An article in yesterday’s Sunday Business Post tells us that to ensure greater compliance than with the recent Household Charge, the government are proposing to get Revenue, rather than local authorities, to collect Property Tax via the payroll system for PAYE workers. Similarly, self-employed workers would be obliged to declare their liabilities through their annual returns to Revenue. Only just over half of all households have paid the Household Charge, which was due last March.
There are some changes to the landlord’s NPPR tax this year.
1) Properties in the RAS scheme are no longer exempt from the tax, as applied in previous years.
2) There will be a handling charge of €10 for payments which are not completed online.
At SCK Group, we will pay your NPPR for you for all new properties let and managed by us this year. That will save you €200!
Landlords – You, and not your tenant, are liable for the Household Charge which you must pay this week to avoid penalties. SCK Group will pay this charge for all new properties let and managed by us this year. Or if you have already paid your Household Charge, we will pay your NPPR instead. The NPPR is due for payment before 30th June 2012. That’s a saving of €200! Visit our webpage to see what else we can do for you.
Further to Mr Patrick Honohan’s comments that the “banks will have to be more aggressive in repossessing properties in the buy-to-let sector” a couple of points should be noted. Firstly, as a company working closely with buy-to-let investors, we are unaware that the banks were ‘holding off’ on being aggressive with landlords. In our experience working with our clients, we have found that the banks have already been taking an aggressive approach with borrowers, and it has taken considerable effort on our part to get the banks to agree to any arrangement with the borrower. In addition, many landlords have cross-secured their buy-to-let investment with their home, so if the bank seek repossession, this will place the landlords home at risk.
Since the downturn landlords have seen their rental income drop, increases in variable mortgage interest, the introduction of NPPR, USC on rental income, the reduction of mortgage interest that is tax allowable to 75% and the recent introduction of the household charge. Take a landlord who has rental income of €12,000 pa . If is mortgage is on a variable rate, his interest repayments will typically also be €12,000 pa, of which he can only allow €9000 against his rental income, so he will be liable for tax, USC etc on €3000. He will also pay €300 in property taxes and will have other bills for service charges, maintenance costs etc. Unless the landlord has losses forward from previous years or unused capital allowances, he will be paying income tax on a negative income.
If the banks insist on repossessing buy-to-let properties, they will either sell them at a vastly reduced price, leaving the landlord with the remaining debt leveraged against his home, or the bank will attempt to manage the properties themselves. Managing buy-to-let properties is not the banks area of expertise. The bank would be better coming to an arrangement with the landlord with regards to his loan repayments and allow the landlord to manage his property himself, or with the help of a property management company, who have experience in the area and can maximise rental income and therefore enable the loan to be paid off over time.
At SCK Group, we have been working with our clients to help them navigate what has been a difficult time for landlords. We have been negotiating with the banks on their behalf and have had some success in this. Many landlords have not been utilising all the capital allowances available to them and we have been able to reduce their tax bill by advising them in this area. Some properties have fallen into disrepair because landlords have not had the money to pay for ongoing maintenance. When we realised that this was preventing landlords getting tenants for their properties, we set up our Property Refurbishment Scheme, whereby we will carry out the repairs, pay the up-front costs and then the landlord can repay us overtime from the rental income. This year, because we recognise the extra burden placed on landlords, we are going to pay the NPPR (second home tax), for all new properties let and managed by us.
Simon Ball, writing in today’s Irish Independent gives a timely warning to those PAYE people who have moved out of their homes and have their property rented out to a third party. The resulting rental income may be chargeable for income tax, even though the individual considers him or herself a standard PAYE worker. A lot of individuals are not fully aware of this and their obligation to file a tax return before 31st October. It is essential that people in this situation keep enough money aside from their rental income to cover the tax that may be due. Preliminary tax may also be due for the following year. Failure to file a tax return on time can lead to additional surcharges and interest.
At SCK Group we can advise you on allowable expenses in relation to an investment property. We can complete your rental accounts and can file a tax return for you. If we let and manage your property, we will complete your rental accounts or file your tax return for FREE.
Many people are having an exceptionally difficult time, in relation to reduced income and job losses with a knock on effect on family life, as reported by Isabel Morton in The Irish Times. Isabel suggests that we go through our contacts in our mobile phones, where we will be horrified at just how many people we know that have been and continue to be badly affected by the recession (or depression!).
