Self assessed tax: income from savings interest...

Wertz

It's looking like I'm going to have to join the big bad world of self-employment.
Whilst looking through some of the revenue booklets on self assessed tax, I noticed something and would like clarification from someone with an accountancy background.
Is yearly interest I receive from a personal savings account liable for income tax under the self-assessed system?
If so, is this not a form of double taxation?
I mean I already pay DIRT (most apt acronym ever) on the interest, and the savings in question are accumulated net earnings from taxed income over the years. The sum would not be huge, but would be significant
Assuming I've read it right, why do self employed people need to pay this tax whilst someone in the PAYE sector does not (AFAIK)?
...and assuming I've read it right, what are the (legal) ways to reduce my liability (apart from just spending the savings lol)...

Whilst I'm here, what rough figure am I looking at for retaining the services of an accountant for RCT and VAT returns and the like?
...and as a sole trader is it something I could do myself eventually?

Thanks for any replies and advice.

Hetheman

I have worked for Revenue. My understanding is that while you have to declare the interest earned you are credited with the DIRT and do not have to any further Income Tax on the interest.

Leon11

it's deducted at source afaik which means that you put in the full amount assessable and then take the actual interest paid off as a refundable tax credit.

ie you recieved 800 euro interest. regross by multiplying 800 x (100/80)=1000

that goes in your assesment

you then take a deduction of 20%, 200.

that's your deduction.

and yes your back to square one:D

Wertz

Thanks for that guys, just couldn't get my head round it. As you say it's back to square one....with that in mind is it worth reporting at all? Am I legally obliged to?

Oh and how about this bit?

Wertz wrote:

Whilst I'm here, what rough figure am I looking at for retaining the services of an accountant for RCT and VAT returns and the like?
...and as a sole trader is it something I could do myself eventually?

Bare in mind that I didn't so much as attempt to learn anything about accounts in school...

Hetheman

Yes, you are obliged to return the interest recd, but it has no net effect on your overall Tax Liability. However if there is a large increase in the interest recd you my may attract attention from an Inspector!

With regard to accounts I have no idea as to cost, but make sure you keep all invoices, receipts etc.

You could also visit your local Tax Office and they will advise you as to what records you need to keep. They don't bite --- Honest

RoryW

Hetheman wrote: »

Yes, you are obliged to return the interest recd, but it has no net effect on your overall Tax Liability.

This is incorrect.

You will have no additional PAYE liability as your liability to PAYE is resticted to the DIRT tax deducted of 20%

You will however have a liability for PRSI and Levies which is 5% for a self employed person and 5.5% if you are lucky to have income over about €101k

An accountant sells time so the cost to you of using his services will depend on how much time you take up for him. The better your records and the less work he/she has to do, then the less you will be charged.

Dont forget the accountant may also talk to you about other things like personal financial planning eg pensions and not just "keep the books and prepare and file tax returns"

The accountancy fee is tax deductible as well so assuming you pay 41% top rate tax and 5% PRSI/Levies, this means that the net cost to you is only 54% of the fee. Any any VAT can be reclaimed (assuming you are VAT registered)

Try to ensure that the accountant you employ has experience of your sector

Good luck with your new business venture

p.s you may find these useful
this
this
this
this

Wertz

So what you're saying is that my yearly interest rec'd should be declared for the reason that it might push me into the higher tax bracket (it most likely won't) and because even if it doesn't, it's still considered earnings WRT PRSI contributions?
Thanks for the links, will have a browse later.

RoryW

as a self employed person you have to file a tax return as you are what is called a "chargeable person"

this return must include details of ALL your WORLDWIDE income

NO additional PAYE will arise on deposit interest income

There will be a small amount of PRSI/Levies on this income (calculated at 5%)

All the best