PAYE Changes

/in /by

Unfogging the Small Print

The new year period is a time of change each year and whilst so often many of our ‘New Year, New Me’ promises may not stick, there are certain changes in the financial field that are occurring this year that it would be easy to miss. As always, we want to keep you as fully informed as possible.

Until recently, some tax assessment was on what is known as the “earnings basis” and was calculated regardless of whether or not the income was paid to the individual during that assessment year. The PAYE system operates on what is known as the “receipts basis” as in the employer deducting tax from the income at the time of payment to employee. New changes to the Finance Act of 2017 will bring order to confusion and bring all in line with the PAYE system of operations, meaning that all assessments will be moved to the “receipts basis” of assessment.

Changes have been made to the PAYE (Pay As You Earn) system from January 1st 2018 that not everyone may be aware of. As of the beginning of this year, the statutory basis of assessment for most employment income is the actual amount of income received, thus placing the basis of assessment for Schedule E income in line with the operation of PAYE.

Further changes will be in effect from January 1st 2019 including a further modernisation of the PAYE system. From next year, employers will be required to report relevant payroll data to Revenue no later than the date of payment to the employee. There will then be an automatic end of year review carried out on all PAYE customers for the year 2019 and subsequent years.

There are a number of exclusions to the receipts basis who will not see this change, proprietary directors will not be required to make this move, and where there is a PAYE exclusion order in place, no changes will occur. The changes will be required of all other employers and employees.

It is hoped that these moves will have a minimal or non-existent effect on employers, who will still be required to make the deductions when payments are made using the PAYE system. Similarly, this move should also not affect employee wages. As we have discussed in the past, Revenue are eager to clamp down on outstanding tax issues, and are now making the positive move to bring everything in line on a statutory basis and bring parity where there was confusion.

For further information, we advise reading through the recently published Tax and Duty Manual Part 05-01-08 found at the Revenue website at your leisure.

Should you require any further guidance please do not hesitate to get in touch with us here at EcovisDCA where we will be happy to assist you in starting 2018 on the right foot.

– – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

The Affordable Mortgage Scheme

/in /by

The First Time Ever you saw your Own Home

We have spoken many times in the past about the ongoing increase in house prices and the ways that these rises combined with stricter mortgage rules have begun to effectively squeeze many first time buyers out of the market. Similarly, the rapid increase of rental costs has dampened many prospective buyers hopes as these costs make it increasingly difficult to get a deposit together. In recent years it has become very difficult to be a hopeful first time buyer, but it seems that there might be a blink of hope on the horizon for prospective buyers on lower incomes.

It was announced this week that the Government has set aside €200m to fund a new scheme entitled the Affordable Mortgage Scheme to offer relief to first time buyers on lower incomes. The scheme will see local councils offer mortgages at lower interest rates than the majority of lending banks and crucially, will be fixed for the duration of the loan. This is said to save buyers up to €10,000 over the duration of their mortgage. The scheme is set for a relatively immediate start, with a start date of February 1st and is sure to offer some hope for lower income buyers.

Interestingly, the scheme’s loan can be used for second –hand as well as new properties, and to build your own home. This is a departure from all other recent schemes which were available only to new homes, and did not apply to building your own home. Previously, there was a local authority mortgage scheme in place for those who had been previously turned down, but this was offered at a variable interest rate and did not offer the long term savings that the Affordable Mortgage Scheme promises.

Under this scheme first time buyers will have access to loans of up to €288,000 at a fixed interest rate of 2.25% for 30 years. This offers first time buyers the security of knowing their repayments for the duration of their mortgage. Minister for Housing Eoghan Murphy has said of the scheme:

“What this means essentially is that a person or couple can purchase a home, while ensuring that they can still keep their monthly repayments to one-third of their net disposable income – with no risk of their mortgage rate rising and so no threat to their ability to afford repayments, giving them certainty and security.”

The loan will be subject to the same lending rules as the banks, in that buyers will require a 10% deposit on the property. Buyers will need to have evidence of being turned down by two lenders and there is also an income cap of €50,000 per year for single buyers and €75,000 per year for joint buyers. There will also be a limit on the overall price of the home as in the Greater Dublin, Cork and Galway areas the maximum market value of the property cannot exceed €320,000 whilst elsewhere in the country this limit will be €250,000.

