Taxback.com are calling on all self-assessed taxpayers, but particularly those who fall into the self-assessed category for the first time this year, to ensure they submit the necessary documentation before the 31st of October deadline (14th November via ROS) to avoid being hit with any of the penalties or fines associated with late payment.
The tax experts say they believe that due to a raft of new revenue-generating activities having come on stream in the last 12 – 18 months, there could be hundreds or even thousands of people who are simply do not know their tax responsibilities.
Taxback.com have outlined the top 3 taxpayers who, based on anecdotal evidence including direct enquiries, they believe could fall into the self-assessed newbie bracket this year
2. Sharing economy participants
3. Airbnb hosts
Barry Flanagan, Senior Tax Manager at Taxback.com explained,
“Every year thousands of taxpayers join the self-assessed tax bracket – and this year is no different. In fact, due to a variety of factors, this year may well be a bumper year for Revenue as more and more people are learning how to generate either a primary or a supplementary stream of income for themselves. However, our experience has been that when the filing deadline roles around, lots of people are either completely unaware of their tax filing obligations or are unsure about exactly what they need to do”.
Social media influencers, digital influencers, bloggers, commercial hashtaggers etc. – whatever name you fall under, experts at Taxback.com say that if you are engaging in these activities and receiving payment, in whatever form, you need to let the Taxman know about it.
Mr. Flanagan advised,
“Social media & digital marketing is a whole new, lucrative and dynamic industry. Like most things, it started from humble beginnings but has now become a crucial part of the marketing strategy of many of the biggest brands in the world. The people who first started blogging from their bedroom have realised that there is a market for this as an occupation and that they can capitalise, in some cases handsomely, on their efforts. While some of the bigger names in the industry would have set themselves up as a business, we believe that there are lots of smaller blogging ‘operations’. These people have secured a certain level of online ‘followers’ which means that brands and businesses, while not paying cash directly, may give them goods & services for free – as a thank you for promoting their offering. However, what lots of people may not realise is that, in the eyes of Revenue, these freebies could be deemed as taxable”.
2. The “Sharing Economy”
Technological advancements over the last few years have led to the advent of the so-called ‘sharing economy’ across the world. According to Taxback.com, Irish people are getting their fair share of this financial pie by getting involved in the practice of sharing, swapping and/or renting their possessions or services. But while the practice can be lucrative, there are tax obligations which people must consider.
Mr. Flanagan went on to comment,
“Savvy and discerning Irish people are taking a piece of the sharing economy pie – there is no doubt. Thanks to smartphones, setting up your sharing ‘business’ is often simple. So whether you want to advertise your gardening services on Adverts.ie, or use DoneDeal.ie to sell your tools to a DIYer in need, you can find your own space in the sharing economy. In truth, you can share almost anything – from your power washer to your bicycle. It’s all about matching those who have with those who need and making the most out of underused assets.
There are a variety of ways to earn some extra cash – your empty car parking space can be lucrative too. Dublin city-dwellers can make up to €200 a month (per space) renting out unused parking spaces, according to Parkingmotel.ie. If you like being out and about, signing up with Deliveroo to deliver food could be for you. You can work to your own availability, make as much as €120 in a day, and keep 100% of your tips! If you’re looking to put your cleaning skills to good use, you can advertise your services on Hassle.com. You can work where and when you want and earn €11 per hour.
But our primary message to people is that any income you do earn is taxable – and there is no getting around this. Revenue are just as aware as anyone of the dawn of this new industry”.
Taxback.com are advising people that, regardless of whether or not you also have a full-time job, if you earn income from the sharing economy, you’ll need to declare this to Revenue.
Mr. Flanagan explained the differences in tax obligations depending on whether you have earned more or less than €5000 in a year,
“If you have earned more than net untaxed €5,000 a year, you will need to register as a self-assessed individual with Revenue by completing a TR 1 form (you will only need to do this once). You’ll then need to file a Form 11 tax return and make a tax payment by October 31st each year for the previous year’s earnings.
Should you earn less than net €5000 a year, you still need to file a return. Form 12 is the correct option to file. Similarly to Form 11, your earnings from the previous year will be relevant when completing a Form 12.
So for example, if you started delivering food for Deliveroo in 2016, you’ll need to pay tax on that income by October 31st 2017”.
Airbnb alone contributes roughly €200 million to the Irish economy per year. In 2015, 7,200 Irish hosts earned an average of €2,600 each year by taking paying guests into their homes using Airbnb.
Revenue had stated clearly that any income earned through renting out your room/ apartment/ home through Airbnb will be treated as taxable income and must be declared.
Taxback.com say that every year there are new people joining the self-assessed taxpayer category – and not always just for the obvious reasons of being newly self-employed. Other people who could be required to file a tax return include:
– Anyone who has received income which is not coded into their tax credit certificate. This can include the following
– Anyone who has received income from renting out a property
– Anyone who has received dividends from shares
– Anyone who has received income from casual childminding duties
– Anyone who has opened a foreign bank account during the previous year
3 Steps to Start
Taxback.com have outlined 3 steps that self-assessed taxpayers should take to kick-start the pay-and-file process:
1) Consider all your sources of income. If you have income that was not subject to PAYE or DIRT, it is likely you’ll need to declare it via your tax return. You should contact Revenue to see whether you need to register as self-assessed.
2) Consider what deductions may be available. If you have rental income, are you claiming all your deductions for capital allowances and expenses?
3) Consider whether you can claim any other reliefs or credits, such as for medical expenses.
Earned Income Tax Credit
Mr. Flanagan continued,
“We are also advising Self-Assessed taxpayers that they may be eligible to claim an Earned Income tax credit of €550 which was introduced in 2016. It is important to note that if you also qualify for the Employee Tax Credit (formerly known as the PAYE tax credit), the combined value of these 2 tax credits cannot exceed €1,650”.
Taxback.com say that when it comes to the pay-and-file process for some people the thought of where to start might fill them with dread! But the tax experts contend that this need not be the case.
Mr. Flanagan concluded,
“Revenue have tried to make it as straightforward as possible for people, and with expert advice, if needed, people should find the pay-and-file deadline relatively painless. However, it can take some time to get the necessary documentation in order, so we are advising that people start the process now – because the penalties for non and/ or late filing can be steep”.