With the introduction of the new Home Renovation Incentive (HRI) Online System last month, some of the burden on the homeowner has been lifted. Last month, we reviewed the Home Renovation Incentive (HRI) and took a rather harsh view of the responsibilities imposed on the homeowner in order to claim the tax credit. Since then, the new HRI Online System has been launched and is meant to make the process a whole lot simpler. But, there’s still a few areas that can snag you – so here are our top 5 things to look out for.
1. VAT Registered & Tax Compliant Contractor
The introduction of the new HRI Online System has removed the requirement for you – the homeowner – to request a copy of the contractors RCT Certificate or Tax Clearance Certificate. However, it is still your responsibility to ensure that your contractor is a “qualifying contractor” – which basically means that their taxes are in order.
So, how do you do this? We suggest you
- Make you get a quote/invoice with their VAT number listed
- Request that your contractor enters the works on the HRI Online System before the work commences – or at least before the first payment is made
- Check that your works are entered on the HRI Online System before you make the first payments
2. Payments must be registered
It’s not good enough that you just retain a copy of your payment receipts. All payments must be entered, by your contractor, in the HRI Online System to be eligible. If they’re not entered, you can’t claim.
We recommend that each time you make a payment, you check the HRI Online System to confirm your contractor has entered the payment and follow-up if they haven’t.
3. Remember, it’s not a refund – it’s a credit!
The way the incentive works is that the relief amount is added to your tax credits over the 2 years following the works being completed. In effect, this will reduce the amount of Income Tax you will pay on each payslip for those years, rather than claiming a lump sum refund.
Of course, if you have the misfortune to not earn enough in those years to pay tax, you will not get any of the tax credits as cash. They will, however, carry forward the credits until you do pay tax.
4. Don’t forget to claim the relief online
Once your contractor has inputted the works and payments for your claim, you still need to claim the relief for the following year. This means you will have to submit your claim via the HRI Online System after 1st January in the year following the works for the tax credits to be applied by Revenue.
5. Make sure your LPT & Household Charge are up to date!
Just like your contractor, you need to have all your taxes up to date in order to claim relief under the HRI scheme.