The Budget

[Bogball XV]

Bit of a debate at work- can anyone clear it up?

Is the 4% levy on earnings over 75k on all your earnings or just the portion over 75k?

income Levy – from 1May
The income levy rates will be doubled to 2%, 4% and 6%.
The exemption threshold will be €15,028. The 4% rate will apply to income in excess of €75,036 and the 6% rate to income in excess of €174,980.

It is not clear but I'm pretty certain 'will apply to income in excess of €75,036' means that any income up to that will be at the lower rate. Maybe one of our accountants here can clarify?

only on the excess, rates are banded.

[INDIANA]

you know no-one who owns a company and pays top up payments into a pension scheme rather than extracting profits of the trade as a cash dividend? and thus avoiding paying tax at the marginal rate on the cash?  Are you serious. Good god please don't ever put me in touch with your taxation advisors. Fairly common practice (in Dublin anyway)- and very effective-might I add.

[muppet]

you know no-one who owns a company and pays top up payments into a pension scheme rather than extracting profits of the trade as a cash dividend? and thus avoiding paying tax at the marginal rate on the cash?  Are you serious. Good god please don't ever put me in touch with your taxation advisors. Fairly common practice (in Dublin anyway)- and very effective-might I add.

No I don't.

Also is it not true that you will be taxed fully on any pension funded beyond 66% of the FRS?

[bingobus]

you know no-one who owns a company and pays top up payments into a pension scheme rather than extracting profits of the trade as a cash dividend? and thus avoiding paying tax at the marginal rate on the cash?  Are you serious. Good god please don't ever put me in touch with your taxation advisors. Fairly common practice (in Dublin anyway)- and very effective-might I add.

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

[INDIANA]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

[muppet]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

Still not a source or link in sight. 

[bingobus]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

Also, with the right pension you can use it to buy shares, property, deposits, etc all at your control. Self-Administered schemes have become very popular in recent years.

[bingobus]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

Still not a source or link in sight. 

Muppet, you are living up to your name.  I'm an accountant/tax advisor in Monaghan with clients in many counties. Its pretty basic adavice and its no big deal, it would be of the first things we would talk to a self-employed director about.

It is by far and away the most tax efficient way to move surplus funds out of your company.

[muppet]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

Still not a source or link in sight. 

Muppet, you are living up to your name.  I'm an accountant/tax advisor in Monaghan with clients in many counties. Its pretty basic adavice and its no big deal, it would be of the first things we would talk to a self-employed director about.

It is by far and away the most tax efficient way to move surplus funds out of your company.

Bingobus this debate has been running for a while.

The gist of it is that Indiana claimed that high earners don't pay their fair share.

I pointed out that the top 6.5% of earners pay over 50% of all income tax. I provided evidence to prove this.

All you have done is shown how some people who own companies could reduce their tax bill. How many of these people do you think there are?  It doesn't change the fact that the highest earning 6.5% pay over 50% of all income tax, therefore to suggest they don't pay their fair share is nothing more that the usual begrudgery.

[bingobus]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

Still not a source or link in sight. 

Muppet, you are living up to your name.  I'm an accountant/tax advisor in Monaghan with clients in many counties. Its pretty basic adavice and its no big deal, it would be of the first things we would talk to a self-employed director about.

It is by far and away the most tax efficient way to move surplus funds out of your company.

Bingobus this debate has been running for a while.

The gist of it is that Indiana claimed that high earners don't pay their fair share.

I pointed out that the top 6.5% of earners pay over 50% of all income tax. I provided evidence to prove this.

All you have done is shown how some people who own companies could reduce their tax bill. How many of these people do you think there are?  It doesn't change the fact that the highest earning 6.5% pay over 50% of all income tax, therefore to suggest they don't pay their fair share is nothing more that the usual begrudgery.

I took it that his argument was that higher earners have more options in which to avoid tax..

In addition to the company paying a person for them, a director/self employed person could then pay a AVC based on his annual salary when filing his own personal tax return. This will further reduce his tax bill and will often give him a part refund of the PAYE he has paid or is due to pay.

When doing the annual incoem tax returns we would always calculate the savings that can be made by paying a AVC. Again basic stuff but is mainly only of benefit to higher earner (top tax rate) or people with funds to do it.

[muppet]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

Still not a source or link in sight. 

Muppet, you are living up to your name.  I'm an accountant/tax advisor in Monaghan with clients in many counties. Its pretty basic adavice and its no big deal, it would be of the first things we would talk to a self-employed director about.

It is by far and away the most tax efficient way to move surplus funds out of your company.

Bingobus this debate has been running for a while.

The gist of it is that Indiana claimed that high earners don't pay their fair share.

I pointed out that the top 6.5% of earners pay over 50% of all income tax. I provided evidence to prove this.

All you have done is shown how some people who own companies could reduce their tax bill. How many of these people do you think there are?  It doesn't change the fact that the highest earning 6.5% pay over 50% of all income tax, therefore to suggest they don't pay their fair share is nothing more that the usual begrudgery.

I took it that his argument was that higher earners have more options in which to avoid tax..

In addition to the company paying a person for them, a director/self employed person could then pay a AVC based on his annual salary when filing his own personal tax return. This will further reduce his tax bill and will often give him a part refund of the PAYE he has paid or is due to pay.

When doing the annual incoem tax returns we would always calculate the savings that can be made by paying a AVC. Again basic stuff but is mainly only of benefit to higher earner (top tax rate) or people with funds to do it.

Does it change the fact that 6.5% of earners pay >50% of tax?

[Rossfan]

What percentage of income does your 6.5 % buddies earn Muppet?

Ye Mayo shower have far too much money anyway.

[Bogball XV]

Common partice in my part of the woods. The level of payment into a pension fund can be restricted depending on level of salary and age of course but its still attractive.

Thank you.

Still not a source or link in sight. 

Muppet, you are living up to your name.  I'm an accountant/tax advisor in Monaghan with clients in many counties. Its pretty basic adavice and its no big deal, it would be of the first things we would talk to a self-employed director about.

It is by far and away the most tax efficient way to move surplus funds out of your company.

I think everybody is getting a wee bit confused here - if you own your own company there's obviously a lot more leeway to avoid paying tax straight away, Muppet is (or at least my take on it was) talking primarily about employees and their ability to avoid paying tax - there are very few schemes open to them, pension payments are the only real one.

On a related issue, is paying tax into a pension scheme not just a delay of paying tax rather than an avoidance?  And given that for the forseeable future our tax rates are rising (and with returns being so poor currently) might it actually be the wrong advice, particularly for someone approaching retirement?  I'm just curious on this and have little knowledge of pension rules etc (or tax avoidance schemes, more's the pity )

[pintsofguinness]

If you are a family on about 80k a year . that budget is a bloodbath- . Interest relief reduced, child benefit cut, 4% extra tax.

Good! FFS a family on 80k a year can pay for their own Children!

[Smokin Joe]

Lads, how silly does the SSIA scheme look with hindsight.

It took government money out of the coffers, and helped fuel the asset bubble.

I am surprised that there hasn't been much mention of this over the past few months.

What sort of values would the government have "lost" on the SSIA scheme?