Company Directors & the PAYE tax credit

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trigger

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As an contractor I'm a 50% shareholder/director in my company. I've only just found out that I'm not eligible for the PAYE tax credit. Does anyone know the logic behind this?

As a regular PAYE employee of the company the only tax difference as far as I knew was that I had to pay class S PRSI. Why are directors not eligible for the PAYE tax credit? It's not like I can take tax free money out of the company any other way.
 
This has been the way for a long time. I think you would get the credit if your shareholding is under 15%.

Not been entitled to credit is not advertised enough. Revenue included it in tax free certs in the past and when you were doing a balancing statement for the year you became liable for it.

Not sure of logic, maybe it is to do with class s as director are seem as self employed to an extent.
 
Self-employed (sole traders / partnerships) are not entitled to the PAYE credit. a company director with in excess of 15% shareholding is considered "proprietory" akin to self-employed and is treated the same way.

There has been another thread on this on AAM recently.
 
Sounds a bit unfair to me. Is there some tax offset/deduction that means directors don't need the PAYE credit? Why would directors be treated differently to any other PAYE worker?
 
trigger said:
Sounds a bit unfair to me. Is there some tax offset/deduction that means directors don't need the PAYE credit? Why would directors be treated differently to any other PAYE worker?
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Because our civil servants, media and political establishment tend to think of Arthur Daley and Delboy Trotter when they think of company directors. I'm not joking...
 
ubiquitous said:
Because our civil servants, media and political establishment tend to think of Arthur Daley and Delboy Trotter when they think of company directors. I'm not joking...
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Well put. I had horrible a feeling it was down to something like that. If only I was half a ballsy as Delboy :)
 
I got stung for that as well last year. It is very unfair. Just pay yourself the €1,760 as a subsistence payment (on a monthly basis) which is tax free. At least that way you can enjoy some of the perks enjoyed by those dossers in the civil service
 
hikicker said:
. Just pay yourself the €1,760 as a subsistence payment (on a monthly basis) which is tax free.
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If you do this, and the Revenue give you a hard time in justifying your claim, you will be paying interest and penalties on top of the tax you have "evaded" in doing so. :(
 
You can claim €144.45 per night as a legitimate expense for an overnight stay, €43.15 fo a 10 hour rate and €17.60 for a 5 hr rate. All of this can be claimed without receipts once a record is kept. It, along with mileage is a very easy way of taking money tax free from one's company whilst avoiding lining the pockets of our wonderful government. As a contractor, I imagine Trigger would be out on the road a lot and therefore be able to claim these expenses very easily. I do it myself and take great pleasure in the fact that I only contribute to my own pension rather than the inefficient and lazy public sectors pension fund!
 
hikicker said:
You can claim €144.45 per night as a legitimate expense for an overnight stay, €43.15 fo a 10 hour rate and €17.60 for a 5 hr rate. All of this can be claimed without receipts once a record is kept. It, along with mileage is a very easy way of taking money tax free from one's company whilst avoiding lining the pockets of our wonderful government. As a contractor, I imagine Trigger would be out on the road a lot and therefore be able to claim these expenses very easily. I do it myself and take great pleasure in the fact that I only contribute to my own pension rather than the inefficient and lazy public sectors pension fund!
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If you are on the road, the expense allowances are good, but you won't get rich on them, not unless you have free accommodation. You will do well to make a profit from €144 for a hotel room, dinner, breakfast and lunch for any 24-hour period.
 
You're missing the point Ubiquitous. Use your imagination, claim for an overnight stay whether you are down the country or not. You don't need to provide receipts therefore you can say you were travelling the country throughout the week. All I'm saying is it is an easy way to take money out of the company tax free, I know it's not going to make anybody super rich but it is a way off offsetting the PAYE tax credit. Also as a Director the company can put as much as you wish into a pension plan (from company revenues) and this is probably viewed as a perk which lead to the removal of the PAYE tax credit for proprietry directors
 
hikicker - this is very practical advice, and advice I believe people should do in adverse anti-enterprise climate we have in ireland.
However, I don't think we are allowed to offer this type of valuable advice on AAM. I could be wrong though.
 
leghorn said:
However, I don't think we are allowed to offer this type of valuable advice on AAM. I could be wrong though.
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No, you're right because its tax evasion and it is illegal. Ironically its effect is also to justify the prejudice I highlighted earlier:

ubiquitous said:
our civil servants, media and political establishment tend to think of Arthur Daley and Delboy Trotter when they think of company directors.
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Ubiquitous, I'd like to point out that as a company director of a company started up in the past 5 years I:

Am not entitled to a PAYE Tax credit
Will not be entitled to social welfare should the company fail
pay tax on my income, dividends and company profits
pay vat in advance of actually receiving payment for invoices
Pay preliminary corporation tax in advance of making any company profit
Have invested and risked my own money (which had already been taxed as paye income)
Pay rates, water charges, and inflated waste charges.

Forgive me if I think it is acceptable to claim subsistance at rates enjoyed by the civil service. I get very frustrated by the fact that Entrepreneurs take on a lot of risk and get very little support by the government. On the otherhand, public sector workers enjoy job security for life, unbelievable pension benefits and have little or no accountability. When are the government ever going to bloody realise that it is people like us that should be rewarded for our hard work and enterprise and NOT the absolute tossers in their cushy jobs within the public sector. I personally am going to continue to explore every allowance available (subsistance, mileage allowances, pension contributions) in order to avoid contributing to Lenihan and his asoociates and I recommend that everybody else should as well
 
Excellent post Hikicker.
However
and get very little support by the government.
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What support? I would say no support. In fact I would say that the government hinders enterprise.
 
hikicker said:
Ubiquitous, I'd like to point out that as a company director of a company started up in the past 5 years...
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Fwiw, I'm in the same boat as you, and share your concerns.

However that does not alter the fact that if the Revenue subject you and your company to audit and they take issue with the validity or otherwise of expenses & allowances you have claimed, they will have no hesitation in disallowing same, charging you the tax, helping themselves to interest and penalties, and also putting your name in the tax defaulters list if the total is high enough :(
 
I work nationwide therefore can account for every expense I claim for. That said, I rarely stay overnight yet claim for it. There is no way that they could find out as:

A receipt is not required.
A signed worksheet from the work carried out proves I was in the area.

€144.45 tax free, cha ching!
 
But...

ubiquitous said:
If you are on the road, the expense allowances are good, but you won't get rich on them, not unless you have free accommodation. You will do well to make a profit from €144 for a hotel room, dinner, breakfast and lunch for any 24-hour period.
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To pretend otherwise is either mistaken or bravado, in my book.
 
However that does not alter the fact that if the Revenue subject you and your company to audit and they take issue with the validity or otherwise of expenses & allowances you have claimed, they will have no hesitation in disallowing same, charging you the tax,
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I would suggest that if you're 100% straight laced, with no grey areas, you'll still get crucified.
 
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