High Earners Restriction

Revenue have changed the categories regarding the filing of returns thereby drawing more people into the self-assessment system. If you fall into these categories you will be obliged to register with Revenue and file a return online for tax years 2011 and subsequent years.

• An individual who is subject to the high earners restriction
• Who gained from offshore funds, foreign life policies and or any other offshore products

This relief was initially introduced in 2007 and was aimed at individuals who at the time earned over and above €500,000 paid at least 20% of income tax plus PRSI and any levies on the income they earned. Over time the threshold amount was reduced to €250,000 ensuring that those who earned over and above this amount would too see an increase in their effective rate.

The Finance Act 2010 made the following changes to the rule;

• For individuals earning in more than €125,000 while at the same time claiming reliefs of €80,000 or more will see a restriction of the reliefs.  
• For those falling into this category the effective rate of income tax payable will rise from 20% to around 30% (before PRSI, levies and USC).
• Individuals who earn between €125,000 and €400,000 will see an increase in their tax rates.

The reliefs that could fall into this restriction are – property based reliefs, Business Expansion Scheme (BES) relief, Seed Capital relief and film investments to name a few. The maximum relief claim is the greater of €80,000 or 20% of your total income. 

Contact Louise Clarke OSK Tax for further information.

Need help with tax return 2013? Contact OSK today to assist you in filing your personal tax return before the October deadline - email advice@osk.ie.