Welcome to this, the third edition of our new weekly personal finance newsletter On the Money, where we delve into personal finance issues and how they might affect your pocket. This newsletter, compiled by our personal finance writers, including Dominic Coyle and Conor Pope, is issued each Friday to subscribers.
The deadline for the estimated 830,000 taxpayers who are obliged to file an annual tax return passed last week. Those who missed the online deadline face a late filing surcharge, but they can still save themselves hundreds, or perhaps thousands, of euro by getting their affairs in order sooner rather than later.
According to Taxback.com, the tax advisers, more than half of the people they deal with confess to feeling confused about looming tax deadlines. And Revenue figures show that about 8 per cent of liable taxpayers miss the pay-and-file deadline. On that basis, about 60,000 people are in that position, so you’re not alone if you didn’t get around to filing in time.
Sticking your head in the sand can prove costly, with Revenue imposing a surcharge of 10 per cent on the tax due. However, Marian Ryan, consumer tax manager at Taxback.com, notes that this figure is halved to 5 per cent if the filing is made within two months of the due date – so, by January 16th, 2023, for people filing in respect of the 2021 tax year.
Meeting that January 16th deadline makes sense, particularly for those with substantial tax liabilities, as the upper limit on the surcharge the Revenue can impose by then is €12,695. If you miss that date, the surcharge ceiling jumps to €63,485, according to Revenue guidance, Ms Ryan advises.
The tax authorities can also charge interest daily on tax outstanding so, clearly, the earlier you catch up on your tax affairs, the better.
The position is more acute this year as Revenue has notified a large number of taxpayers – many of whom have never filed a tax return – that it thinks they have underpaid tax and are obliged to file a return.
Most likely this is because the tax authorities believe those they sent the letters out to might have issues outstanding as a result of their being in receipt of Covid wage subsidies or the Pandemic Unemployment Payment (PUP).
“It is our understanding that the vast majority of taxpayers in receipt of this communication from Revenue will never have filed a tax return before [because all their income is dealt with under PAYE] and are now, understandably, very concerned,” said Ms Ryan. “Nobody wants a call from Revenue... it can be scary.”
Because of the way the pandemic supports were paid, Revenue had warned previously that workers might have unexpected tax liabilities. They said any tax owing could be paid over a number of years – including by adjusting tax credits. However, people still have to file a tax return, although that wasn’t made clear until the letters landed.
Another group likely to find themselves among the ranks of the late filers are the growing number of people making a career full- or part-time as social media influencers.
Gifts from brands looking for a higher profile are an integral part of influencers’ working lives, but Taxback.com found that 70 per cent of people they spoke to had no idea that items like clothes, cosmetics, jewellery, food or travel, among other things, became taxable if the value of what they got from an individual brand tops €3,000 in a year.
It may sound like a lot but, with the sort of products influencers specialise in, it’s a figure easily reached, so keeping records – and filing a tax return if necessary – is important.
Investing: A family affair?
We all like to think we are making our own decisions when it comes to financial investment, but new research from Finland suggests this might not always be the case.
The study by professors at Aalto University School of Business found that people were much more likely to hold shares in a company or invest in a particular mutual fund if their parents had already done so.
Analysing five years of data from official or government sources, they found that the likelihood of an investor purchasing assets already held by their father was 12.2 per cent, rising to 15.8 per cent for a mother’s holdings.
Family size, how far they live away from each other and gender all play a factor, apparently, with families that communicate better showing the greatest similarity in investment calls, according to the study led by Prof Samuli Knüpfer. On the basis of the figures above, clearly mothers are the better communicators.
In the absence of parental ownership, that probability of investing in a particular asset fell to 0.3 per cent.
The researchers also found that children do influence their parents’ investment decisions, but to a much lesser extent than in the opposite direction – as in most other areas of life.
Get in touch
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
