THERE are lots of adverts in the media lately for kitchen companies promoting the advantage of The Home Renovation Incentive Scheme when planning to revamp your kitchen.
This scheme is not limited to kitchen makeovers but encompasses a wide range of home improvements/renovations.
The Home Renovation Incentive (HRI) Scheme provides tax relief for you by way of an income tax credit of 13.5% of qualifying expenditure.
The works must be carried out on or after 25 October 2013 and up to 31 December 2015.
Homeowners must be Local Property Tax and Household Charge compliant in order to qualify under the incentive.
Contractors must be VAT and RCT registered and tax compliant in order to qualify to carry out works under the HRI.
The Incentive is administered through Revenue HRI online. All works, payments and claims must be entered to HRI online.
Qualifying expenditure includes:
Painting & Decorating; Plastering; Rewiring; Plumbing; Tiling; Bathroom upgrades; Fitted Kitchens; Window replacement; Extensions; Attic conversions; Garages; Driveways; Landscaping; Septic tank repair or replacement.
Work must be carried out and paid for on or after 25/10/13
Carpets, furniture, white goods and services (such as architect fees) with a VAT rate of 23% do not qualify.
Works carried out must be on your main home or a second hand home that will become your main home after works are completed.
You can claim tax relief on qualifying expenditure over €4,405 (before VAT). You can get as much work done as you like but you can only claim relief up to €30,000 (before VAT). If you claim a grant (e.g. Better Energy Home Grant) the qualifying expenditure will be reduced by three times the grant amount.
If the works are subject to an insurance claim the qualifying expenditure is reduced by the amount of insurance due or received.
Relief will be given by way of additional tax credits. For example, if you paid €5,000 (before VAT) to a VAT registered and tax compliant electrician for rewiring your home, your tax credit is €5,000 x 13.5% = €675.
2015 will be the first year for HRI tax credits. Your HRI tax credit will be included in your tax credits over two years, starting on the year after the work is carried out and paid for.
If you are on PAYE, the tax credit will be spread evenly throughout the two years.
It is essential that you receive evidence from your contractor that he/she is a qualifying contractor.
This can include proof of VAT registration combined with a current tax clearance certificate or a Relevant Contract Tax rate notification of no higher than 20%.
Further information is available from www.revenue.ie
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• Chris Murray is Practice Manager at Casey & Co Accountants & Auditors. Casey & Co. strive to add real value to your business by providing specialist services in the areas of personal taxation, business start up, restructuring, bank negotiations and succession.