Among our clients, we have experienced this also and consider those of us who are healthy and whose families are healthy, to be fortunate as many people have been decimated financially only to suffer the further hardship of ill-health among themselves or family members. Our latest newsletter gives some useful advice on Positive Thinking. Read it on http://www.sckgroup.ie/html/news.
Phone contacts list tells stories of woes, writes ISABEL MORTON
BORED WHILE sitting in Gatwick airport last Thursday evening, waiting for my delayed flight home, I started going through the names in my mobile phone and was surprised, as I stopped to think about each person and what I knew of their individual circumstances.
Many of those friends, family and work contacts, had of late, experienced fairly dramatic changes to their lives. No doubt, there were a lot more, whose problems I was not privy to, who were currently planning whatever exit routes they could. What struck me was how widespread and varied the problems were and how disruptive this “depression” is for almost everyone. Without a working banking system and the availability of credit, everyday life has become disconcertingly uncertain, unstable and for many, unsustainable.
Property can neither be bought nor sold with any vestige of normality and the knock-on affect that this economic stagnation is having on people’s everyday lives, is dramatic.
Add a few nasty extras into the already unpalatable mix, such as higher taxes, lower salaries, unemployment and the general malaise and suddenly family life is being seriously affected.
As I looked around the departures lounge, I wondered how many were forced into spending most of their week in London, away from their homes and families. Im finding it tiring enough myself, and my trips are short and infrequent.
Scrolling through my contact list, I came across a number of people who, up until relatively recently, had jobs at home but were now thankful to have a job anywhere, regardless of the commute.
There is one couple, whose “good life” I sometimes envied, as they live in a delightful but rather remote part of the country. Their circumstances have now changed, as one has to commute for work, leaving the other with their children and trying desperately to sell their beautiful home, at whatever price they can get for it. So far, they are not having any luck, as it fits into neither the category of farmhouse or holiday home.
Another family name came up on my screen. They eventually managed to sell their home and now live in a rented house in Dublin but are separated for most of the week as he works in England.
Then I came across a fair number, mostly those in the area of construction and property, who have long since given up hope of any revival and have scattered to far flung places in search of work.
One, whose husband is a civil engineer working in the Middle East admitted, the last time we met, that now their lives were so different, they found it hard to communicate. She felt resentful of him, away from the children and the everyday problems while he was resentful of her, being home with family and friends. But at least they could pay their bills and keep their heads above water.
A surprising number of people with families of all ages, have, over the last year or so, sold their homes and moved into rented accommodation. The further I went down through my list, the more people I realised I knew, who were no longer homeowners.
I was then reminded of a few more, whose properties had been sitting on the market for so long now that I’d actually forgotten about them. And despite having lowered their prices, changed their estate agents and increased their viewing figures, offers were still not forthcoming.
I came across some people, who have adult children (and in some cases, grandchildren) who have emigrated. Some are even managing the rental of those properties, now in negative equity, which their children have left behind.
And I’d forgotten about neighbours, who planned on downsizing, only for three of their four children to move back home, one with a toddler in tow, as she has separated from her partner and can no longer bear to live with him (they’ve not yet managed to sell their home).
I looked around at those waiting patiently to board: the usual bunch of grey-suited men with laptops and small overnight bags; a group of four cheerful English women in their 60s, laughing about which one’s eyesight and nerves were best suited to driving around Ireland’s tourist spots; a mother and her teenage daughter analysing the pros and cons of various British universities and the usual mix of others.
I took a phone call from a friend and mentioned how I was entertaining myself as I waited for my flight. She suggested that I was either exaggerating or knew an unfortunate bunch of people.
An hour and a half later she texted back. She’d just gone through her own contact list and was surprised at her findings.
Try it yourself. You’ll be amazed and probably horrified.
In these difficult times. it’s important for families to budget properly and to cut down on unnecessary expenses. John Lowe gives some tips in the Sunday Business Post.
Tips to hang onto family cash
05 June 2011
It is crucial to complete a household budget as your first exercise. First, work out exactly what you are spending each month and, from this, determine initially how much disposable – and, if applicable, surplus – income you have.
That is what is left after tax, and after you pay your rent or mortgage, household bills, food, petrol and ‘spending money’.
If your expenditure exceeds your income, you then have two choices – cut costs or earn more.
Remember to ask yourself: do you really need to buy that product or service and, if you do, is there a cheaper or better alternative?
