This scheme, introduced in 2013, is the government’s way of encouraging people to use tax compliant contractors, rather than pay cash into the black economy, as many did in the height of the recession. The minimum spend to qualify for the scheme is €5,000 (incl VAT) which would entitle the homeowner to a tax credit of €595. The maximum tax credit available is €4,050, which equates to a spend of €30,000. You can spend more than this, but you won’t get the VAT refunded beyond that amount.
So if you have been considering repairs or renovations to your home, it makes sense to look at the scheme.
Homeowners who use a compliant contractor can claim the VAT on their renovations over the next two tax years. So 13.5% of what is spent on the property will be returned as a tax credit, 50% the year after you carry out the work and the remainder the following year.
Details of the work must be entered online by the builder/contractor — they cannot be entered by the homeowner. Therefore the homeowner will need to provide the Property ID. Once entered, the homeowner can enter their credentials and log in to review what has been input by the contractor.
The homeowner does need to go online to access the scheme. It is a system that Revenue has made straightforward, with clear guides available for contractors and homeowners at Revenue.ie.
Repair, renovation or improvement works qualify under the incentive, including septic tank repair or replacement, attic conversions, driveways, painting and decorating. Revenue recommend homeowners register all jobs on the system, even if they fall below the current €5,000 threshold. If you were to need further work to your property before the scheme ends, it could be enough to bring you up to the refund amount. All the work involved would have to be undertaken by compliant contractors.
EXAMPLE: If you hired a HRI qualifying contractor in April 2014 to renovate your home for €12,000 (before VAT at 13.5%). You claim your HRI tax credit in January 2015. Your HRI tax credit is €12,000 x 13.5% = €1,620. You receive your HRI tax credit of €810 in 2015 and €810 in 2016. If you are a PAYE worker, your HRI tax credit will be divided evenly across your pay dates for each year.
For more information call your Revenue LoCall service (Cork 1890 222 425) or visit www.revenue.ie !