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Are You A Self-Assessed Taxpayers?

If you are a self-assessed taxpayer and are interested in learning more about the USC and have questions on how that impacts you then this article maybe of interest to you. We have compiled some of the most frequently asked questions by self-assessed taxpayers when it comes to USC.

How will the USC be collected?
Self-assessed taxpayers have responsibility for operating the charge in respect of all income sources. They will make a payment of USC along with their preliminary tax payment, by 31 October with any balance payable by 31 October in the following year.

I am self-employed – how do I calculate gross income for the purposes of USC?
Gross income is determined after deduction of legitimate expenses directly associated with the performance of the trade. This is in accordance with the normal principles of commercial accounting.

Can expenses be deducted?
Legitimate revenue expenses directly associated with the performance of the trade can be deducted in calculating the taxable profit figure upon which the USC is chargeable.

Am I allowed to deduct capital allowances or losses?
Normal business expenses incurred in carrying on a trade are deductible before the USC is calculated. This includes allowances for capital expenditure incurred on providing certain items for the purposes of the trade, such as

  • Plant and machinery
  • Vehicles used for business purposes
  • Certain types of buildings, such as factories or farm buildings

Capital allowances (other than those used to create or increase a loss under section 392 TCA 1997) must actually be used in a tax year to be deductible. Only standard rate capital allowances are deductible. Apart from farm buildings, capital allowances that are written off over accelerated 7-year periods are not allowed.

Any capital allowances due to people that do not actively carry on a trade are not deductible. Therefore, lessors and other passive investors, such as non-active partners in a partnership trade, will pay the USC on gross income before the deduction of capital allowances. Appendix C contains details of both deductible and non-deductible allowances in respect of the different types of buildings.

Losses other than those arising from the carrying on of a trade or profession are not deductible before USC is charged. Nor can trading losses arising in a tax year reduce other non-trading income in that year. Where unused trading losses are carried forward, only that part of the losses that is actually used to reduce taxable income from the same trade in the tax year to which they have been carried forward is deductible.

Are exempt sources of income liable for the USC?
Yes. An individual whose income consists of exempt source income from occupation of certain woodlands, profits from stallion fees, stud greyhound services fees and farmland leasing, along with patent royalty income and earnings of certain writers, artists and composers, will be subject to USC on the sources above – subject to the relevant thresholds.

I have a medical card. Will this affect my liability to USC?
Individuals in possession of a full medical card, including a Health Amendment Act card, whose aggregate income for the year is €60,000 or less, will only pay USC at a maximum rate of 3% in 2016. ‘Aggregate’ income for USC purposes does not include payments from the Dept of Social Protection.

I am aged 60 and in 2015 & 2016 will have non-PAYE income of €120,000 and also PAYE employment income of €60,000. What USC will I pay?
Your 2015 USC is calculated as follows:
Gross Income for USC:

Non-PAYE income: 120,000
PAYE employment: 60,000
USC liability:
€12,012 @ 1.5% = 180.18
€5,564 @ 3.5% = 194.74
€52,468 @ 7% = 3,672.76
€89,956 @ 8% = 7,196.48
* €20,000 @ 11% = 2,200.00
* There is a surcharge of 3% on individuals who have non-PAYE income that exceeds €100,000 in a year. This surcharge applies to the non-PAYE income only.

Your 2016 USC is calculated as follows:
Gross Income for USC:
Non-PAYE income: 120,000
PAYE employment: 60,000
USC liability:
€12,012 @ 1% = 120.12
€6,656 @ 3% = 199.68
€51,376 @ 5.5% = 2,825.68
€89,956 @ 8% = 7,196.48
€20,000 @ 11% = 2,200.00

Is foreign employment income on which Transborder Relief is due, liable to USC?
USC does not apply to that part of the income to which Section 825A applies i.e. Foreign Employment Income.

We hope that FAQ on USC has been helpful is you are a self assessed tax payer. If you have further questions or are looking for some help preparing a tax return then please do get in touch and we will be happy to help you out.

If you need a Dublin based accountant to look after your accounting, bookkeeping, management accounts or other financial related business needs. Then click here now to call us here at Kilcoyne Accountants for a discussion regarding your requirements.

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