2. Cut your banking and insurance bills
Overdrafts, especially those exceeding the limits, should be a no-no. Also, try to avoid arrangement fees, high interest rates and referral fees.
Surcharges, which are additional interest charges applied for exceeding overdraft limits, can be up to another 12 per cent annually, and unpaid fees all take their toll on your disposable income.
Credit card costs are similar – try and use your credit card like a charge card and pay it all off when the payment is due.
But be wary of using your credit card to take out cash, as you can be charge up to 26 per cent from the time you withdraw.
You should also shop around for the best mortgage and loan deals, not to mention insurance premiums – life, health, buildings and contents, travel and even your car.
Always compare quotes from your insurer with other options available in the market, or seek advice from an independent authorised adviser.
3. Find the right savings accounts
The most important decision about savings can be summed up in one word: start.
By planning to save, you are setting immediate goals – for holidays, an attic conversion, the new plasma 3D screen television you want or even funding Christmas presents for the children.
Save small, but save often, whether in a bank’s regular saver account, the post office or your local credit union.
Ensure your deposit-taker is regulated.
The Financial Regulator’s deposit protection scheme covers you for up to €100,000.Then it is a simple matter of finding the best rate. Remember the mantra: better in your pocket than theirs. So what’s the best regular saver account currently?
You can save between €100 and €1,000 per month for 12 months and receive 4 per cent interest from both EBS’s family regular saver account and Ulster Bank’s Special Interest deposit account.
4. Cut down your household bills
When you analyse your household bills, you will find you may have left the lights on for too long, or not used the washing machine on the night-time rate or had the central heating blazing while you were away for the weekend.
Choose the most appropriate utility plan for your needs and take advantage of the deals created by competition in the sector.
Travel bills can also be cut easily. Buy discounted or tax friendly bus passes, get the best rates on tolls by using www.tolltag.ie, or try a bicycle over time; not only is it cheaper, but better for you physically. If planning a holiday, hold out for last-minute deals.
Across all areas of spending, you will find ways to reduce your overheads. Always adhere to the Money Doctor mantra – stop spending and, if you must spend, ensure you are getting the best value.
5. Look for bargains
* Take advantage of special in-store offers – for instance, SuperValu is delivering real savings to parents with a baby and toddler event, including value-for-money offers on all things baby until June 18.
*Use coupons and discount
vouchers. * Go online and use discount websites – www.fatcheese.ie and www.onoffer.ie to name but two.
* Have fun for free: take the family to the town library, art gallery, museum or park.
*Generic and bulk buying – especially for family purchases, like nappies and baby food.
* Clothes: buy tough-wearing items and remember your family and friends will appreciate the clothes once your baby’s grown out of them.
There is no shame in hand medowns.
* Food: portion control is key. Follow healthy eating guidelines.
Portions of mashed potato or rice should be the size of a computer mouse.
For cheese, you should eat a golf ball-sized portion, while vegetables should take up over half your plate.
*Water is free, and far better for your children and you, than any soft drink – and tap water at that.
At SCK Group we specialise in payroll for UK companies operating a subsidiary in Ireland. In general, the responsibility for processing PAYE, PRSI, USC deductions falls on the UK employer. However, if the UK employer does not process Irish PAYE payments, the responsibility falls on the subsidiary in Ireland. There are some exceptions, which must be Revenue approved in advance, i.e. if the number of days worked by the employee(s) in Ireland falls below certain limits. But in general if a company does not process PAYE etc for it’s employees in Ireland, it exposes the subsidiary company here to the risk of interest payments and penalites for late payments.
For further information please contact our payroll department.
AIB is to launch a €22 million venture capital fund for investment in early-stage companies, as part of its commitment under the government’s bank recapitalisaton strategy, according to last Sunday’s Business Post newspaper.
For many years, we have been advising our clients to ‘over-pay’ their mortgage if they can. With deposit interest rates low and condsidering DIRT, it made more sense to clear down debt rather than increase savings. This is still the case, but with most entrepreneurs and individuals in survival mode, not many will be able to pay more. However, it still makes sense if you can afford to do so. Last week we saw the first increase in ECB interest rates for some time, how many more increases will follow? If nothing else, paying extra on your mortgage each month now, will prepare you for the increased repayment in the months to come, and you will be reducing your debt. For tips on how to keep your mortgage costs down, see the article in last Sunday’s Business Post