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Dáil Éireann debate -
Tuesday, 30 Jan 2001

Vol. 529 No. 1

Written Answers. - PAYE Allowance.

Ivan Yates

Question:

503 Mr. Yates asked the Minister for Finance if he has any proposals to extend eligibility for the PAYE allowance to any category of self-employed persons or their spouses particularly in family enterprises. [2344/01]

The PAYE allowance was introduced in 1980 to improve the tax progression of PAYE taxpayers. It took account of the fact that the self-employed generally then had the advantage of paying tax on a preceding year basis and also the case made by ICTU that the general scheme of allowances discriminated against employees and in favour of other taxpayers. The allowance was extended in the 1994 Finance Act to children of proprietary directors who previously were ineligible for the allowance. To qualify for the allowance children of proprietary directors, other than a child who is himself/herself a proprietary director, must be full-time employees throughout the year in the business of their parents with earnings of at least £3,600 per annum.

The granting of the PAYE allowance to proprietary directors would lead to calls for the extension of the allowance to the self-employed generally. Such an extension would not be appropriate given that self-employed persons are taxed on a different basis to PAYE taxpayers which may have certain advantages. For example, although the self employed now pay tax on a current year basis, there still can be timing benefits in relation to payment and finalisation of the tax. Consequently I have no plans at present to extend the PAYE allowance to other categories of taxpayers.

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