Why are some workers entitled to claim thousands in flat-rate expense allowances?
Published 03/07/2016 | 02:30
I'm a waiter full-time at a hotel in the city. We have to supply our own uniforms (bar the shirts, which are supplied by my employer).
However, my sister is a nurse and she told me recently that I should be claiming some tax relief for the cost of what I wear to work. Apparently, she gets some money from Revenue. So am I entitled to the same amount of tax relief?
Michelle, Dublin City
What you are referring to is the flat-rate expense (FRE) allowance, which most non-union PAYE workers seem to be unaware of, in our experience. FREs may be claimed as a deduction from your taxable income based simply on your job description.
Standard flat-rate expense allowances are set for various classes of employee. For example, shop workers are granted flat-rate expenses of €121 per year and bar trade employees get €97 per annum. Nurses who supply and launder their own uniforms can claim a deduction of €733 - which is what your sister is referring to.
I have checked with Revenue and as a waiter you are entitled to an annual allowance of €97. Waitresses are entitled to a deduction of €64 per annum.
FRE levels were set mainly through negotiation with representative bodies of various trades and professions over an extended period of time (at least 20 years), leading to many inconsistencies. This had two inequitable effects.
Firstly, the level achieved by each union or representative body was largely dependent on the skill of the respective negotiators.
So the unfortunate kitchen porters who receive only €21 per year (which effectively is a paltry tax saving of either €4.20 per year) are dwarfed by the RTE Concert Orchestra, who are entitled to a deduction of €2,476.
Secondly, it's likely that levels negotiated during recessions will have been negatively affected. Furthermore, there is a well-known anomaly whereby waitresses are entitled to less than waiters (which dates from the late 1950s).
We would always advise waiting staff of either sex to claim the male 'waiter' rate.
To its credit, we have not had a case yet where Revenue has contested this and sought to impose the gender-based penalty on a female waiter, but it was the representative bodies that initially distinguished between the sexes on this one and not the Revenue themselves.
Nurses receive the same allowances whether male or female. It works in reverse for cardiac technicians, again for undocumented reasons. Female technicians are allowed €212 per year, while the men have to make do with €107.
The allowances are great in principle and are undoubtedly welcomed by those who are entitled to them. And another good thing about flat-rate expenses is that there is no need to keep receipts to claim this relief - it is granted once you confirm that you are in a qualifying employment. Another benefit is that - like medical expenses - you can claim this relief for the last four years.
Last year my father became ill and as my mother passed some years previously, I decided to move in with him to look after him. Sadly, my father passed away earlier this year. He has left the family home to me.
I have no idea about the tax and/or the financial implications of this. Is it something that I should be talking to the Revenue about? I plan to continue to live in this property for the foreseeable future but I just want to ensure that I'm on the right track compliance-wise.
Andrew, Kilbeggan, Co Westmeath
My sympathies on your loss. With regard to your question, you should note that receipt of gifts or inheritances are subject to Capital Acquisitions Tax (CAT). Various reliefs from CAT exist, depending on the circumstances. In addition, every individual is allowed a tax-free amount which can be received without incurring a tax liability.
The relationship between the person who provided the gift or inheritance (i.e. the disponer) and the person who received the gift or inheritance (i.e. the beneficiary), determines the maximum tax-free threshold, known as the 'group threshold'.
Inheritances received by a son or daughter from a parent are subject to the 'Group A' threshold, which is currently €280,000. This means that you can receive up to €280,000 during your lifetime from your parents without tax consequences for you. So any gift/inheritance received previously from your parents must be deducted (if it is above the small gift exemption level of €3,000 annually).
Therefore, if the house has a value lower than €280,000, no tax will be due (though you may still be required to notify Revenue if you are over 80pc of the threshold). If the total inheritance received is now above €280,000, CAT will be due at 33pc on the excess, subject to other reliefs.
One of the potential reliefs that may be available is known as Dwelling House Relief. To qualify, you must have occupied the dwelling house continuously as his/her main residence for a period of three years immediately prior to the date of the inheritance.
As it would appear that this condition has not been met, as you moved into the family home only one year ago, this relief will not be available in this instance.
My wife and I own a holiday home in Wexford - which we actually no longer use and hadn't been able to sell because of the negative equity.
However, now that the market is changing a bit we're thinking about trying to put it up for sale now. The thing is, though, money has been tight and we haven't paid our LPT (local property tax) on this property.
Will this make a difference when we go to sell? What should we be doing to tidy up our affairs? I really want to avoid paying any penalties if at all possible.
Robbie, Bray, Co Wicklow
It is standard practice for solicitors involved in the sales process to check to see if the LPT has been paid. If it has not, the unpaid LPT charge will "attach" to the asset and the sale will not be executed until such time as the liability has been discharged. This will often involve payment of interest and penalties due.
You may also wish to consider whether this complication could jeopardise any potential sale.
Revenue's website has a facility which allows you to file and/or pay your Local Property Tax and to manage any LPT/Household Charge arrears online. Usually, there is also a greater chance of mitigating any penalties through proactive engagement with Revenue on any tax arrears, rather than taking a passive approach.
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While we will endeavour to place your questions with the most appropriate expert to answer your query, this column is a reader service and is not intended to replace professional advice.
Barry Flanagan is senior tax manager at Taxback.com
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