Should you require any guidance on any financial or business matters, please do not hesitate to contact us here at EcovisDCA, where we will be happy to assist.

– – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Remembering the Importance of Saving

/in /by

Don’t Break the (Piggy) Bank

As January gets into full swing and we all settle back into the daily grind of working life, some of our New Year resolutions may be left behind or pushed aside in favour of those resolutions promising more longevity or better return of investment. High on people’s lists of resolutions is often the vow to save more money in the coming year. Whilst the increasing cost of living might make this quite a difficult task, it is often one of the most rewarding resolutions as the results can be clear to see. We have spoken recently about some of our top tips for saving in the New Year, and it seems like you will not be alone in your savings endeavours.

The Bank of Ireland Savings and Investment Index, published on 15th January shows that over half of Irish consumers were regularly saving during the December period. December is of course a rather difficult time for savings, and this sentiment was also reflected in the findings. Tom McCabe, global investment strategist with Bank of Ireland Investment Markets was quoted as saying:

“”Irish sentiment towards savings and investments eased in December mainly as a result of a weaker outlook for the savings and investment environment. This may be temporary given recent trends in the index but could also be an early indication that savers are looking for better returns on their money and are willing to consider alternatives to their savings account.”

This shows that although Irish consumers are continuing to save, there is a lingering fear that savings are no longer generating enough of a return in their traditional savings methods. This may see a shift in the Irish market towards investments rather than traditional saving. The Index found that 34% of Irish consumers also invested regularly during the month of December, much like the savings findings this could be either temporary or indicative of a new trend in Irish savings.

Hinting towards this being a possible new Irish trend is the fact that investments were more prevalent in the younger generation with 39% of under 50s regularly investing whilst only 26% of over 50s were found to be investing during the same period. Perhaps unsurprisingly, investment numbers were higher in November than December, which is to be expected as December is often a month in which consumers have less disposable income.

These findings also found that the Irish population have a strong preference towards saving should they encounter any windfall gain, but also a new move towards considering investments with windfall amounts.

Should you require any help or guidance on any savings, investments, business or personal finance matters please don’t hesitate to get in touch with us here at EcovisDCA.

– – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Merry Christmas From Ecovis DCA

/in /by

Merry Christmas & A Happy New Year From All At ECOVIS DCA.

Long Term Gains from Short Term Pains

/in /by

It’s that time of year when we are all more intensely focused on our ever-lightening wallets as the Christmas season puts a strain on our willpower not to buy everything in the stores. Whilst most of us are focused on the short term goal of getting over the Christmas period, it has emerged that far too few of us are focusing on our longer term goals, particularly our goals in terms of retirement.

A recent study by the Organisation for Economic Co-operation and Development (OECD) has found that the average Irish worker’s pension is worth less than half of their earnings (roughly 34%) due to the lack of provision made beyond the basic State Pension. This leaves Ireland far behind other European countries in terms of pension provisions. In addition to this, it has emerged that approximately two thirds of workers have no occupational pension to supplement their State Pension. This news does not bode well for the future retirement of Ireland’s workforce, and has been described as being a pensions time bomb.

In order to combat this issue and diffuse this situation, a new scheme is being planned which would see workers paying 5% of their salary into their pensions from their 20s onwards, with employers expected to match the 5% annually. The scheme would be mandatory and would see workers and employers enrolled automatically. The OECD have stated that this could more than double the existing pension potential of workers without being a significant drain on their current earnings. If all workers had an occupational pension in addition to their State Pension we could avoid major issues when our young workers reach old age.

It is also believed that middle class workers who do not have an occupational pension, could see their pension be worth as little as 24% of their salary. The OECD believe that these occupational pensions should be mandatory for all workers entering the workforce from age 20 onwards in order to diffuse this ticking time bomb. Ireland and New Zealand remain the only countries within the OECD that do not have mandatory second tier pension provisions, with other countries having various options available.

Taoiseach Leo Varadkar has stated that there could be an automatic enrolment scheme in place for these provisions by 2021, with the option for workers to opt out.

Should you have any queries on any financial or business matters please don’t hesitate to contact us here at EcovisDCA, where we will be happy to help.

– – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

How Santa got his Tax Back

/in /by

It may be the most wonderful time of the year, but it is also the time of year when people are likely to be more in need of an extra bit of cash in their wallets or accounts. Having possibly spent more than we intended to on Christmas presents having sworn that this year would be different, we may likely find ourselves in need of an extra boost of cash flow for the New Year.

Here at EcovisDCA we are always thinking of our friends and clients and, particularly at this time of year when our minds take more of a shift towards those we love and care about we thought that this would be a good opportunity to remind you all that the deadline for the four-year time limit for claiming tax back on expenses such as prescriptions, doctor fees, and tuition fees is fast approaching.

This may have fallen down the list of priorities in the run up to Christmas, but it is worth noting that the deadline for claiming expenses incurred in 2013 is 31st December 2017. It may be a wonderful way to start off the New Year on the right foot having completed your claim which has likely been on your mind for some time.

If you submit your claim to Revenue before 31st December 2017, you will be entitled to claim for all four years; 2013, 2014, 2015 and 2016, and you may be surprised to find that you are entitled to a refund. As always, the recommended route is through the PAYE Service on their MyAccount system, which has made making claims and filings infinitely easier in recent years.

Further information can be accessed on the Revenue website and as always our advice is to get your claim in as soon as possible and avoid waiting until the deadline is upon you.

Should you require any assistance or guidance on any financial or business matters, please do not hesitate to contact us here at EcovisDCA, where we are always happy to help.

– – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Little Fish in a Big Pond

/in /by

As you no doubt are aware by now, we here at EcovisDCA are big supporters of Small and Medium Enterprises (SME’s). We have spoken at length in the past about the challenges faced by these types of businesses as well as the opportunities for growth and investment surrounding them. This week, we are focusing on the bigger picture for SMEs in Europe.

Data released from Eurostat, the European Union’s statistical office this week revealed that SMEs actually generate half the value of the intra-EU trade in goods. Whilst we have long known that SMEs form the backbone of the Irish economy, we now see that they are beginning to form the cornerstone of trade within the European Union also. SMEs in counties such as Latvia, Cyprus, Estonia and the Netherlands fly the flag for European SMEs as they are understood to have generated in excess of two thirds of intra-EU goods exports.

These new findings show that 98% of companies trading goods within the EU are SMEs, and that 70% of these companies are micro-enterprises. Small and Medium Enterprises are defined within the European Union as being non-subsidiary, independent firms which employ fewer than 250 employees, whilst micro-enterprises are defined as being businesses operating on a much smaller scale, with fewer than 9 employees.

Whilst we know that SMEs account for more than half of all Irish business, this new data shows that there is massive room for improvement for Irish SMEs within the larger European Union market. Irish SMEs account for less than one third of the intra-EU exports which given our size compared to larger countries may be understandable, but does allow for more expansion of Irish SMEs into this marketplace.

With Irish Small and Medium Enterprises now having greater access to a wider number of funding options than were available previously, there is now more opportunity for Irish SMEs to take to the World Stage. As always, we root for the underdogs here in Ireland!

Should you require any assistance or guidance on any financial or business matters, please don’t hesitate to get in touch with us here at EcovisDCA where we will be delighted to be of service.

– – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Looking at the Big Picture for SMEs

/in /by

As you know, we here at EcovisDCA are massive supporters of the SME (Small and Medium Enterprises) community in Ireland. The businesses were some of the hardest hit by the economic downturn, and remain affected despite continued recovery. Funding for SMEs has been relatively slow to make a return to the market and in recent weeks we have discussed some new options coming to the market for these types of business. This week, we return with even more good news in the SME market.

The ISIF (Ireland Strategic Investment Fund), an economic stimulus vehicle is set to join forces with AIB and Bank of Ireland as a backer for a new investment fund targeting Irish SMEs. This venture will be managed by BGF, a private UK company with a wealth of British lenders at its disposal. This UK-based company will now have an Irish branch for this purpose and will have a dedicated Irish team based in Dublin.

The idea behind this investment endeavour is to allow Irish SMEs access to a longer term funding and investment than would be ordinarily available, whilst also giving managers access to expertise from their investor. This will allow these companies to expand and scale up their operations whilst having the financial back up, and advice on hand.

Investments will initially be available of between €2m and €10m in exchange for minority stake in the business in question, it is planned that additional funding will then be available from the investing company. Qualifying businesses will have revenues between €5m and €100m per year.

