Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

“Many in­di­vid­u­als who are not self-em­ployed are un­aware they have self-assess­ment obli­ga­tions [namely to file a tax re­turn and pay what­ever tax is due],” said Su­san Reilly, a se­nior manager with Deloitte’s pri­vate clients di­vi­sion.

It is not only the self-em­ployed who must file a re­turn. Any­one re­ceiv­ing in­come that can­not be taxed in the nor­mal way must usu­ally do so too — and pay what­ever tax is due. That in­come could in­clude rent earned from an in­vest­ment prop­erty, money earned from Airbnb or nix­ers, share div­i­dends, for­eign in­come and for­eign pen­sions, and any prof­its you make from ex­er­cis­ing share op­tions.

“Some of those caught in the self-assess­ment tax net in­clude in­di­vid­u­als who have opened a for­eign bank ac­count, in­di­vid­u­als who ac­quired a for­eign life pol­icy, a ma­te­rial in­ter­est in an off­shore prod­uct or fund, or some­one who has sold an as­set li­able for Cap­i­tal Gains Tax (CGT),” said Reilly.

Even if you are earn­ing in­come that is ex­empt from tax, you may still need to file a tax re­turn and de­clare that tax-ex­empt in­come on your re­turn. This, for ex­am­ple, is the case with the rent-a-room relief scheme, where up to €14,000 a year can be earned tax-free by rent­ing out a room in your home.

“In­di­vid­u­als who have in­come to which the rent-a-room relief-ex­emp­tion ap­plies and whose only other in­come is em­ploy­ment taxed un­der PAYE, or who have no other source of in­come, must file an in­come tax re­turn,” said a spokes­woman for the Rev­enue Com­mis­sion­ers.

Of course, should you be self-em­ployed and earn­ing tax-free in­come un­der the rent-a-room scheme, you must also de­clare that ex­empt in­come in your tax re­turn.

Some pro­pri­etary direc­tors of com­pa­nies may be un­aware of their obli­ga­tion to file a re­turn. A pro­pri­etary direc­tor is the ben­e­fi­cial owner of — or an in­di­vid­ual who con­trols — more than 15pc of the or­di­nary share cap­i­tal of a com­pany. “Pro­pri­etary direc­tors are obliged to file tax re­turns — even if they have no in­come other than their PAYE in­come,” said Suzanne O’neill, pri­vate client part­ner with RSM.

“Direc­tors are heav­ily pe­nalised for fail­ure to file a tax re­turn — with a sur­charge ap­plied to their tax li­a­bil­ity be­fore the PAYE al­ready paid is de­ducted.”

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