General Guide to Taxation for People with Disabilities - IT12

Introduction

This is a guide to the tax credits, reliefs and exemptions that may be claimed by an individual with disabilities of a permanent nature. In general, individuals with disabilities are liable to pay tax on their income in the same way as everyone else, however additional tax credits and exemptions may be claimed.

Who can qualify for these Tax Credits?

Anyone who is permanently incapacitated either physically or mentally and unable to maintain themselves, may be entitled to claim one or more of the additional tax credits available. In addition, individuals who care for dependent relatives, or who incur expenses on their behalf may also qualify for some of these tax credits and reliefs.

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What Tax Credits and reliefs are available?

A complete list of all tax credits is available in Leaflet IT1 - Tax Credits, Reliefs & Rates.

The following is a summary of specific tax credits and reliefs that may be claimed.

Blind Person’s Tax Credit

This tax credit can be claimed by a person who is regarded as blind. If married or in a civil partnership, and both individuals are regarded as blind, they will each qualify for this tax credit.

More detailed information is given in Leaflet IT35 - Blind Person’s Tax Credit.

Note: Guide Dog Allowance is due where an individual and/or their spouse or civil partner who is regarded as blind at any time during the tax year, maintains a trained Guide Dog. The individual must hold a letter from 'Irish Guide Dogs for the Blind', in respect of each dog maintained, confirming that they are a registered owner.

Deed of Covenant

A Deed of Covenant is a legally binding written agreement made by an individual to pay an agreed amount to another individual, without receiving any benefit in return. Relief is available in respect of a properly drawn up Deed of Covenant in favour of a permanently incapacitated individual. However, parents cannot covenant to a permanently incapacitated minor child, i.e. under 18 years of age.

For further information please see Leaflet IT7 - Covenants to Individuals.

Dependent Relative Tax Credit

This tax credit can be claimed by a person who maintains:

  • a relative, including a relative of their spouse or civil partner, who is unable due to old age or infirmity, to maintain himself or herself
  • the widowed father or mother of the claimant, or of the claimant’s spouse or civil partner, whether incapacitated or not
  • a son or daughter, or a child of their spouse or civil partner, who resides with them and on whose services the claimant is compelled to depend upon due to old age or infirmity.

For further information please see Leaflet IT46 - Dependent Relative Tax Credit.

Employed person taking care of an Incapacitated Individual

This relief can be claimed in respect of the cost of employing a person (including a person whose services are provided by or through an agency) to take care of either:

  • a family member, including the claimant, their spouse or civil partner, who is totally incapacitated by reason of physical or mental infirmity, or
  • a relative of the claimant, or a relative of the claimant’s spouse or civil partner, who is totally incapacitated by reason of physical or mental infirmity. A 'relative' in this context includes an individual in respect of whom the claimant is or was the legal guardian.

Health/Medical Expenses

Tax Relief is available in respect of un-reimbursed medical or non-routine dental expenses paid, either on the claimant’s own behalf or on behalf of another individual.

This relief is allowed at the standard rate of tax (20%) with the exception of nursing home expenditure which is allowable at the individual’s highest rate of tax (20% or 41%).

Details on the main medical expenses that qualify for relief are given in Leaflet IT 6 - Guide to claiming Health or Medical Expenses Relief.

Incapacitated Child Tax Credit

This tax credit can be claimed where a claimant proves that he or she has living, at any time during the tax year, any child who:

  • is under 18 years of age and is permanently incapacitated either physically or mentally, or
  • if over 18 years of age at the commencement of the tax year and is permanently incapacitated either physically or mentally from maintaining himself or herself and had become so permanently incapacitated before reaching 21 years, or
  • had become so permanently incapacitated after reaching 21 years, but while he or she has been in receipt of full-time education at any university, college, school or other educational establishment, or while training full-time for a trade or profession for a minimum of two years
  • is any child for whom the claimant has custody of and maintains at his or her own expense and who is permanently incapacitated.

Where more than one child is permanently incapacitated, a tax credit may be claimed for each child.

For further information see Leaflet IT18 - Incapacitated Child Tax Credit.

How do I claim these Tax credits/reliefs?

Complete the relevant claim form and return it to your Revenue office. The return address can be found on any correspondence you have received from Revenue. (e.g. Tax Credit Certificate) or enter your PPS number into our Contact Locator , and the name, address and contact details of your Revenue office will be displayed. Certain Tax credits and reliefs can be claimed through PAYE Anytime which is Revenue’s on-line service for PAYE employees.

What incomes are exempt from tax?

The following sources of income and gains are exempt from Income Tax and Capital Gains Tax for people with incapacities.

Deposit Interest Retention Tax (DIRT)

An individual, their spouse or civil partner, who is permanently incapacitated, or aged over 65 years during the tax year may be entitled to exemption from DIRT or to a refund of DIRT where deducted, provided their total income is below the relevant annual exemption limit.

For further information see Leaflet IT8 - Income Tax Exemption and Marginal Relief and DE2 - Dirt-free Deposit Accounts for Permanently Incapacitated individuals.

Disabled Persons Maintenance Allowance

This allowance, paid by the Health Service Executive, is exempt from tax.

Hepatitis C Compensation payments and payments made by trustees of the Haemophilia HIV Trust

Payments made by the Tribunal established under the Hepatitis C Compensation Tribunal Act 1997 and payments made to the beneficiaries of the Haemophilia HIV Trust are exempt from Income Tax and Capital Gains Tax. Also exempt is income arising from the investment of such payments and gains arising on the disposal of assets acquired with such payments, provided the aggregate of the gains and income exceeds 50% of the aggregate of the person’s total income and gains, if the individual is permanently and totally incapacitated from maintaining themselves as a result of the infection.

Payments received following the institution of proceedings on behalf of a person of a civil action for damages in respect of personal injury under this heading are also exempt.

Leasing of Farmland

Rent received from farmland can be exempt if an individual is permanently incapacitated from carrying on the trade, provided certain conditions are met. Contact your Revenue office for further information.

Lump Sums

Lump Sum payments can be exempt where paid by an employer because of injury or disability.

For further information see Leaflet IT21 – Lump Sum Payments.

Payments to or in respect of Thalidomide Persons

Payments made by the Department of Health and Children or by the foundation known as the Conterganstiftung Für behinderte Menschen are exempt from Income Tax. Also exempt is income arising from the investment of such payments, for example deposit interest, rental income, dividend income, etc. Gains arising on the disposal of assets acquired with such payments or the investment of such payments are exempt from Capital Gains Tax.

Personal Injury Compensation Payments

Certain compensation payments received are exempt from Income Tax. Also income arising from the investment of such payments, and gains arising on the disposal of assets acquired with such payments or the investment of such payments, may be exempt, provided the aggregate of the gains and income exceeds 50% of the aggregate of the person’s total income and gains. The injury must have given rise to a permanent and total mental or physical incapacity which prevents the person from maintaining himself or herself.

For further information see Leaflet IT13 - Personal Injury Compensation Payments

Special Trusts for Permanently Incapacitated Individuals

Special tax treatment applies on income arising following the creation of a trust whose funds have arisen as a result of public subscription raised on behalf of an individual or individuals who are permanently and totally incapacitated. Contact your Revenue office for further information.

Miscellaneous

Universal Social Charge (USC)

A reduced rate of USC applies to individuals in possession of a full medical card, including a Health Amendment Act card and where their total income for the year is below a specific amount.

The current USC rates and thresholds can be found in Leaflet IT1 - Tax Credits, Reliefs and Rates.

Note: All Department of Social Protection payments and income already subjected to DIRT are exempt from USC.

Further information on USC and a complete list of USC exempt incomes are available at: Universal Social Charge (USC)

Capital Acquisitions Tax

Exemption Relating to Medical Expenses of Incapacitated Persons

Gifts or inheritances taken by an individual permanently incapacitated because of physical or mental infirmity, to meet their medical expenses (including, for example, the cost of nursing home care) is exempt from gift or inheritance tax.

More information on Capital Acquisitions Tax:

  • E-mail - catdr@revenue.ie, or
  • Telephone - LoCall 1890 20 11 04, or if calling from outside the Republic of Ireland: +353 1 865 5000

VAT Refunds

Repayment of VAT paid can be claimed on the purchase or importation of certain special aids and appliances, including parts and accessories, i.e. assistive technology, braille books, braille writing equipment, braille converters, etc. Individuals who purchase an aid or appliance for a disabled person can claim a VAT refund provided they meet certain eligibility conditions.

Applications for repayment should be made on pdfForm VAT 61A - Claim for Refund of Value-Added Tax (VAT) (PDF, 127KB).

Drivers and Passengers with Disabilities

A range of tax reliefs may be claimed by persons with disabilities on the purchase of motor vehicles.

More detailed information is available in pdfLeaflet VRT7 – Drivers and Passengers with Disabilities (PDF, 827KB).

4-year time limit

A claim for tax relief must be made within four years after the end of the tax year to which the claim relates.

Accessibility

To obtain this or other leaflets, in an alternative format, contact the Revenue Access Officer at: accessofficer@revenue.ie

Further Information

This leaflet is for general information only. For further information, phone your Revenue LoCall service. If you are calling from outside the Republic of Ireland, please phone + 353 1 702 3011.

November 2013


pdfPDF Version of IT12 - General Guide to Taxation for People with Disabilities (PDF, 817KB)


Legal Disclaimer

This leaflet is intended to describe the subject in general terms. As such, it does not attempt to cover every issue which may arise in relation to the subject. It does not purport to be a legal interpretation of the statutory provisions and consequently, responsibility cannot be accepted for any liability incurred or loss suffered as a result of relying on any matter published herein.

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