Business Personal Finance

Saturday 17 August 2019

Should my bank still be charging me tax on my savings interest even though I'm 66?


Denise Connell, Owner of Elite Personal Tax Consulting

I am 66 years old and have recently retired. I have a lot of savings on deposit and my bank is still taking tax out of my savings interest. I thought I no longer had to pay tax on the interest, given my age?

Cathy, Castleknock, Dublin 15

A single person aged 65 or over can earn tax-free interest on their savings as long as their total income is €18,000 or less for 2015. In the case of married couples, the couple can earn tax-free interest as long as their total income is €36,000 or less for 2015.

In other words, as long as your total income (which includes all sources of income, such as the State pension, dividend income, deposit interest and so on) is no more than €18,000 a year, or if married, as long as your aggregate income as a couple is no more than €36,000 a year, you should not have to pay tax on the interest earned on your savings.

You must however apply directly to the financial institution with which you hold your savings to have the interest paid without deduction of DIRT (Deposit Interest Retention Tax) by completing a declaration for each account that you and/or your spouse hold.

Should your total income marginally exceed the relevant limit, you may be entitled to a refund of some of the DIRT paid on your savings and you should apply to the Revenue Commissioners for a refund at the end of the tax year, using Form 54.

My wife is a PAYE worker and has worked in the legal sector all her working life. So we are confused why Revenue is treating her as self-employed. Revenue has sent her out a pay and file payment form for the last few years.

We have told Revenue that we are PAYE and it still asks us to file the self assessment tax return - and has even asked how we deposed of our assets from a past business (which never existed).

I have been a house husband for the past 10 years and before that, a PAYE worker. Must we fill out these self assessments forms?

Don, Clonmel, Co Tipperary

An individual is obliged to complete and file an income tax return when given notice to do so by the Revenue Commissioners.

Although your wife is a PAYE worker, an obligation to file an income tax return under self-assessment applies not only to self-employed individuals but also to a 'chargeable person' who is in receipt of assessable income from unearned sources (such as for example, rental income, investment income and foreign income) where the assessable amount is over €3,174.

The obligation to file an income tax return under self-assessment also applies to employees in receipt of gains arising on the exercise of share options. Normally Revenue will require an individual to file an income tax return under self-assessment if they are given to understand that the individual falls into the category of a 'chargeable person'.

I would recommend that you complete and file the income tax returns as soon as possible as you are you are obliged to do. If you do not have any income outside of your wife's PAYE source, then the Revenue is unlikely to require you to file an income tax return again.

I received shares from an ESOT scheme with a former employer seven years ago. I left Ireland to reside in Britain a year and nine months ago. I sold these shares in the last few weeks. Does this mean I am now liable for Capital Gains Tax (CGT) on the sale of these shares in Ireland?

Ciaran, Carrickmines, Co Dublin

An individual who is either resident or ordinarily resident in Ireland is liable to capital gains tax (CGT) on their worldwide chargeable gains. Once an individual is resident in Ireland for three consecutive years, he/she becomes ordinarily resident here.

An individual must then be non-resident for three consecutive years before becoming non-ordinarily resident in Ireland. Assuming that you are Irish domiciled and that you resided in Ireland since receiving the shares, you would still be considered ordinarily resident in Ireland and therefore subject to Irish CGT in respect of any gain arising on this share disposal.

You should also seek advice in Britain to ascertain your British tax obligations and to consider, if necessary, the availability of a credit or relief from any double taxation, as appropriate.

I have been renting out a property for almost five years. I recently learned that I have been claiming more mortgage interest relief on that property than I should have when filing my tax return.

I had thought I could write off the full cost of the mortgage interest on the rented property off my tax bill - I recently learned that I could only write off 75pc of the cost. What should I do now?

Marie, Raheny, Dublin 5

I would recommend that you write to Revenue in relation to this matter and request that it makes a correction to your income tax return for each of the years in question - on the basis that this was an innocent error on your part.

Revenue will decide whether this was an innocent error on your part based on a number of factors including whether you maintain proper records in respect of the rental property, your previous compliance as a taxpayer, and whether this error is immaterial in the context of your overall tax payments to Revenue.

If Revenue accepts that this is a correction of a genuine error on your part, no penalties should apply to your 2014 income tax return.

However, self-correction without penalty only applies if the correction is made within 12 months from the due date of filing of the income tax return in question. Therefore, a penalty may apply to the amendment of your income tax returns for 2010 to 2013. Statutory interest will also apply to the underpayment of income tax.

I am a freelance photographer and a well-known magazine recently approached me to do some work for them. The magazine wants proof that I am tax compliant before it takes me on. How would I go about doing this?

Colin, Rathmines, Dublin 6

Assuming that you are registered for income tax with Revenue, you can apply on-line (through for a tax clearance certificate, which is in essence written confirmation that your tax affairs are in order.

All you need is your income tax registration number and VAT number where relevant. Revenue must issue the certificate if all your tax affairs, including income tax, VAT, Capital Acquisitions Tax, Capital Gains Tax and Local Property Tax, are in order.

My husband and I have been retired a few years. Our home is currently worth about €300,000 and we had been hoping to leave this home to our son. He no longer lives in the home - he rents a property elsewhere.

Would it be possible for our son to inherit our home tax-free - assuming it is still worth €300,000?

Emily, Salthill, Co Galway

Budget 2016 announced the Government's intention to increase the Capital Acquisition Tax (CAT) 'Parent to Child' tax-free threshold from €225,000 to €280,000 with effect from October 14, 2015.

Assuming that you have made no previous taxable gifts to your son, if he inherited the family home at a market value of €300,000, then under current rules the first €280,000 would be exempt from CAT in 2016.

The balance of €20,000 would be subject to CAT at the rate of 33pc, resulting in a CAT bill of €6,600.

Email your questions to or write to 'Your Questions, The Sunday Independent Business Section, 27-32 Talbot Street, Dublin 1'.

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.

Owner of Elite Personal Tax Consulting

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