Tax Relief on the Cost of Home Care - Latest from Revenue
Date Posted: 24.03.2015
Latest information from Revenue regarding tax relief on the cost of
employing a care giver
As an employer of a carer you are entitled to claim tax relief on this cost, provided the care is for yourself or a family member. This includes employing a carer from an agency or using an agency’s services, such as ourselves.
Who can claim?
You, your spouse or civil partner may claim tax relief in respect of the cost of employing a person (including a person whose services are provided by or through an agency) to take care of either –a family member (including yourself, your spouse or civil partner) who is totally incapacitated by reason of physical or mental infirmity, ora relative who is totally incapacitated by reason of physical or mental infirmity. Relative in this context includes a relation by marriage or civil partnership and includes an individual in respect of whom the claimant is or was the legal guardian.
Revenue accepts that services provided "by or through an agency" includes services provided by:charitable or voluntary organisations, e.g. the Alzheimer Society of Ireland, and commercial organisations that provide home care services such as Private Home Care
Any amount recovered from the Health Service Executive or a local authority in respect of the costs of employing the carer does not qualify for tax relief as any such amount reduces the cost to the claimant.
What is the amount of the tax relief?
Tax relief may be claimed on the lower of the following amounts: the actual cost incurred in employing the carer, or €75,000 at the claimant’s highest rate of tax (€50,000 for years up to and including 2014)
Relief can be claimed in the first year in which the claimant proves that either he or she or a relative was totally incapacitated by physical or mental infirmity. The deduction is: the lower of either the actual cost incurred, or the maximum deduction of €75,000 (€50,000 for years up to and including 2014).
There is no requirement to apportion the relief by reference to the period of incapacity.
What is the position if two or more individuals engage a person to look after a relative?
If two or more individuals are entitled to claim this deduction in respect of the same incapacitated individual, then:
the aggregate of the deductions granted to them shall not exceed the current maximum amount, and the relief granted to each individual shall be in proportion to the amount of the employment cost he or she has borne.
Note - The maximum amount of relief due is confirmed in Revenue Leaflet IT1 - Tax Credits, Reliefs and Rates, which is updated annually.
How is a claim made?
You can claim relief by completing pdfForm HK1 - Claim for an Allowance for Employing a Carer (PDF, 293KB). As your claim may be selected for future audit, you should retain all documentation relating to this claim for a period of six years.
How is the tax relief granted?
If you are a PAYE customer, relief can be claimed during the tax year and your Tax Credit Certificate will be increased by the amount of relief due.
Alternatively, you can claim relief at the end of the tax year by submitting your form P60 and that of your spouse or civil partner, if applicable, to your Revenue office.
If you are a Self-Assessment customer, the claim should be made in your annual tax return and relief granted will be shown on your Notice of Assessment.
Unused tax relief in a particular year is not carried forward to the next year.
Note: Tax relief is only available against income tax paid. Therefore no refund is due if you have paid no tax.
Do I have to operate PAYE on payments made to the carer?
If the services of the carer are provided by or through an agency or other commercial entity and the carer is paid by the agency or commercial entity, the obligation is on that organisation to make the necessary income tax, PRSI and USC deductions through the PAYE system when paying the carer.
However, where you employ the carer directly, you will have certain obligations as an employer, including registering as an employer and making income tax, PRSI and USC deductions from the wages paid to the carer. pdfForm PREM Reg - Employer (PAYE/PRSI) Tax Registration (PDF, 244KB) must be completed and submitted to your Revenue office.
Forms and Leaflets
Revenue claim forms and information leaflets referred to in this guide are available from Forms and Leaflets or can be requested by contacting Revenue's Forms and Leaflets service - LoCall 1890 306 706, (ROI only), + 353 1 702 3050 (if calling from abroad).
Time Limit for Repayment Claims
A claim for repayment of tax must be made within four years after the end of the tax year to which the claim relates.
Source: Revenue.ie 2015