Contracting (Tax and welfare)

T

tonto2010

Guest
Hi,

I am starting a role IT contracting tomorrow after being out of work for over a year. During the last year I have been claiming BTEA after returning to college and social welfare out of term.

I will be setting up through an umbrella company as its a short term contract, I am just wondering if this will effect my benefits if/when I return to college? also will I be able to claim all tax back providing I dont go over my tax free allowance for the year?

Thanks In Advance
 
1. I don't know about affecting your benefits, you need to talk to the Social Welfare officers. AFAIK all those back-to-education stuff is only available to long-term unemployed. I had the same situation as you a few years ago, and the Social Welfare office "closed" my claim, even though I had clearly and persistently indicated that it was a short-term contract. So the clock on my claim was reset to zero.

On the other had, I've got friends who did temporary work of a few weeks and were able to continue their benefits uninterrupted after. I really think it depends on the clerk in Social Welfare office.

2. Tax back - assuming you haven't worked in 2011, you will be able to ask the Revenue to issue your tax credits for the remaing 5 months of 2011. I simply can't remember the term for it. Just call up your local PAYE office and explain and they'll know what you mean.
You will probably pay very little in PAYE as you'll have unused tax credits. But PRSI/USC will probably still take a big chunk out of your pocket. The less you pay in Payroll, the less you'll pay in PRSI/USC, so you should maximise your expenses.

As an IT contractor, you need to maximise your expenses, so look up the Askaboutbusiness section for advice there. Legitimate expenses include a proportion of the rent for your home (you'll obviously set up one room as a home-office), a proportion of your energy bills, your mobile phone bill, your broadband bill, and your bus/luas/taxi fares. You are also entitled to award yourself one gift voucher for €250.
Just remember that it's still money that you could be saving, so don't go crazy and buy a new computer, bicycle or anything else like that.

As for tax credits, don't forget to apply for the Rent Relief (due to be abolised soon), medical fees etc.

Also, have you applied for a medical card while you are unemployed? If you hold a medical card - even of 1 day - you don't need to pay the Universal Social Charge, I believe.
 
Just a small addition regarding the medical card. If you apply while you are unemployed/qualify they will issue it for one year. Even if you go back to work you can continue to use it until it expires. It's a fantastic little benefit to help you get back on your feet after a period of unemployment.
 
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