Tax net for sole traders

E

eddiej

Guest
This might seem like a silly question, but is there a 'tax net' for sole traders, below which they don't pay tax? For instane, if someone makes 5k in a year, and to keep it simple, had no expenses / deductables apart from their personal tax credit, would they pay take on the 5k (minus the tax credit) or would they be exempt from paying tax because they earned so little?
 
Income of €5,000 would mean tax of €1,000. Tax credit €1,830 covers this so no tax.
PRSI would be due at 3% subject to minimum of €253.
 
That's interesting. Is there a tax net for a PAYE worker or am I imagining this? I know they'll have the extra PAYE credit, but I always had the impression that PAYE workers didn't pay tax if they earned a certain amount like 15k per year or something around that.
 
PAYE workers get an additional up to €1,830 tax credit for being a PAYE worker, that doubles their basic tax credit allowing them to earn (potentially) €18,300 before paying tax.
 
i know this off post but can anyone tell me why someone who is a sole trader should have to pay any PSRI amount at all, as we now are not covered by any benefits .i.e.if our business's close we are not entitled to any state benefits such as JSB or JSA even though we've paid all our taxes up to date etc. you only have to listen to any radio talk show to hear daily horror show's of people's circumstances.
 
donee said:
i know this off post but can anyone tell me why someone who is a sole trader should have to pay any PSRI amount at all, as we now are not covered by any benefits .i.e.if our business's close we are not entitled to any state benefits such as JSB or JSA even though we've paid all our taxes up to date etc. you only have to listen to any radio talk show to hear daily horror show's of people's circumstances.
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The PRSI you pay as a self-employed contributor does give you benefits
- State contributory pension
- Maternity Benefits
- Survivors pension (widows/widowers)

JSB entitlements come from the employer portion of PRSI which a self-employed contributor does not have.

You will get JSA if you meet the means test criteria.
 
Graham_07 said:
PAYE workers get an additional up to €1,830 tax credit for being a PAYE worker, that doubles their basic tax credit allowing them to earn (potentially) €18,300 before paying tax.
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But if a PAYE worker has a (2*1830)=€3660, doesn't this mean that they pay tax on everything they earn after the €3660? Could you explain how they can make up to €18,300 before paying tax?
 
The €3660 value is a TAX saving.

To pay that amount of tax at a tax rate of 20% requires that you earn taxable income of €18300 (€3660 / 20%). That's how a PAYE worker can earn €18300 before paying tax.

EDIT: For a sole trader who doesn't receive the PAYE credit, s/he can earn €9150 (1830 / 20%) before paying tax.
 
Understand now, I was thinking of tax credits as a deduction you take from your gross income as opposed to a deducation you take from your tax bill.

From another thread on this forum:
"If your income to date was under €18,300 and you paid tax then you would received the full amount of tax back that you paid as most people would get their personal tax credit of 1830 and Paye tax credit of 1830 = 3660. €18,300@20% = 3660 (which is covered by your tax credits) and therefore no tax would be due on your income. Any tax stated then on your p45 should be refunded."

Am I right in saying that a self employed person can potentially earn up to €9,150 before they pay tax (as their tax bill on the €9,150 will be €1,830 (20% of €9,150) which will be covered by their tax credit) ?

Thanks Graham.
 
Cheers Deadlyduck, I hadn't seen your comment when I posted my last response.
 
eddiej said:
Am I right in saying that a self employed person can potentially earn up to €9,150 before they pay tax (as their tax bill on the €9,150 will be €1,830 (20% of €9,150) which will be covered by their tax credit) ?
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Correct, but as previously mentioned while there would be no tax they would have PRSI on the €9,150 at 3% which is €274.50
 
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