Tax take from self-employed down up to 50pc
Thursday November 19 2009
THE amount of tax paid by the self-employed will be down by as much as 50pc in many cases, according to the Association of Chartered Certified Accountants (ACCA).
On average, around 30pc less tax will have been paid this year by those who file returns to the Revenue Commissioners, Aidan Clifford of the ACCA said.
Monday was the closing date for those who opted to file a tax return online, while the deadline was last month for those who filed a paper form.
But Mr Clifford said this year's take would be well down on last year. The preliminary tax paid by the self-employed and those who need to file a return will be down because the tax is based on the lower of their profits in 2008 or their estimated profits for 2009.
In a sample of self-employed tax returns spread across the country, ACCA practicing members reported that on average their clients profits are substantially lower in 2009 and their tax bill is also correspondingly lower.
Reductions
Reductions of an average of 50pc were reported in some practices, with 30pc being the average for all of the participating practices.
Mr Clifford said all of the practices reported they had clients who could not afford to pay any tax, although the amount due is on average down 30pc. He said that a likely increase in numbers of taxpayers seeking an installment plan to pay their tax, and underpaying their preliminary tax for 2009, will further reduce the tax yield.
Underestimated preliminary tax will have to be made good in October 2010 and interest will be charged on the shortfall.
"The sample of ACCA members working in practice reported that, even with higher tax rates and income levies, their clients are paying on average 30pc less tax in October 2009 compared to 2008.
"A small number of self-employed clients were reported to be paying more tax, particularly clients relying on property investment tax shelters or self-employed people in certain sectors of the economy, but this is being offset by clients getting tax refunds due to current year losses."
The reduced tax yield will be repeated in 2010.
- Charlie Weston Personal Finance Editor
Irish Independent
