Welcome to Taxbytes for Expats. The top tax tips you

want to know as an expat, the podcast is here to help answer

the common queries and concerns expats have when moving to

or from Ireland. Complex taxes explained

simply, we'll focus on the irish and international

tax issues to be aware of to ensure you save time,

money and stress. Welcome back

to tax Bytes for expats. This is another two part

episode after my chat with Alan Purcell, a chartered accountant and

tax expert with cloud accounts. He shared so much with me so

we had to break it into two different episodes. This week is part

one where Alan tells us about PAYE taxation in Ireland,

the difference for PAYE between countries and how to get the most

from your tax return. He is adamant about registering with revenue ie

and checking to see if they owe you money because you never know what the

irish government might give you back. Join us in two weeks for part two of

this discussion and enjoy this part of my conversation with Alan

Purcell.

Hi everyone, welcome to this episode of Tax Bytes for

expats and today it's a first for us. We are joined

by an irish chartered accountant and chartered tax advisor, Alan

Purcell from Cloud Accounts. A little bit about Alan before we

introduce him to say hello. Cloud Accounts was founded in

2019 and it was initially founded to bridge the gap between

large scale accountancy firms and small businesses, which, as we often

find, are overlooked and lack the support and expertise that they need. It's

evolved since into a sphere where Alan also aims now to educate

and break down the complexities of tax and accounting into easy

to understand language. We love that at expat taxes and to give practical

advice on how to navigate the irish tax system. So I think you're all

going to really enjoy this episode. Alan, thank you so much for joining us. It's

really, really good to have you on. Pleasure. Thank you for having me this morning,

steph. Yeah, it's great. So I gave you a bit of an intro there, but

tell us a little bit about your background. What led you to setting up

cloud accounts? Because it's a niche service. It's brilliant. We love to see niche providers

like ourselves. Thank you. Yeah, I suppose my background, as you say,

chartered accountant, trained in big four, emigrated

for a couple of years to Australia, came back to Ireland, worked in a

couple of PAYE roles. And I suppose just

like many people, get that bug to work for yourself because in theory you think

you'll work less then you start going out on your own and you realize you'll

never work harder in your life and maybe regret the decision to

go working for yourself and give up the paYe. But where this all

came from really was my sister worked in as a freelancer

in the theater world and she did that whole irish family thing of,

you're an accountant, you sort out my tax, thanks very much, and just left it

at that and got that over the line. And then suddenly her boyfriend was along

and then suddenly it was, can you help about our friends? And it

morphed into, I suppose, a small business from there. And then

classic Ireland and word of mouth, it just evolved into

more and more and more. Hopefully that's a sign of a good

service, given it definitely is that the word of

mouth just spreads around and that is where it came from. And then

during COVID I decided to use that lot of spare time

that suddenly was on my hands to do the CTA's with the Irish

Tax Institute. And off the back of that, I suppose I

started just, you know, giving some people a bit of guidance on

tax efficiencies, things they could claim, things they can't claim, how

the irish tax system works. And suddenly an Instagram page fell out

of that. And, yeah, that the whole purpose of that page now is really

just to try and educate, as you said in the intro, and to

try and just give out some, what you and I would think is basic

information. But when you realize a lot of people are intimidated by the tax system

and by revenue themselves, these are things that are often overlooked. They're not taught at

school, and there are things that people just often don't want to think

about or touch. So I'm trying to just explain to people

these things are there. It's not that difficult of a process. I mean, it's not

very straightforward, but it's not difficult either. Once people are kind of educated and

empowered to go off and claim what they are eligible to

claim, hopefully that will put some money back in their pockets, which at the moment

is obviously quite relevant and pertinent. So that's kind of the gist of it,

in a nutshell. Yeah, it's brilliant. I love it. And I think what you've

touched on there is really, really valid and true for a lot

of our listeners, which is, you know, it is overwhelming when you maybe

return to a tax system that you haven't paid into for years

or you're moving from a new country to Ireland with zero knowledge of

what it means. And, you know, just before we started to record, we were talking

about what people can routinely leave on the table and the short answer

is a lot. You know, a little bit of knowledge can can actually be a

great thing when it comes to being able to, you know, claim what

you're entitled to. So maybe let's to break it down for people who are listening,

