Pre-Year-End tax planning

1. Small gift exemption

The small gift exemption allows you to provide a gift of up to €3,000 to any individual tax-free in any year without reducing their tax-free threshold for gift tax purposes. For example, you could gift each of your children €3,000, gift your grandchildren €3,000, gift your siblings €3,000 each and gift your siblings’ spouses €3,000 each in any given year. There is no gift tax on these payments, and their tax-free thresholds remain intact.

2. Income tax refund

If you are entitled to a refund of income tax, the claim must be made within four years of the end of the year in which the refund arises. For instance, if you are due a tax repayment in respect of the 2021 tax year, the claim must be made by 31 December 2025. Typical examples of expenses that may result in a tax refund are medical expenses and college fees.

3. Income tax surcharge

Your 2024 tax return was due for filing by 31 October 2025. If it has not yet been filed, you have until 31 December 2025 to submit the return and incur a 5% surcharge. If filed after 31 December 2025, the surcharge doubles to 10%. In the case of proprietary directors, please note that the surcharge is based on your income tax liability before credit for tax paid under the PAYE system.

4. Additional pensions contributions

If you have not done so already, you may wish to consider maximising the allowable pension contributions to your personal pension fund before 31 December 2025. If you are a business owner employing staff with an accounting year-end of 31 December, then pension contributions must be paid before the year-end to get a deduction in the 31 December 2025 accounts.

If you employ your spouse in your business, you can make an employer contribution for them.

5. Small non-cash benefit

If you are an employer, you can provide your employees up to two gifts or vouchers up to €1,500 per annum, which is not subject to PAYE, USC or PRSI.

6. Loan from company

In situations where employees or directors have an outstanding loan from a company at the end of the year, the company may be required to pay income tax to the Revenue Commissioners at a rate of 20% of the amount of the loan that is owed on 31 December. If the loan is repaid to the company, the company receives a refund of the income tax paid.

If you are in a position where you have a company loan, it may be worth considering paying back the loan before the year-end to avoid the company having to pay the 20% income tax.

7. Claiming losses

If you incurred a trading loss, you could elect to have the trading loss offset against other income earned in the year, and if applicable your spouse’s income. However, there is a two-year time limit to claim such loss relief. For trading losses incurred in 2023, the claim for the loss relief against other income must be submitted to the Revenue Commissioners by 31 December 2025.

8. Defer a Capital Gains Tax (CGT) liability

Where possible one should consider deferring a sale of an asset until after the New Year. CGT payable on a gain arising on a disposal in the period 1 January to 30 November 2025 is due on 15 December 2025. For disposals which occur in December 2025, the CGT is due on 31 January 2026. If the gain is realised say in January 2026, then the CGT is not payable until 15 December 2026. Also, for any assets which are “underwater”, you may wish to crystallise the loss before 31 December 2025 so that the loss will be allowed against 2025 gains. Certain rules apply regarding the generation of artificial losses, so care needs to be taken in this regard.

9. Artist exemption income

If you receive income in 2025 and the income qualifies as artist exempt income, an application should be made to the Revenue Commissioners by 31 December 2025. If the claim is not submitted by the end of the year, you could lose out on the exemption for 2025.

Conclusion

If you wish to discuss any of the pre-year-end action points applicable to you, feel free to contact any member of our Private Client Division. If you feel you may be entitled to a tax refund due to unclaimed tax credits, our tax compliance team would be more than happy to review your position and assist in submitting any claim to the Revenue Commissioners.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Forvis Mazars private client team below: