PAYE taxpayers must disclose any non-PAYE income they earn to Revenue by 31 October.
Recently we are seeing more examples of PAYE taxpayers with various types of non-PAYE income. Irrespective of the source, if you earn income outside of the PAYE system, you must declare it to Revenue and pay the appropriate taxes.
For example, a PAYE taxpayer who lets out a room in his house would be liable to pay income tax at the appropriate marginal rate plus Universal Social Charge and PRSI.
Other examples of non-PAYE income include foreign pensions, dividends and rental income.
If you are in any doubt about your tax liabilities, it is a good idea to get professional advice as underpayment and/or errors on tax returns can result in interest charges or penalties.
Am I a PAYE taxpayer?
A PAYE taxpayer is someone:
whose main source of income is taxed through the PAYE system, and
whose annual net non-PAYE income is less than €5,000 (€3,174 for years up to and including 2015).
Certain social welfare payments and legally enforceable maintenance payments are excluded when calculating net non-PAYE income.
Provided your net non-PAYE income is below €5,000, this is taxed through the PAYE system by reducing your tax credits and/or adjusting your tax rate band. You are responsible for telling Revenue about your non-PAYE income. You can do this through Revenue's 'my account' service or by filing Revenue Form 12 before the 31 October deadline.
Am I a ‘chargeable person’?
Revenue considers a PAYE taxpayer with net non-PAYE earnings over €5,000 to be a ‘chargeable person’. This means you must self-assess your income tax and file a tax return (Form 11). The filing deadline is 31 October.
Remember when working out your net non-PAYE income that you may be able to claim back certain expenses. It is important to calculate the taxes due correctly as errors can prove costly.