Top 10 Tax tips for SMEs

  1. A 50% reduction in Employers PRSI applies to wages paid to staff members who earn less that €352 per week. This applies to both new and existing employees.
  2. Retain all medical expense receipts for tax relief. This applies to prescription charges and GP Bills and non-routine dental work. Remember that payments made to a nursing home on behalf of a relative qualify for tax relief at the marginal rate of 41%.
  3. Reclaim vat at 23% paid for “on street” parking. Just keep the parking ticket from the machine and include the cost in you next vat return.
  4. Pre trading expenditure incurred in the 3 years prior to commencement is allowed against the taxable profits of the new business. You may also, in certain circumstances reclaim vat expended on pre trading costs.
  5. New business start-ups may qualify for the 3 year tax free holiday, depending on the type of business involved. The relief is linked to the amount of Employer PRSI paid.
  6. If you are currently running your business as a sole trader, consider a change to a limited liability company and you can invest much higher amounts into your personal pension ,which qualifies for tax relief. Tax on Business Profits will also be lower at 12.5%.
  7. While the tax credit for rent paid was abolished,if you started renting before 7 December 2010,you can still claim a small tax credit for rent paid until 2017.
  8. Watch out for BIK on directors loans, currently at 12.5%.This can arise even if the loan is repaid to the company before the end of the financial year. There might also be an income tax liability at the standard rate on such loans.
  9. Normally a person can have only one PPR which qualifies as a tax free disposal. However if you make a second property available to a dependent relative, rent free, the period of this occupation will be regarded as if you were residing there, and will reduce the CGT chargeable when the property is eventually sold.
  10. Remember the small gift exemption of €3,000- This is the amount that you can receive tax free from anybody, in the calendar year, without any charge to Gift tax.
Losses by Sole Trader Businesses

If your business suffers a trading loss in a given year, you can opt to offset this against other income earned in the same year, such as PAYE salary, however this loss will not reduce the PRSI or USC payable on that other income. Consider instead that, if you elect to carry the loss forward against next year’s profits the loss will then be relieved against PRSI and USC and therefore you gain an additional 11% in overall tax relief.

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