uses as his or her principal private residence,

- where the claimant makes a qualifying payment in respect of a residential property which he or she uses to facilitate his or her attendance at or participation in his or her employment, office holding, trade, profession or an approved course, and

- where the claimant makes a qualifying payment in respect of a residential property which his or her child uses to facilitate his or her child’s attendance at or participation in an approved course.

Further details in respect of the rent tax credit, including comprehensive guidance on the eligibility criteria, can be found in Tax and Duty Manual Part 15-01-11A at the link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-11A.pdf

I am advised by Revenue that if the Deputy requires additional information in relation to a specific case to contact Revenue directly.

A comprehensive list of the different rate bands and personal tax credits is available from the Revenue website at: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/tax-relief-charts/index.aspx