Expenses cannot generally be claimed for travel to and from the ‘normal place of work’. First time contractors in particular can get caught out by this and submit bus and train tickets – or mileage claims – in anticipation of getting tax relief.
What is a Tax Saver Commuter Ticket?
The Tax Saver Commuter Ticket Scheme was introduced to encourage people to utilise public transport when travelling to work, to reduce traffic congestion. These tickets are available for all types of public transport, but also many private transport options, so long as they are approved transport providers.
How do I get my tax relief?
Tax relief works by reducing your taxable gross salary by the value of the ticket.
For example, if your gross monthly salary was €3,000, you would pay PAYE, PRSI and USC on €3,000.
However, if you availed of a Tax Saver Ticket, worth €100 in this example, you would only pay PAYE, PRSI and USC on €2,900 of your gross salary rather than upon €3,000.
When using an Umbrella Company, the additional tax saving of Employers PRSI is also passed onto the contractor. For employees, your employer will save up 10.75% Employers PRSI on the value of your Tax Saver Ticket, but this is usually kept as a saving for the business.
An Important Rule!
The individual’s company must apply and pay for the purchase of the ticket. For Umbrella Company contractors, this means your Umbrella Company must purchase the ticket on your behalf. For Private Limited Company contractors, this means your own company must purchase the ticket.For all other types of employees, it is your employer who must purchase your Tax Saver Ticket on your behalf.
Where Can I Get More Information?
Check out www.taxsaver.ie
They also have a handy “tax savings” calculator on their website where you can work out how much tax you are saving by using the scheme: www.taxsaver.ie/Ticket-Calculator
Contracting with Fenero?
Umbrella Company Contractors
We process Tax Saver Ticket purchases for our contractors for no extra cost on top of our standard service fees. So don’t lose out on valuable tax relief & let us know when you want to purchase a tax saver ticket. Email us on taxsaver@fenero.ie
Private Limited Company Contractors
As the limited company must make the purchase, you should arrange the purchase of your Tax Saver Ticket directly yourself. Remember however that the ticket must be purchased by your company and not you. In practical terms this means you must pay for the ticket directly from funds in your company bank account, which is a little different to the rules for most other types of expenses. You cannot pay for the ticket from your personal bank account funds and claim a reimbursement from your company.
If you are a contractor and need any more advice or assistance, get in touch with us on hello@fenero.ie
