A: Currently if you are in employment you are entitled to an additional tax credit referred to as the PAYE credit (€1,650). Self – employed people cannot claim this. Additionally there is a 3% USC surcharge on individuals who have non-PAYE income that exceeds €100,000.
For example a PAYE single person earning €50,000 will pay €10,312 in PAYE, whilst a self-employed person with a profit of €50,000 will pay the extra €1,650, in total €11,962.
It has been argued by some that self-employed individuals can reduce their taxable income, by claiming additional expenses that maybe and an employed person cannot, for example travel costs.
The government have stated they wish to close this gap, whilst also cutting USC and income tax rates. We can therefore only assume that the intention is to provide an additional tax credit to self-employed individuals, similar to the PAYE credit. Any potential changes will more than likely not be confirmed until budget 2016.
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