Below is a summary of the changes introduced in todays Budget by the Minister for Finance.

INCOME TAX

Marginal tax rate for those earning up to €70k reduced to 49.5%.

The entry threshold for Universal Social Charge (“USC”) will be increased from €12,012 to €13,000.

Otherwise, rates of USC will be reduced as follows:

• Income up to €12,012 – Rates reduced from 1.5% to 1%.

• Income from €12,013 to €18,668 – Rates reduced from 3.5% rate to 3%.

• Income between €18,669 – 70,044 – Rates reduced from 7% to 5.5%

• Income between €70,045 – €100,000 – 8% (no change)

• PAYE Income in excess of €100,000 – 8% (no change)

• Self-employed income in excess of €100,000 – 11% (no change)

Top rate USC exemption to be retained for all medical card holders and individuals aged 70 and older whose total income does not exceed €60,000.

Introduction of a tapered PRSI tax credit for employees up to €624 per annum. Further information on how this is to be implemented will follow.

The ceiling for the higher rate of employers PRSI of 10.75% to be increased to €376 per week.

Earned income tax credit of €550 to be introduced for the self-employed.

Home carer tax credit increased by €190 to €1,000 p.a.

A scheme for the transfer of farm’s to the next generation of farmers has been introduced. This being where a family partnership is set up for a period up to a maximum of 10 years before the farm is handed over and An income tax credit worth up to €5,000 per annum for five years for the partnerships to facilitate the transfer.

Extension of general and young farmers’ stock relief for a further 3 years.

Profits or gains from the occupation of woodlands are being removed from the High Earners’ Restriction.

 

BUSINESS TAX

Introduction of a Knowledge Development Box to provide for a 6.25% corporation tax rate on profits arising to certain IP assets which are the result of qualifying R&D activity that is carried out in Ireland.

Start-up relief from corporation tax being extended for new start-ups commencing to trade over the next three years.

Commercial Road Tax to be simplified and reduced. Ranging from €92 to €900.

 

INDIRECT TAX

The Minister confirmed the reduced 9% rate for the tourism and hospitality sector will be retained. There will be no changes to the reduced VAT rate of 13.5% or the standard VAT rate of 23% in 2016.

Duty on a packet of 20 cigarettes will be increased by 50 cent (including VAT) from midnight tonight with a pro rata increase on other tobacco products. No change to the Duty rates on beer, cider or other alcohol products.

CAPITAL TAXES

New CGT rate of 20% on the sale of whole or part of a business applying to capital gains of up to €1m.

The Group A threshold for capital acquisition tax will be increased from €225,000 to €280,000 with effect from 14 October. The Group A threshold typically applies to transfers between parents and their children.

ROPERTY

Local Property Tax effectively frozen until 2019.

STAMP DUTY

Existing €5 Stamp Duty on Debit/ATM cards to be replaced with a 12c charge for ATM transactions, subject to a cap of €2.50 or €5 depending on card type.

 

I will be happy to answer any queries on the above measures.

Declan Keville, Keville Accounting, Drumshanbo, Co Leitrim