let's step through what you would generally say or advise

clients who maybe are moving to Ireland and trying to set themselves up

in revenue system. Talk us high level through what you would kind of

recommend people do in that situation. Yeah, of course. So

first things first, I suppose, is getting access into revenue

system, and obviously the key to unlocking that door is being set up

with your PPS number, your MyGov ID

and access to revenues. My account, anecdotally speaking,

I've been kind of. I've seen it myself and being told by other people that

revenue system seems to be better than maybe other

countries that people have arrived to Ireland from. And again, nobody

wants to compliment or talk positively about revenue, but the. My

account system is excellent. It's user friendly, it's visually

quite attractive, almost as attractive as a tax system could possibly

be. But it's, you know, it's easy on the eye and it's just easy to

navigate around. And I've seen between claiming,

you know, or filing tax returns, claiming my own taxes back in the past, or

advising other people who aren't that familiar with the system, that often

a few clicks of a button can actually lead to money being deposited back into

a bank account. So it's just about not having the fear being able

to get logged into that revenue, my account, and also realizing you

can't, let's say, break it. And it does take a few clicks of a

mouse to file a tax return. So it's not like you're going to click on

something and instantly make a mountain out of a molehill for yourself

with revenue. So, you know, not to be shy to get on there, to

use resources that are available. Revenue do have their own educational

videos or else my instagram page go on there. And

we're firing out information at the moment with video content

and me kind of overlaying voice over it to say, this is what

you need to do, this is where you need to click, and this is what

you have to do to claim this particular tax credit. And it is step

by step and straightforward. But obviously, I appreciate that

many people will hear the word tax and revenue and just say, oh, God, no,

I don't want anything to do with that. Yeah, totally. I think as

well, you know, when you kind of tip that on its head and think about

the fact that for most people, you know, for a

family, let's say where there's two incomes and they're earning over eighty

k a year, you know, Ireland's tax rate then for everything they

earn over that 80,000 is one of the highest in Europe. You know,

we have a very high tax rate once you go above a certain level.

So I suppose for a little bit of pain and I would say you're

spot on, sit down and do it. You know, realistically with a couple of clicks

of the button from start to end probably isn't going to take you more than

what, 1520 minutes. Would you agree with that? You know, if you have the

documents to hand, you could really be entering your bank account

details in your, my account and see how long are revenue processing

refunds within now a week, two weeks for simple. My

account. Oh, within a week. Yeah, I've seen, yeah, I've seen them rock

back into bank accounts in a couple of days. It's, I know, like

they're trying to automate it obviously, and advance technologically

themselves. So I'm sure maybe there's possibly a threshold

there or something built into the system that if you know, you're only

claiming whatever of medical expenses, a couple of hundred quid, maybe that

refund comes back quite quickly without having to have as much human oversight on

revenue's end. Obviously that's not a permission or a free for all now for

people to go and stick in bogey claims, but just always

claim what you're eligible to claim. Always have your backup and your documentation

in case it gets probed or queried, which it can do.

There's not like as you know Seth, any sort of threshold that if you're under

it, you're, you're in the clear and they're not going to ask questions.

People can be picked at random for all sorts of reasons. So be able to

stand over what you're putting into that system. But no, it's very quick. And

one example would be the work from home kind of tax

relief, for tax relief on your broadband, your light and heat

expenses. I see so many people on social media platforms and

online giving out saying this isnt worth the effort. It is worth the effort

because even if the amount that comes back to you is small, its better

than absolutely zero. And all youre being asked to do in that case

is pull out your utility bills, add them up, put the numbers into the

system and in PAYE tax returns revenue,

do all the calculations for you so they just want the gross numbers, the high

level numbers. You pop them in, send off the tax return

digitally, and more often than not something will rock back into your bank

account, which is fantastic. I know that a few people who may not

previously have done tax returns off the back of COVID and the

pandemic unemployment payment and the wage subsidy schemes may have found themselves in

the reverse position where theyre actually owing tax on the p ay system,

which was very, very unusual. Its probably a once in a lifetime event.

We shouldnt be seeing that again. The majority of time that I open

up a form twelve PAYE tax return to somebody, it's either

balance, which means neither revenue or the client

owes before claiming anything that they might be eligible for,

or else there's an overpayment already there. And there's a variety of reasons as to

why that can happen. But it's very rare that you see an underpayment now

because revenue have modernized the PayE system and it's

always done in real time. So what that means for anyone listening is every time

you get paid, your taxes are basically calculated

live based on what you've paid during the year. And it shouldn't lead to any

surprises at the end of the year. In the majority of cases, we're talking

99% of cases, I would say. Yeah. And actually, do you know what, just

when you're talking there, when we talk about like pay as you earn or my

account, a natural question is going to come. Oh, okay.

What are we like actually talking about here? So maybe just high

level, explain the delineation in Ireland between,

you know, having to file a tax return form eleven, as we call

it, when we kind of talk about a long form tax return or form. And

that's kind of the old name for the form, the paper form, which doesn't really

exist anymore, which has now been replaced essentially by the my account. Let's maybe

frame that so people listening, who would often be coming from jurisdictions

where everybody has to file a tax return, maybe let's frame

that so people kind of get that, that distinction. Yeah. Like years ago I emigrated

to Australia and over there as a paye, or PAYG as they call it. In

Australia, you had to file your tax return even if you had nothing to claim.

You just had to click the button and say, yep, that's confirming my income for

the year. So I still call the pay turned the form twelve. I don't

know if that name has disappeared at all. But anyway, let's call it a

form twelve and what it is I know I do too.

