Tuesday 24 January 2017

Some - limited - good news for self-employed on tax credits

Published 11/10/2016 | 16:10

File photo
File photo

THE self-employed have seen the earned income tax credit rise to €950 from €550 as a result of the budget.

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But the measure still falls short of closing the disparity gap between PAYE workers and the self-employed.

“It is another small step towards equalising treatment with PAYE workers but there is still a disparity between the two which is unfair tax discrimination,” according to Audrey Lydon, head of private client services at EY Ireland. “It is disappointing that no steps have been taken to abolish the additional USC surcharge on the self-employed”.

Mr Noonan said the increased in the earned income tax credit would benefit more than 147,000 self-employed people.

Self-employed people can end up paying more tax than PAYE workers, due to be charged higher USC rates for higher earners who work for themselves. Self-employed workers also pay more PRSI than their salaried counterparts, as the entry-point for paying the tax is lower for the self-employed than it is for employee workers.

There are also some State benefits which the self-employed cannot avail of.

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