Income Protection Tax Relief (IPTR) is a form of tax relief that can be claimed if you pay for income protection insurance. It aims to simplify the process of claiming tax relief on an income protection policy by making it easier to apply and reducing the administrative burden on insurers. The scheme was introduced in April 2019 and it applies to policies taken out on or after 1 April 2019. This article will explain what IPTR is, how much you could save with it and how to apply for the tax relief
What is income protection tax relief?
Income protection tax relief is a tax relief that reduces the amount of tax you pay on your income protection insurance premiums.
The main conditions for qualifying for income protection tax relief are:
- You must be an employee, self-employed person or director of a company (but not a director of a limited company).
- Your income must come from work that’s eligible for PAYE deductions or if you’re self-employed and paying Class S PRSI contributions.
- You must have paid at least one premium during the year before claiming this relief (i.e., it cannot be claimed in years when no premiums were paid).
How much can you save?
The amount of tax relief you can get depends on the level of your income protection. The higher the level, the more tax relief you can get. For example, if you have an income protection policy with a weekly benefit of €500 and your gross annual income is €50,000 (before expenses), then this will entitle you to 100% tax relief on all premiums paid up until 31 December 2020. This means that instead of paying tax at 41%, as it normally would be for someone earning this amount every year since 2016 when changes were made in Budget 2017; instead they would only pay 20%.
Your maximum amount of annual premium eligible for deduction from your gross taxable income is capped at €1,250 per year but remember:
- You may not claim both salary sacrifice arrangements together and
- Your employer must deduct PAYE from any portion not paid through salary sacrifice arrangements
Are you eligible for income protection tax relief?
You must be self-employed to qualify for income protection tax relief. If you’re an employee, your employer will pay the cost of your insurance and any tax relief is given at their discretion.
You also need a minimum of 2 years of insurance cover so that it can be claimed through Revenue. You must also have at least €2,500 in income protection cover (the maximum amount allowed) at all times during the year when claiming this tax relief on your income tax return with Revenue Ireland.
How to apply for income protection tax relief in Ireland.
To apply for income protection tax relief in Ireland, you will need to fill out a form and send it to Revenue. You will receive a response from Revenue within 6 weeks if you are eligible for income protection tax relief or not. If you are eligible, they will notify you with information on how much money they have refunded back onto your PAYE account.
Income protection tax relief could help you save some money.
Income protection tax relief is a government scheme that helps you to save money on your income protection insurance. It’s available if you’re self-employed, or working for someone else and paying into an occupational pension scheme. In order to qualify for this tax relief, though, there are a few things that need to be checked:
- You must have been paying PRSI contributions for at least one year before applying for income protection tax relief in Ireland. If not, then it’s possible that someone else will be eligible instead (like your spouse). In this case they’ll receive all of the benefits instead of just half of them like normal applicants do!
- It doesn’t matter how old or young they are either – even if they’re just starting out their career as an apprentice mechanic or electrician etcetera…they can still apply while still studying full time through college/university courses as well!
Conclusion
Income protection tax relief is a great way to save some money. If you’re eligible for this tax relief, it could mean thousands of euros every year. The best part about income protection tax relief is that there’s no risk involved–you only pay if your claim is successful! So if you think this sounds like something that could help your family out, then apply.