Top tips to keep more of your income & cut your tax bill

Many of us are watching our money at the moment and trying to save as much as we can. 

One of the biggest expenses we face in life are taxes, so it’s important to try and reduce the burden of tax as much as we can in order to benefit our financial future. This means you’ll have more money for important moments in life and can plan for the future you want.

With the Irish tax return deadline approaching on October 31, Nick Charalambous, Financial Advisor and Managing Director of Alpha Wealth, has decided to share four smart ways you can protect your income and keep more of your hard-earned money in 2024.

Pensions

Maximising your pension contributions is a highly effective way to reduce your tax liability and save for the long term. By contributing, you secure your future while benefiting from up to 40% tax relief, depending on your income (reduced to 20% if you earn less than €42,000 per year). For example, a €10,000 contribution could yield up to €4,000 in tax savings, amounting to a 66% gain. Additionally, pension savings grow tax-free, and a portion can be withdrawn tax-free as early as age 50. If your employer offers a matching scheme, it’s essentially free money, making it crucial to maximise these contributions for retirement. 

Employment & Investment Incentive Scheme (EIIS)

The Employment Investment Incentive Scheme (EIIS) is another powerful tool for reducing your tax bill. This government-backed scheme lets you invest in qualifying Irish companies and receive tax relief on earned and non-earned income, such as dividends and rental income. For example, investing €6,500 could yield €3,500 in tax relief the following year, doubling your investment. Plus, there's potential for additional gains if the company performs well.

Utilise Gift Allowances for Your Children

Using gift allowances is a smart way to reduce future tax liabilities for your family. The Capital Acquisitions Tax (CAT) provides a tax-free threshold, but you can maximise this by gifting smaller amounts annually. The first €3,000 gift per person per year is exempt from CAT, allowing you to give tax-free gifts to children or grandchildren from multiple family members. Over time, these gifts can cover significant expenses like education or a house deposit without incurring tax penalties.

Claim Expenses

Many people overlook tax-saving opportunities available through claiming expenses. Using the Revenue Online System (ROS), you can easily reclaim expenses like medical costs, rent relief, and work-from-home expenses. ROS lets you claim for up to four previous years, potentially recovering a significant amount. This simple process helps reduce your tax liability and ensures you're not overpaying.

Book a financial review with Alpha Wealth at www.alphawealth.ie for trusted financial advice on tax savings, pensions, investments, and more.