Tax relief on domestic service charges

Information

Tax relief is available if you pay service charges to a local authority or other provider of water, refuse or sewage services. The relief is granted in each tax year in respect of charges paid in the previous tax year.

The Finance Bill 2010 provides for the termination of this tax relief. However, relief will still be available for the tax year 2011 in respect of service charges due in 2010 and actually paid.

In order to qualify, you must have paid your service charges in full and on time in the previous year. You will not get tax relief for payment of arrears.

The charges that you pay for the following services qualify for tax relief:

• Domestic refuse collection, domestic sewage disposal and domestic water supplies provided by your local authority 
• Domestic water supplies provided by group water schemes
• Domestic refuse collection by independent contractors 

Who qualifies for tax relief?

In general, you (or your spouse if you are taxed jointly) qualify for the tax relief if you are liable for and pay the domestic service charges on a premises.

However, if you live on a full-time basis in a premises for which another person (for example, your elderly parent) is liable to pay the service charge, and you pay the service charge yourself, you may also qualify for relief. In such a case, the liable person can disclaim their entitlement to relief and transfer it to you. They do this by completing a disclaimer form and sending it to the Revenue Commissioners - see 'How to apply' below.

Claiming tax relief for service charges

To obtain tax relief for domestic service charges paid to your local authority, you must have paid the charges in full and on time in the previous tax year. Any arrears you owed from previous years must have been paid in line with the requirements of your local authority.

To obtain tax relief for domestic service charges paid to independent contractors or group water schemes, you must also have paid any other charges for domestic services to your local authority in full and on time. Again, any arrears you owed from previous years must have been paid in line with the requirements of your local authority.

However, you do not get tax relief in respect of arrears you have paid.

If you are a PAYE worker, your tax relief for domestic service charges will be incorporated into your normal certificate of tax credits. There are several ways to claim - see 'How to apply' below. If you have missed claiming in recent years, remember that you can claim up to 4 years in arrears. This means that you can still claim in 2010 for charges paid in 2005, if you have not yet done so, as the tax relief for these payments applies to the tax year 2006.

If you are self-assessed for tax purposes, you should claim the tax relief at the end of the year on your annual tax return.

Group water schemes and independent contractors that provide domestic services issue receipts to their customers as evidence of payment of charges. You should keep the receipts for all such payments as your tax office may require them at a later stage. You should also keep receipts/dockets for any bin tags that you buy.

Rates

Since 1 January 2007, an upper limit of €400 per year applies to tax relief on domestic waste charges. At the standard rate of tax this means a maximum tax credit of €80 in 2010.

How to apply

The Revenue Commissioners have published a leaflet IT27 Tax Relief for Service Charges Paid (pdf) containing a 2-part application form. You can use the main part of the form to apply for the tax relief in the normal way and send it to your local tax office.

If you are liable to pay the charges and someone who lives with you is paying them, you can use the second part of the form to disclaim the relief in favour of that person.

The tax relief can be claimed in several other ways:

• by text message
• via the PAYE online facility
• by phoning your regional PAYE Lo-call service