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A few quick questions

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  • 15-08-2015 5:07pm
    #1
    noddy78779
    Registered Users Posts: 76 ✭✭


    Hi Guys,

    Currently I have just started contracted work for the HSE of a temporary basis but full time rate. The contract duration is 11 months in total, split 5 months in 2015 and 6 months in 2016. Given that the tax rate I would be charged is 20% as I am receiving below the 338,00 band for this work I have a few tax related inquiries I'm hoping that you can assist me with.

    A. Given that I am receiving this sum over 2 years (roughly 50/50), is there an exemption rate that I can avail of or am I bound to pay 20% as I am in full time employment.

    B. Given the corporate tax rate is 12.5%, would it be more beneficial for me to open a personal company account granted that I can find an accountant ensuring that I remain tax compliant for my contract duration.

    C. Given that I can avail of tax free/reduced company expenses such as travel for example, does this extend to me breaking my laptop and purchasing another one as a "company expense" from my company account i.e. is there any legal pitfalls I should be wary of when declaring something as a company expense.

    D. Would there be any issue if I were to approach HR and asked them to stop paying into my personal account and instead pay into my company account, given that it would be a public entity (HSE) paying into a personal company account.

    E. Should I for whatever good reason not open up a personal company account and let the government take 20%, given that chances are I am going to be contracting for the next few years before finding a permanent position.

    I've done a fair bit of research but am unable to find answers to the above scenarios (in laymen terms for someone new to taxation) so any help to the above queries would be amazing.

    Thanking you in advance :)


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    #2
    delahuntv
    Closed Accounts Posts: 1,532 ✭✭✭delahuntv


    simple answer is talk to an accountant or tax adviser.

    More than likely the advice is to stay as you are - setting up a company is not a tax efficient way of contracting anymore, if naything, you come under much closer scrutiny by revenue.

    What you get paid this year up to dec 31st is taxed this year. What you get paid from 1st jan 2016 is taxed in 2016.

    If you haven;t earned anything this year your tax free allowance from 1st Jan will apply.

    If you have genuine expense (mileage to/from a contract place of work is NOT allowable) that is to do with the work you do under contract this can still be deducted in your tax return


    But definitely get an accountant - they don't charge much for something like this and more than likely some friend / relative will know someone.


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    #3
    Mrs OBumble
    Registered Users Posts: 25,967 ✭✭✭✭Mrs OBumble


    noddy78779 wrote: »
    Currently I have just started contracted work for the HSE of a temporary basis but full time rate. The contract duration is 11 months in total, split 5 months in 2015 and 6 months in 2016. Given that the tax rate I would be charged is 20% as I am receiving below the 338,00 band for this work I have a few tax related inquiries I'm hoping that you can assist me with.

    ...

    D. Would there be any issue if I were to approach HR and asked them to stop paying into my personal account and instead pay into my company account, given that it would be a public entity (HSE) paying into a personal company account.

    E. Should I for whatever good reason not open up a personal company account and let the government take 20%, given that chances are I am going to be contracting for the next few years before finding a permanent position.


    OP, a fundamental quesiton for you:

    Are HR paying you through the payroll, and deducting tax from each payment?
    Or are you issuing an invoice to the HSE each month (or other agreed term), they pay you the amount of the invoice, and you have to manage all your own tax affairs? Oh - and you will have had to organise your own public liability insurance too, unless this is covered by something like a professional association fee.

    I would strongly suspect it is the former case, in which case you are simply a temporary employee. HR will put your pay into whatever bank account you tell them to. But this won't change your tax situation in the least. You will still pay income tax of:
    • 0% on your first 15k of income for the year,
    • 20% on 15-33k, and
    • 41% on the rest.
    As well, there is PRSI and USC, which get added at varying rates.

    The fact that you are on non-permanent contracts does not automatically make you a "contractor". Most likely you are a simply a temporary employee (like a growing number of people).

    To qualify as a "contractor" (which is the 2nd case in my original question), there are a number of criteria that your work situation must meet. And the HSE would want to be very certain that your situation did meet them before hiring you as a contractor - because it is tax-fraud for them if they pretend that someone is a contractor when they're not.

    The only way you can claim expenses is if you really are a contractor.


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