Can I get tax relief for the cost of a carer for my cocooning mother?

Charlie Weston Your Questions

QI used to care full-time for my elderly mother until the Covid outbreak. However, as I am a frontline healthcare worker, I’ve been unable to do so while she is cocooning. I have had to employ a carer to look after her. Is it possible to get some tax relief or benefit on the cost of the carer?

AIt is possible to claim tax relief on the cost of employing a carer on behalf of a family member who is totally incapacitated due to physical or mental infirmity, according to the CEO of Taxback.com, Joanna Murphy. A family member is defined by Revenue as a spouse, civil partner, child or a relative, including a relation by marriage or civil partnership, Ms Murphy said.

Note that this relief can’t be claimed where a Dependent Relative Tax Credit or an Incapacitated Child Tax Credit has already been granted and that you must claim tax relief on the cost of employing a carer each year.

The amount that can be claimed is the lower of the actual cost of employing a carer or a maximum deduction of €75,000 per incapacitated individual.

If two or more people pay for the cost of employing a carer, then the relief is divided between you in proportion to the amount each paid.

QI’m thinking of joining a basic health insurance plan for myself and my partner as we’re both about to turn 35. However, is there any point given the current position with our healthcare services?

ATaking out full cover is recommended by broker Dermot Goode, of TotalHealthCover.ie.

He said basic policies cover public hospitals only, which means they will fully cover the statutory charge of €80 per night in any public hospital. Secondly, every new member has to serve a sixmonth waiting period for any new conditions, so it will be November before the policy really kicks in. The sooner this waiting period has been served, the better, Mr Goode said. Also, if you join at a later date, you will be subject to the age loadings which is equivalent to an additional 2pc for each year over 34.

QMy spouse and I are in our late 40s and have €80,000 in savings on deposit in the local credit union, which equates to about one year’s take-home pay. We were saving about €300 a month but have been able to increase that to over €500 a month since the start of the lockdown. While we’re both agreed on the merits of saving, I would like to switch to pension savings rather than to keep putting it in the credit union, whereas my husband would like to continue to put it in the credit union where he can “see it”. Please advise.

AIt will depend on your own circumstances, but the general rule of thumb for savings is to first establish a rainy-day cash fund equal to about six months net income, in case you lose your job or jobs.

After that, your attention should turn to long-term pension savings, according to the CEO of the Irish Association of Pension Funds, Jerry Moriarty.

He says that at least one of you is likely to live for 20 to 25 years after retirement and the State pension is really only sufficient to ensure you don’t live in poverty. Pension saving is far more efficient than deposit savings as you get tax relief on your savings – 40pc based on your income, Mr Moriarty said.

So if you save €800 a month, the taxman will give you €320 back and it will only cost you €480 of your takehome pay.

This money will then grow tax free, unlike your deposit savings.

If your employer has a pension scheme you should join that as they will also pay into it, he added.

You are advised to get independent financial advice before making a decision on which pension to go with, assuming that you can persuade your husband.

QI have just received a rebate from my health insurer. Is this a permanent reduction in my premium?

AUnfortunately not. These refunds are to do with the reduced access to private hospitals during the Covid-19 crisis, according to broker Dermot Goode, of TotalHealthCare.ie.

As the health insurers will be paying fewer claims, all members will be receiving some level of refund depending on the plan held. However, this is a once-off reduction covering the three-month period of the agreement between the HSE and the private hospitals, Mr Goode added. All savings are welcome but this is not a permanent reduction in your health insurance costs.