For self-employed individuals in Ireland, the deadline for filing your self-assessment tax return is October 31st, 2024. However, if you've signed up for Revenue Online Service (ROS), you'll have until November 14th, 2024 to file and pay.

While the deadline might seem daunting, there's a significant opportunity to reduce your tax bill by taking full advantage of the various expenses you can claim. This guide will explore the types of expenses eligible for deduction and provide valuable insights to maximize your tax savings.

Business Expenses

Generally, expenses directly related to the operation of your business are eligible for deduction.

The Revenue website lists the expenses you can claim for your business.

These include:

The purchase of goods for resale
Employees’ pay
Rent and utilities for your business premises
Running costs and lease payments for vehicles or machinery
Accountancy fees and interest paid on business loans.

Other Deductible Expenses

In addition to business expenses, you can also claim:

Personal tax credits
Medical care costs

Earned Income Tax Credit

A positive development for self-employed individuals is the Earned Income Tax Credit (EITC). For 2024, the EITC amounts to €1,875. This credit can significantly reduce your overall tax liability.

Pension Contributions

Investing in a pension can be a strategic way to lower your taxable income. The tax-free percentage of your contributions depends on your age.

Filing Your Return and Record Keeping

Remember that your 2024 tax return must include:

The balance of income tax payable from 2023
Preliminary tax for 2024

As a business owner, it's essential to maintain accurate records of all your financial transactions. This includes invoices, petty cash books, mileage records, bank statements, and receipts for business-related expenses. While you don't need to submit these documents with your return, you must keep them for at least six years in case of an audit.

Startup Expenses

If you're a startup, you can claim pre-trading expenses incurred in the previous three years against your first return. These expenses typically include:

Accounting fees
Advertising costs
Feasibility studies
Business plan preparation
Rent for business premises

VAT and Expenses

If you're registered for Value Added Tax (VAT), remember to exclude the VAT portion from your expense claims.

Personal and Business Use Expenses

If you use items or services for both business and personal purposes, you can generally claim a deduction for the business portion. For example, if you work from home, you might be able to claim a portion of your household bills.

Common Expense Pitfalls

Meals Out: While meals with clients are generally not deductible, there are exceptions for subsistence allowances when traveling for business.
Clothing: The cost of regular work attire is typically not deductible. However, protective clothing can be claimed.
Mileage Expenses: Only trips directly related to business activities are eligible for mileage deductions.
Accommodation: Hotel bills are generally deductible for business trips.
Client Entertainment: Costs incurred for client entertainment are generally not deductible.
Staff Entertainment: Reasonable expenses for staff events, such as Christmas parties or team-building activities, might be deductible.

Capital Allowances

While you can't deduct the cost of purchasing or maintaining land, buildings, or equipment, you might be eligible for capital allowances, which can reduce your taxable income over time.

By carefully considering the expenses you can claim and maintaining accurate records, you can significantly reduce your tax liability. While the process might seem complex, taking the time to understand the eligible expenses and gather the necessary documentation can yield substantial financial benefits for your business.

Expenses You Can Claim on Your Income Tax Return