Thursday 27 October 2016

Changes to home carer tax credit to benefit stay-at-home spouses and part-time workers by at least €190 a year

Published 14/10/2015 | 02:30

Benefits for home carers. Picture posed
Benefits for home carers. Picture posed

THOUSANDS of householders are set to benefit from changes to a tax credit aimed at families.

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The home carer tax credit is paid to families where one person stays at home to mind children, or a dependent relative.

The value of the credit is to rise by €190 to €1,000.

For those who qualify for it, getting this credit means they pay €1,000 less in income tax.

The Budget also increased the amount of income the stay-at-home person can earn before they lose this credit altogether.

The threshold has gone from €5,080 to €7,200.

KPMG Ireland's associate director, tax, Helen Creedon said the change in the home carer tax credit is good news for part-time workers.

"Based on the increased minimum wage, home carers can now work on average 15 hours per week and still get the benefit of the home carer's tax credit of €1,000 per annum.

"Previously they were excluded from claiming the full credit if they worked more than 11 hours per week. Furthermore, the credit has been increased by €190 per annum," Ms Creedon said.

There were also changes to pay related social insurance (PRSI) for low-paid workers.

Employers can now pay an employee €19,552 a year (it was previously €18,304 a year) without paying 10.75pc PRSI.

KPMG Ireland's Thalia O'Toole said this was a welcome measure for small business, but the same relief is not extended to employees.

Ms O'Toole said the increase in the hourly minimum wage will push many employees into the PRSI net for the first time as the new annual minimum wage of €18,556 exceeds the employee PRSI income threshold.

A measure of relief has been outlined to minimise these effects. For example, those earning €18,556 will now pay €160 in Employee PRSI - without the relief, a bill of €742 would arise.

Irish Independent

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