We should work out on our age where you're a pAYe

or a pay as you earn employee, your employer is responsible

for calculating your employment taxes and

withholding them from your net pay into your bank account and remitting it over to

revenue. So as I say, nine times out of ten or 99 times out of

100 at the end of the year, that will all have been done absolutely correctly

to the center and revenue will say, we don't owe you, you

don't owe us. What we do have in Ireland is things called tax credits,

which I think is a pretty bad description. Other countries call it a tax free

allowance. And I would much rather see in Ireland that instead of saying, oh, you

get two tax credits as basic each year for, let's say

you are an employee and a personal tax credit and they're worth. What are they

now? They're 1875 each, so it's worth 3000. What is that

in get on my calculator here this year they're worth

3750. I'd rather see revenue turn around and

say what that actually means is that you don't have to pay any income tax

on the first 18,750 euro of your income. I think it's

a much clearer way of explaining it than saying, oh, you don't have to pay

the first 3750 of tax that you owe, because that leads to

confusion. People are wondering, well, when do I pay it? Those tax credits

usually will get divided over your twelve months or your 26

fortnight, so your 52 weeks, depending on how frequently you're paid.

But anyone who's listening and is wondering about what you mentioned earlier,

steph, the really kind of early entry point that we have in Ireland to

the higher rate of tax. People should also be aware that we have

a threshold in this country of 18,750 euro in

2024 where you don't pay one cent of income tax. And that's quite generous

compared with other countries around Europe. So it's a little bit of swings and roundabouts.

However, we do have quite a penal higher tax entry point,

unfortunately, at 42,000 euro in 2024 in Ireland.

But as well as your question on the form twelve, what does it

mean? You're not obligated to file this

by revenue, but why you might want to file it is if you want to

claim tax credits and tax reliefs, revenue aren't aware of that

you might be eligible to claim. So they can be things like tax relief on

some medical expenses, tax relief on work from home expenses, like

I mentioned a few moments ago. A common one that gets overlooked a lot is

claiming a tax credit on medical insurance where your

employer pays that on your behalf as a benefit in kind. Yeah, that can be

worth up to 200 euro per adult or 100 euro per child, so that's

usually a good one. The rent tax credit was newly

introduced in 2022. It was worth 500 euro in 2022

and 2023. It's now worth 750 euro in

2024. It's a bit of a drop in the ocean compared to what people are

paying on rent. I've claimed that for some people got them back their

500 euro and I've nearly had a tear in my eye looking at the

20 plus grand that they've spent on rent to get back this

500. I know it's a drop in the ocean, isn't

it? A drop in the ocean on a different day's conversation. But

it's. Look, it's better than nothing. Although that

one, it is a bit of a slap in the face. Being honest. I know

some there has been talk about getting a month's rent back. Maybe it's a

positive sign that already that rent tax credit has gone from 500 to

750. Maybe it will continue to increase in the coming

years. In 2023, we have a new mortgage interest

tax relief for some people who might have seen their mortgage interest

repayments increase in 2023. Another

one that often gets overlooked and brings a big smile to my face when I

can claim if my clients is the home carer tax credit because I

often find many people think that home carer might mean they're

looking after somebody who's infirmed or disabled or elderly, but it

actually also relates to if you are a stay at home

parent and looking after your children, and that is quite a valuable one, I think

its 1800 euro this year and thats cold, hard cash of a tax

credit. So like in our intro before we came on, I was explaining to

estef that I had a client last year whose tax bill was five

grand plus higher than it should have been if he was under

the joint assessment system. But he wasnt eligible to claim this home care

credit because he isnt jointly assessed with his partner. Again,

possibly another day's conversation, but anyone who's coming to

Ireland who is married or in a civil partnership should

understand that if they are jointly assessed, and that means

combined as two individuals into one taxpayer unit, as

revenue call them, they could potentially pay less tax

depending on their incomes and different circumstances. But that only

applies to married couples or couples in civil partnerships for

the time being. And basically there's a whole other range and host

of tax credits that exist. Some of them aren't nice to talk about because

they're like, you know, single parents or widowed parent

or blind person credits. And you know, sometimes as tax advisors, you

might have this. You're asking fairly personal and awkward questions

that irish people often don't like to talk about. But again, I would say

to anyone listening, just Google revenue tax credits and see the list

of them. There are so, so many. And every year

at the start of the year and at the end of the year, you hear

revenue and loads of other agencies all across the radio talking about

the hundreds of millions of taxes that are overpaid by

PAYE pay as you earn taxpayers every single year. And it is hundreds and

hundreds of millions that could possibly be

reclaimed by sitting down for 30 minutes, maybe an hour.

It shouldn't take you more than an hour and just clicking the buttons, putting

in those figures. And if it's in January or February, you do it. It's

possibly a nice lump sum to arrive into your bank account, just that after the

Christmas period. Or if you do it towards the end of the year, it's a

nice little bonus coming into Christmas. And what I'd also say to people is

revenue are probably generous nearly in a way to allow

you to claim and file tax returns for the previous four

years. So anyone who thinks having claimed x, y or z

ever, you might have a very nice surprise if you log in, file four years

worth of tax returns. That might take you an hour and a half all in,

but it could be financially well worth it at the end of that time. You're

spot on, and there's nothing nicer than doing a tax return for a client

who is going to get a little refund.

Thanks for listening to Taxbytes for Expats. Please do leave a

rating or review wherever you listen to your podcast. And as always,

remember to take professional tax advice specific to your

personal circumstances before acting or refraining from action

in connection with the matters dealt with in this series. The material

in this podcast is intended to give general guidance only.