Implications for Sole Traders Employing Family Members and entitlement to the contributory State Pension

Financial penalties: Revenue may impose fixed penalties or percentage-based penalties. The type depends on the nature and amount of the under-declaration. <a href=\"https://www.revenue.ie/en/vat/interest-and-penalties/when-are-penalties-payable-to-revenue/fixed-penalties.aspx\">Learn more .
Interest charges: Any unpaid tax accrues interest from the original due date until settlement.
Legal action: Persistent or deliberate under declarations can result in prosecution. Details on Revenue offences explain the risks.

As a sole Trader you may have a spouse/partner and/or other relatives involved in the business or practise in some manner, e.g. Accountant/Doctor whose spouse w...

As a sole Trader you may have a spouse/partner and/or other relatives involved in the business or practise in some manner, e.g. Accountant/Doctor whose spouse works as a receptionist and assistant in the practise. A spouse or civil partner working as an employee of a sole trader in return for Schedule E remuneration from the business/practise is not insurable for PRSI purposes in respect of the remuneration. This means that such a spouse/civil partner does not build up any State Pension (contributory) entitlement from such employment, unless they are paying a voluntary PRSI contribution.

The Sole Trader, as their employer, can establish an employer sponsored Occupational Pension Scheme for their spouse/civil partner working in the business for schedule E remuneration from the business or practise. There are talks about adding additional requirements in September 2018.

This gives the Sole trader an opportunity to:

Make tax deductible contributions for their spouse/civil partner in excess of the limits which would apply to personal contributions made by their spouse/civil Partner.