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Your Questions: I'm on a pension and work part-time, so what tax do I pay?

Question: I am 66 and last year retired from my work as a gallery assistant in Dublin. To help with my bills, I have recently taken on some part-time work teaching English as a foreign language. I currently work 15 hours a week, and earn €17 an hour. Do I pay any less income tax as a single person now I’m drawing my state pension?

Answer: Tax exemption limits are applicable for workers over 65, meaning that where your income is below a certain threshold, no income tax is payable. The threshold for a single person aged 65 or older stands at €18,000, according to the CEO of Taxback.com, Joanna Murphy.

All income, including pensions, is taken into account when considering the exemption threshold.

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Where earnings exceed the relevant minimum exemption, you may be entitled to what is called a marginal relief, where you will pay tax at a rate of 40pc on the excess amount, she explained.

Marginal relief will only be given to you where it is more beneficial than using your tax credits.

The marginal relief calculation is always compared with the regular tax credit calculation, which uses your personal and employee credits, the age tax credit (when an individual turns 65, they are entitled to the age tax credit of €245, if single), etc to find out which is more beneficial for the individual.

The more beneficial calculation is the one applied. While workers over 66 are not charged PRSI contributions, you will still likely have to pay USC. This is applicable once earnings top €13,000, with standard USC rates currently between 0.5pc and 8pc.

Question: I am looking for insurance quotes for a new commercial van. I haven’t settled on the final model. I am still somewhere between a Ford Transit and a VW Transporter, and I am also unsure regarding the level of cover I will need. I have always had third-party-fire-and-theft insurance on my own car and I have never needed more than that. Would that be sufficient?

Answer: Motor insurance needs for a commercial business are very different from what we expect from our private vehicle insurance. Additional time on the road, the year and value of your vehicle are just some of the extra factors involved in determining the level of protection required, according to manager with InsureMyVan.ie, Shauna Fogarty.

Third-party-fire-and-theft cover is a common type of commercial policy and will insure damage to or loss of your vehicle if it is stolen, someone tries to steal it, or if the vehicle goes on fire, she explained. Comprehensive cover, the highest form of protection available, covers a wide range of fire, theft and accidental damage incidents.

Crucially, comprehensive cover insures where the claim is one’s own fault, another driver’s fault, or where fault for damage can’t be proven. A key factor is also the size of the vehicle you choose to purchase, which will have a significant impact on the cost of your insurance. A very simple rule of thumb to follow is that ‘lower risk equates to lower premiums’.

The smaller the van, the smaller the premium. Paying for additional security features or a higher-spec model might cost you a little extra on the forecourt, but it can save you a lot in the long run, lowering your risk of theft and reducing your premium, Ms Fogarty said.

Question: I am 40 on my next birthday and have been travelling for pretty much the last 20 years. I am finally returning to Ireland and am buying my first property. I have mortgage approval in principle, but I still can’t decide what to do about the length of the mortgage. Given my age, I am wondering if I have to take a 25-year term. Would going with 35 years be crazy? Would a lender even allow me to do this, as I would be 75 making my final repayments?

Answer: The maximum age for mortgages is usually 70, so 30 years would be the maximum term available to you.

Joey Sheahan, who is head of credit at MyMortgages.ie, recommends taking the maximum term of 30 years, and then overpaying if you are in a position to do so.

This effectively gives you the best of both worlds. The benefit of doing it this way is that you are contracted to the lower monthly repayment and can revert back to this at any stage without having to ask your lender. You can overpay without any penalty on a variable interest rate, and some banks will allow you to overpay a portion of your loan without penalty on a fixed rate.

Tax exemption limits are applicable for workers over 65, meaning that where your income is below a certain threshold, no income tax is payable.

The maximum age for mortgages is usually 70, so 30 years would be the maximum term available to someone approaching 40.

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