The numbers of self-assessed income earners whose main source of income is from non-PAYE sources are set out as follows.
Year
|
Self-Employed income earners
|
2001
|
208,100
|
2002
|
207,000
|
2003*
|
210,000
|
2004*
|
212,000
|
2005*
|
215,000
|
* Provisional and subject to revision.
The numbers above have been rounded to the nearest 100 as appropriate. The numbers of income earners for the years 2003, 2004 and 2005 are based on actual data for 2002 projected forward in accordance with macro-economic data relating to actual and expected growth in incomes and employment. A married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.
The Revenue Commissioners do not have a policy of switching people with mixed PAYE and other income to a self-assessment basis. Whether an individual comes within the self-assessment system is determined by whether they are deemed a "chargeable person" under section 950 of the Taxes Consolidation Act 1997. An individual whose income is derived solely from PAYE is excluded from self-assessment. However, an individual having both PAYE and non-PAYE income is strictly within the self-assessment system. For ease of administration, Revenue accepts that an individual whose net income from non-PAYE sources is €3,174 or less will continue to be taxed under PAYE and the non-PAYE income will be "coded in" against their tax credits.
Section 14 of the Finance Act 2005 amended the definition of a "chargeable person" for self-assessment purposes. This permits Revenue the discretion to look at an individual's gross non-PAYE income when deciding on assessment status.
For the 2005 tax year and subsequent years of assessment, substantial gross income is defined as gross non-PAYE income of €50,000 or more, for example, gross income from a trade or profession, gross rental income, dividends and distributions or foreign income and so on. An individual with PAYE income who also has substantial gross income from a non-PAYE source, but where this income has been reduced to nil or to a negligible amount because of deductions, losses, allowances and other reliefs, is regarded as a "chargeable person" and is required to make a return under the self-assessment system.
Except as outlined above, there is no change to the practice for individuals whose main source of income is subject to PAYE but who have assessable non-PAYE income of less than €3,174. These individuals can continue to have the liability on such income effectively assessed within PAYE by means of coding in the income against their tax credits. An individual with assessable non-PAYE income of more than €3,174 for any year is regarded as a "chargeable person" for self-assessment purposes and must file a Form 11 for that year. There are no indications that this practice has influenced the upward trend in the number of people who are taxed under the self-assessment system.