High Earners Restriction

Finance Bill 2010 amended the restriction of reliefs for High Earners for 2010 and subsequent tax years in order to achieve a 30% effective rate of income tax for those subject to the full restriction. This represents a 10% rise in the effective rate which currently applies.

The entry level threshold for the restriction will now occur at adjusted income levels of €125,000 and the full restriction will apply at €400,000. Previously, only those individuals with incomes in excess of €500,000 were fully impacted by the restriction. Individuals earning between €250,000 and €500,000 were partially affected.

The restriction will apply to an individual for a tax year whose “adjusted income” is equal to or greater than the “threshold amount” and the aggregate of the specified reliefs used by the individual in the tax year is greater than the threshold amount.

If the individual’s adjusted income is less than the threshold amount or the amount of the specified reliefs being claimed is less than the threshold amount, the restriction will not apply.

The calculations of applicable restrictions and tax liabilities for those affected are complex and detailed.

At BDO we have the skilled professionals who will assist in this area.