What is the Home Renovation Incentive (HRI) Scheme?
The Home Renovation Incentive (HRI) Scheme provides for tax relief for Homeowners and Landlords by way of an Income Tax credit at 13.5% of qualifying expenditure on repair, renovation or improvement works carried out on a main home or rental property by qualifying Contractors.
How much can I claim?
The amount of the HRI tax credit depends on the amount spent on qualifying works. Tax relief can be claimed on qualifying expenditure over €4,405 (before VAT at 13.5%) per property. This €4,405 (before VAT) can be the total from any number of jobs carried out and paid for from 25 October 2013 to 31 December 2015 for Homeowners claiming on their main home and on or after 15 October 2014 and up to 31 December 2015 for Landlords claiming on their rental property. While there is no upper limit on expenditure on qualifying works, the tax credit will only be given in relation to a maximum of €30,000 (before VAT at 13.5%) per property.
If a Homeowner or Landlord is having qualifying work done but isn’t spending over €4,405 (before VAT) per property, it’s still worth choosing a HRI qualifying Contractor and having the work details entered on HRI online. The Homeowner or Landlord may have more qualifying work carried out between now and 31 December 2015. All the spending, added up, could reach the €4,405 (before VAT) per property. It will be very difficult to go back to a Contractor, to try to get him or her to enter details to HRI online, for a job from a year or more ago.
In addition, if a Homeowner or Landlord is using a HRI qualifying Contractor, the Homeowner or Landlord can at least be sure that the Contractor is tax compliant.
If there are no grants or insurance claims, the lowest tax credit amount is €595 (€4,405 at 13.5%) per property and the highest tax credit is €4,050 (€30,000 at 13.5%) per property.
What’s the deadline?
You must have the works completed and paid for between 25th October 2013 and 31st December 2015, or until March 31st 2016 if you have gained planning permission between these dates.
What type of home improvement work qualifies?
Qualifying works include (list not exhaustive): Painting and decorating, Plastering, Rewiring, Plumbing including supply of solar panels, Tiling, Bathroom upgrades, Fitted kitchens, Fitted wardrobes, Window replacement, Extensions, Attic conversions, Garages, Driveways and Landscaping, Septic tank repair or replacement.
The main thing to remember is that only invoices billed to you with the 13.5 per cent VAT rate will qualify. Therefore things like white goods, furniture or professional fees are not eligible, nor are materials you buy yourself, e.g. paint.
Likewise if you buy, say, kitchen units separately (at a VAT rate of 23 per cent) and get a fitter to install them for you, only the expenditure relating to the fitter will qualify. If the fitter also supplies the kitchen you may be entitled to claim the total cost, under the VAT regime known as the ‘two thirds rule’ whereby the cost of the materials does not exceed two thirds of the overall cost (supply and fitting service). In that case the fitter would charge you the 13.5 per cent rate and the total expenditure would qualify.
Claiming tax back
To qualify the builder(s) /supplier(s) must be registered with the HRI scheme, which they can easily do if they are VAT registered and tax compliant – you should obtain a tax clearance cert or equivalent before work starts. Keep copies of all quotations, invoices and receipts/proof of payment. Although unlikely, Revenue may ask you for this documentation.
The builder(s)/ supplier(s) will have to claim the tax credit for you; an online registration system will be made available in April and that’s when you can first claim, even if the works were completed before that date. In that case claims must be made within 28 days of the system going live.
After the go-live date, the contractor must enter details on the HRI system of any payment received in respect of qualifying works, within 10 working days of receiving the payment. The works have to be on record before payments can be entered.
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