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Here you can access summary of the key current tax developments in Ireland, the UK and internationally as reported by Chartered Accountants Ireland

The report of key tax developments are displayed per year, per month, by Ireland, the UK or International and by report title

2011 Report on High Income Earners Restriction

Revenue issued their customary analysis of the High Earners Restriction, this time in respect of the 2011 tax year. It is clear from the analysis that the restriction remains highly effective in blocking taxpayers availing of reliefs otherwise available under the Taxes Acts. Nevertheless, the High Earners Restriction seems itself to be a victim of the downturn as both the numbers of individuals involved and the amount of tax at issue are down by about a quarter compared to earlier years.

According to the report, the two main reasons that there were 401 less individuals subject to the restriction when compared to the 2010 results, and the yield from the measure is down a16.58m, are:

  1. The general economic downturn which has meant that a number of taxpayers have seen their income fall to levels at which they are no longer subject to the limitation
  2. The changes introduced in Finance Act 2011 i.e. the reduction in the amount of income which can qualify from the artists exemption and the removal of the tax exemption for patent income

The high earners restriction limits the use of specified reliefs and is designed to ensure that, with effect from the tax year 2010, individuals with an adjusted income level of a400,000 or more (where the full restriction applies) would pay an effective tax rate of approximately 30% on a combination of adjusted income and ring-fenced income. Prior to 2010, the restriction resulted in an effective tax rate of approx. 20%.

The Report shows that the 286 high-income individuals with an adjusted income of a400,000 or more (i.e. where the full restriction applied) paid an average effective tax rate of 30.67% on the combination of adjusted income and ring-fenced income. These individuals paid on average 39.7% tax inclusive of USC.

The full Report is published on the Department of Finance website.

The high earners restriction is provided for in Part 15, Chapter 2A of the Taxes Consolidation Act 1997 and the list of specific reliefs is contained in Schedule 25B of the Taxes Consolidation Act 1997.