The Revenue Commissioners operates a small number of tax incentive investment schemes and investors wishing to avail of the tax benefits in the current tax year have until April 5th to get on board.
One of the best known schemes is the Business Expansion Scheme (BES). This allows tax relief on up to £25,000 (€31,750) used to buy shares in certain qualified companies. The concession is also available on money invested in certain tourism ventures and was extended to the music industry in 1996. There are three ways to become involved. The first is to invest in a fund that spreads the risk by investing your money in a number of different BES projects. It's also possible, although more risky, to invest in a single project through an accountancy firm. The third option is to invest in your own project, in which you are involved at a management level.
Property tax incentives can be divided into two main categories - capital allowances relating to industrial buildings and tax incentives relating to designated areas. The range of industrial buildings that qualify for tax relief is very broad and varies from market gardening, nursing homes and mills to factories or other similar premises. An annual allowance is generally available to investors holding an interest in an industrial building or structure. The allowance is available to owner-occupiers and lessors, and varies between 4 per cent and 15 per cent per annum depending on the use of the building or structure.
Investors and owner-occupiers can avail of tax relief on property purchased in designated areas. The Urban Renewal Scheme covers five cities and 38 towns, and was introduced in its current form in 1999.
The Town Renewal Scheme provides tax incentives for certain towns with a population of between 500 and 6,000. A list of the 100 towns that qualify for the scheme is available from the Revenue Commissioners. Copies of the maps of each area are available from the Local Authority involved. Two types of relief apply under the category of Residential Developments. With owner-occupier relief, the individual is allowed the cost of all or part of the expenditure on their main residence as an additional tax-free allowance
Investors get rented residential accommodation relief, where the owner is allowed to deduct all or part of the expenditure on a rented property in calculating his or her rental income. Rural Renewal Relief was introduced in the 1998 Finance Act and covers designated parts of Cavan, Roscommon and Sligo, and the administrative county of Leitrim and Longford.
Tax relief is also available for renewal and improvement of certain resort areas and seaside resort schemes. Tax relief similar to tax reliefs under BES is available on money invested in certain film and music projects. This is a relatively high-risk area and is best suited to those who have an inside knowledge of the industry.
One final and easily accessible form of tax relief is pension related. PAYE employees may, depending on the rules of their pension schemes, top up their pension contributions with additional voluntary contributions (AVCs). You can contribute up to 15 per cent of your annual income in AVCs into an approved pension fund and claim tax relief. The 15 per cent includes contributions to the main scheme.
If this is your first time to make AVCs, you can pay in more than 15 per cent and use up your limits from previous years' income. There is, however, an overall cap relating to maximum benefits permissible on how much an individual can pay in AVCs.
