Ok, so it’s not exactly small print. It is in fact written in the same size as the rest of Revenue’s guidance, but the guidance on this scheme is actually quite long and it is easy to miss some of the important facts!

 

The Small Print!

 

YOU MUST USE A VAT REGISTERED BUILDING CONTRACTOR

Some small builders and tradesmen may not be VAT registered. This is because they are only required to register for VAT when annual turnover exceeds €37,500. However unfortunately only VAT registered contractors qualify under this scheme so you must ensure your builder is VAT registered.

 

MINIMUM SPEND IS €5,675

Many people think the minimum spend is €5,000. It is actually €5,000 plus VAT which is a total of €5,675.

 

USING MULTIPLE CONTRACTORS

You do not have to spend the total €5,675 with the same contractor. Over the course of a year you can use a different electrician, plumber and builder for example. As long as each is a qualifying contractor and you spend a total of €5,675 within the year, this qualifies for tax relief.

 

TAX RELIEF IS GIVEN OVER 2 YEARS

The credit is payable over the two years following the year in which the work is carried out. So for example, for work carried out in 2014, you will receive the tax credit during 2015 and 2016.

 

WORK CARRIED OUT IN 2013

Initially this scheme was planned to commence with effect from 1st January 2014. However the government decided to start this scheme early allowing work carried out from 25th October 2013 to qualify. However, any work carried out in 2013 will be deemed to have occurred in 2014. This means that tax relief will not be paid out until 2015 and 2016.

 

YOU MUST HAVE PAID TAX TO RECEIVE THE RELIEF

As this is a tax credit, you must have earned enough income and paid enough tax to benefit from the credit. It is not simply a refund from the government. If you haven’t paid enough tax to cover the amount of tax relief you are claiming, you won’t receive a refund. However you can carry the credit forward to future years when you have paid enough tax and it can be utilised then. This tax credit is also transferable between spouses. Lastly, the tax credit applies only to income tax paid, not to USC or PRSI. So if your total earnings are low enough to mean that you only pay USC and PRSI, you will not receive this relief until such a year as you have earned enough to pay income tax.

 

YOU MUST BE UP TO DATE WITH YOUR LOCAL PROPERTY TAX AND HOUSEHOLD CHARGE

To claim your tax credit, you must be compliant with the Local Property Tax (LPT) and the old Household Charge, meaning you must have filed your tax return and paid (or made arrangements to pay) any taxes due. If you have not paid the Household Charge or LPT, you must do so before you can claim the tax credit. The contractor is required to obtain your LPT Property ID before starting work.

 

YOU MUST USE REVENUE’S ONLINE SYSTEM

The work that you are getting done must be registered online and you must obtain a unique reference number. You will need this reference number when you claiming your tax relief. However, as Revenue have not yet developed this online system, transitional arrangements apply in advance of the availability of the online system. When the online system is available, the contractor must enter details of the work to be carried out. Homeowners will then be able to view the information online to ensure that it qualifies. You should do this before allowing work to commence to ensure you do not get caught out. After you pay the contractor, they must enter details of the payment received online. You need to make sure that this happens.

 

YOUR BUILDER MUST QUALIFY UNDER THE SCHEME

It is your responsibility to ensure that the contractor you use is a qualified contractor under the definition of the scheme. This means a contractor who is VAT registered in Ireland and tax compliant. You can check if your contractor is tax compliant by asking to see their “Notification of Determination of RCT Rate” certificate. This certificate must show a zero or 20% RCT rate.

 

WHAT ABOUT RCT?

RCT is unlikely to be a familiar term to you unless you work in the construction industry. RCT stands for Relevant Contracts Tax. If you are a building contractor reading this, note that you must register for RCT as a subcontractor to be a qualifying contractor under this scheme. You will only be able to present the required documentation to homeowners after you have registered for RCT.

 

WHO DOESN’T QUALIFY FOR THIS RELIEF?

Tenants carrying out work on a rented property or persons carrying out work on a second home which they own do not qualify for the relief. It is only available to homeowners for work carried out on their main home.

 

GRANTS RECEIVED

If you have received a grant to fund some of the costs of the work, this is offset against the total cost of the work and the reduced amount only qualifies for tax relief.

 

General Information

 

WHAT WORK QUALIFIES UNDER THE SCHEME?

Qualifying work means repair, renovation or improvement work, which is subject to VAT at 13.5%, carried out on a homeowners principal private residence. The type of work covered includes extensions, garages, attic conversions, supply and fitting of kitchens, bathrooms, and built in wardrobes, window fitting, plumbing, tiling, rewiring and plastering.

 

WHEN SHOULD THE WORK TAKE PLACE?

Work carried out and paid for on or after 25th October 2013 and up to 31st December 2015 qualifies. Where planning permission (where required) is in place before 31stDecember 2015, work paid for up to 31 March 2016 will qualify.

 

HOW CAN I FIND OUT MORE?

Revenue have quite lengthy guidance on this scheme available at:http://www.revenue.ie/en/tax/it/reliefs/hri/index.html