Ask The Experts

Re PRSI, I am confused. When submitting tax returns Form11 online over the years, I always had to pay PRSI on the bank interest earned on my deposits (i.e. bank interest on deposits was always liable to PRSI). I am self employed. Can you clarify this please.

Dominic Coyle — Thu, 06 Dec 2012 13:11:30 +0000

The self-employed have always done so as they have always been liable to PRSI on investments under Class S, and have always had to file returns. That has not been the case for PAYE workers. Essentially, the measure announced in the Budget standardises things. From now on, everyone will have to pay PRSI on bank interest – in all likelihgood, they will have to file returns as well for the first time, though that remains for Revenue to confirm.

How is the value of your property going to be worked out for the property tax?? Houses are selling at the moment for a lot less than asking prices… will the owner have to get evaluations done??

Dominic Coyle — Thu, 06 Dec 2012 12:57:41 +0000

The Revenue will issue guidance on assessing the value of property but it is ultimately a matter of self-assessment. If similar property has sold recently, you will be able to turn to the Residential Property Price Register, which is available online at http://iti.ms/RelY1g, and has actual sale prices, not asking prices. Alternatively, the Minister said in his speech, you could acquire a valuation from a “competent valuer”, presumably at your own cost. The presumption is that sensible valuations assessed in line with Revenue guidance will not be challenged.

Hi just wondering what is the story with savings. I no DIRT tax has increased to 33% but what is this talk about PRSI also?

Dominic Coyle — Thu, 06 Dec 2012 12:57:21 +0000

Apart from DIRT which, as you say, has been increased to 33 per cent, savings interest will also now be subject to PRSI. That will add probably another 4 per cent to the tax bill meaning that on the already meagre interest available on bank savings, you will now pay 37 per cent of it to the tax man…

my wife and i are both retired and have combined pensions of 50,000 euro per annum. are we affected by the budget.

Dominic Coyle — Thu, 06 Dec 2012 12:34:52 +0000

You won’t be affected by the planned imposition of higher universal social charge at the higher 7 per cent rate because your income is below the threshold. You will be affected by reductions in money paid for phones and energy under the household benefits package for older people and you will be affected by new PRSI rules on unearned income if you have any bank savings, other investments of share dividends. Similarly, if you sell any shares or other asst, you will be affected by the three point increase in capital gains tax. DIRT on any bank savings is also three points higher on 33 per cent.

Was any exemption to the property tax introduced for those who paid high stamp duty during the boom years? Thank you.

Dominic Coyle — Thu, 06 Dec 2012 12:34:05 +0000

No exemption was allowed for those who paid high stamp duty during the boom years, despite the election commitment on the issue made by Fine Gael. It appears the Inter-Departmental Export Group on proposals for a property tax, chaired by Dr Don Thornhill advised against any such measure.

I am a pensioner over 70 years old with a medical card. Would you please tell me the post budget threshold for a single person. Thanking you in anticipation of a prompt reply.

Dominic Coyle — Thu, 06 Dec 2012 12:28:29 +0000

The income threshold for medical card eligibility has been reduced to €600 per week for a single person and €1,200 per week for a couple. That equates to €31,200 per annum for a single person and €62,400 for a couple. Previously the weekly limit was €700 for an individual and €1,400 for a couple (€36,400/€72,800 per annum). People who lose their medical card under the new limits willl be entitled to a GP-only card.

if I have rental income of €2000 per year, what does the budget do to that income?

Dominic Coyle — Thu, 06 Dec 2012 12:21:08 +0000

That rental income will now be subject to PRSI – as well as income tax which you already pay on it. The rate, I understand, will be 4 per cent.

In addition to marginal tax, will PRSI and USC be payable on withdrawals from AVC funds?

Dominic Coyle — Thu, 06 Dec 2012 11:55:20 +0000

That has not been expressly confirmed. The Minister said that marginal rate income tax would apply “since marginal rate relief was provided on the contributions on the way in”. That does little to clarify the position on PRSI and USC. Pension contributions have not been exempt from these in the past couple of years, but they were previously. I would not be surprised if the AVC drawdown was treated as any other income iun that tax year – i.e. subject to income tax, PRSI and USC but, as I sday, we will have to await the Finance Bill for clarity on this.

Hi, i have a private pension of €8,000 as well as the state pension. will i be liable for PRSI? hi,i have a small private of 44 €

Dominic Coyle — Thu, 06 Dec 2012 11:47:47 +0000

It sounds as though you will be well below the threshold being targeted by the minister. It’s worth remembering that his stated thinking behind the introduction of PRSI on retirement income is to address concerns over mega-pensions

Has there been any change to the rent a room scheme? What is the max income allowed from this?

Dominic Coyle — Thu, 06 Dec 2012 11:46:23 +0000

No change has been announced in the rent a room scheme. At present, the maximum total rent you get under the scheme – including any money paid for food, utilities, laundry etc – is €10,000. A euro over this and all the income is subject top tax.