Should you require any help or guidance on any small, medium, or indeed large enterprise, please don’t hesitate to get in touch with us here at Ecovis DCA where we will be happy to help.

– – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

The Offshore Blues

/in /by

With the Tax deadlines having just passed, taxation has been a hot topic of conversation in recent weeks, we have spoken in the past about the ways in which there will be an increased clamp down on tax evasion and this week, Revenue have confirmed that there is an inquiry underway to identify tax payers engaged in offshore tax evasion and avoidance. Recent leaks in the celebrity world have brought issues such as these to the forefront of public consciousness and now we are seeing this become a higher priority for Revenue themselves.

Changes made in the Finance Act 2016 means that now any tax payers engaged in offshore activities may face larger penalties and even prosecution for defaulting. The deadline for coming forward with declarations on offshore tax liabilities was May 5th 2017, and despite receiving over 2700 disclosures, it is thought that there may be many others.

As we have discussed previously, Revenue are embracing technological advances in order to tackle tax evasion and will be employing a system of data analytics to combat this offshore issue. According to Daniel Sinnot, Head of Revenue’s Research

“Data analytics is an integral element of Revenue decision making, and it works by having a ‘whole of taxpayer’ view. We use proprietary software to match the data that we receive from other tax administrations to Revenue’s taxpayer records, then cross-check against prior returns to ensure all relevant income and assets have been declared. We also feed the data into our social network analysis and anomaly detection tools, to highlight suspicious cases. Then, as we begin to carry out risk based compliance interventions, we use the results of our interventions to train machine-learning models that further refine our ability to recognise and target the riskiest cases.”  

Mr. Rigney also stated that Revenue study and examine the information published in the wider media, including all allegations within the so-called “Paradise Papers”. The disclosures already made have revealed that over half were related to British-based liabilities with others referring to the UK, France, Spain and Switzerland. Revenue have revealed that almost a third of the disclosures related to property, with 20% relating to shares.

It is clear that tax evasion remains a top priority for Revenue and as always we recommend early and efficient filing before deadlines to avoid any penalties or issues that may delay processing. Revenue have stated that they will continue to keep this as a priority and will investigate further as more information emerges.

Should you have any queries relating to any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help you and your business.

– – – – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

The Dropping Unemployment Rate

/in /by

There was good news this week as the latest monthly employment figures were released by the Central Statistics Office (CSO). These numbers showed that the unemployment level in Ireland has fallen to 6%. The number of individuals classified as unemployed dropped by 1800 in October bringing us the lowest figure in 9 years and the first time that unemployment has hit a level equivalent to those before the financial crisis.

In further positive news, these new figures place Ireland in an incredibly favourable position in terms of unemployment in the Eurozone itself. The Eurozone average unemployment level is 8.9%, placing Ireland almost 3% under this average. As stated in the budget announcement, experts expect that this level will continue to fall in the coming months at a steady rate following current trends. It is believed that Ireland could reach what is known as full employment (an unemployment level of 5.5% or less) in 2018.

The employment figures also showed a drop in the youth unemployment level from 14.7 to 14%. Despite these positive moves however, there is always room for concern and businesses will have new concerns to be addressed in the wake of this record low in unemployment.

Mariano Mamertino, economist with Indeed, has stated that there are still major concerns and that the Irish public should not become complacent, likewise jobseekers should not assume that there are jobs aplenty available for them.

“Although the rate of youth unemployment was down to 14 per cent in October, from 16.7 per cent a year ago, young people in Ireland are still almost three times more likely than older people to be unemployed today, with 27,000 people under the age of 25 who want a job not yet finding a role […] nearly half of those who are unemployed are long-term unemployed, and therefore have been looking for a role for at least 12 months. It is unlikely that the sectors facing the most significant skills shortages such as technology, finance and biopharmaceuticals will be hiring from these two cohorts, and are more likely to look overseas for hires who have experience and are ready to hit the ground running.”

As such, although these are of course shifts in the right direction for the Irish economy, it is wise for employers and employees alike to never take figures such as these for granted. If recent years have taught us anything it’s that in the current economic climate, things can shift dramatically in a short period of time.

Should you require any help or guidance on any business or financial matter, please do not hesitate to contact us here at EcovisDCA where we are always delighted to welcome clients both old and new.

– – – – –

~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY