Budget 2017

The Minister for Finance delivered the Budget 2017 proposals today 11th October 2016. The following is a synopsis of the main taxation changes.

 

Personal Tax:

  1. Income Tax Credits & Bands: No changes to general bands.
  2. Home Carer Tax Credit: Increase from €1,000 to €1,100, No change to existing income threshold.
  3. Earned Income Credit: Tax Credit of €550 increased to €950 for Self Employed and Directors who do not qualify for the PAYE allowances.
  4. USC:
    1. No change to Income Exemption of €13,000.

    2. Rate reduction of 0.5% on earnings band between €0 and €12,012

    3. Rate reduction of 0.5% on earnings band between €12,013 and €18,772

    4. Rate reduction of 0.5% on earnings band between €18,773 and €70,044 

    5. Earnings band between €70,045 and €100,000 remain liable at 8% rate.

    6. 11% for self employed earning over €100,000 remains in place

    7. PAYE income in excess of €100,000 will be liable at 8%

    8. Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2.5%. 

  5. Home Renovation Incentive: Incentive scheme being extended until 31 December 2018.
  6. Rent A Room Relief: The existing ceiling for exemption from income tax is being increased from €12,000 to €14,000 for 2017 and subsequent years.
  7. Help to Buy: An income rebate incentive is being introduced to assist first time buyers of new homes to fund the deposit required under the Central Bank macro-prudential rules. It will consist of a rebate of income tax paid over the previous four years up to 5% of the purchase price of up to €400,000. Where new homes are valued between €400,000 and €600,000 the maximum relief (i.e. €20,000) will continue to be available. The house must be a new build and applicants must take out a mortgage of at least 80% of the purchase price. This scheme will run until the end of 2019. .
  8. Farming Income Tax (Income Averaging): The income averaging regime is being amended to allow an “opt out “in a single year of unexpectedly poor income, which may be availed of for the 2016 tax year.
  9. Interest Relief – Rented Residential Property: The deduction for qualifying interest payments on monies borrowed to purchase, improve or repair residential rental property is being increased from 75% to 80% for 2017, rising by 5% per annum each year to 2021 when the full relief will be restored.
  10. Accelerated Capital Allowance for energy efficient equipment: The scheme of accelerated capital allowances for energy efficient equipment is being made available to sole traders and non-corporates.
  11. Living City Initiative: The Living City Initiative is being amended to encourage an increase in the take-up of the scheme. This involves extending the availability of the scheme to landlords.
  12. Foreign Earnings Deduction: FED is being extended until the end of 2020 and qualifying countries are being extended to include Columbia and Pakistan. The minimum number of days for travel is being reduced to 30 per annum.
  13. Special Assignee Relief Program: SARP is being extended for a further 3 years until the end of 2020.
  14. Start Your Own Business Relief: The Start Your Own Business tax relief is being extended for 2 years until the end of 2018.
  15. Fishing Sector: A new tax credit is being announced for fishermen to assist the viability of the fishing sector. Fishermen who have fished for wild fish or wild shellfish for at least 80 days in a tax year can claim an income tax credit of €1,270 per annum.
  16. DIRT: The rate of DIRT will be decreased by 2% each year for the next 4 years until it reaches 33%.

 

VAT:

  1. Agri-Taxation: The farmer’s flat rate addition will be increased from 5.2% to 5.4% with effect from 01/01/2017.

Carbon Tax:

  1. The fuel inputs used to create high efficiency electricity in combined heat and power are being fully exempted from carbon tax.

Capital Gains Tax

  1. Entrepreneur Relief: Existing 20% Capital Gains Tax rate is being reduced to 10% applying to the disposal in whole or in part of a business up to an overall limit of €1million.

Capital Acquisition Tax:

  1. The class A threshold which mainly applies to gifts and inheritances from parents to their children is being increased from €280,000 to €310,000.
  2. The Class B lifetime tax free threshold applying to gifts and inheritances made to parents, siblings, nieces, nephews or grandchildren is being raised from €30,150 to €32,500.
  3. The Class C lifetime tax free threshold applying to gifts and inheritances made to all other groups (except spouses and civil partners who are exempt) is being raised from €15,075 to €16,250.


Excise Duties

  1. The excise duty on a packet of 20 cigarettes is being increased by 50 cents (including VAT) with a pro-rata increase on the other tobacco products, with effect from midnight on 11 October 2016.
  2. The special relief reducing the standard rate of alcohol Products Tax by 50% is being extended to microbreweries producing not more than 40,000 hectolitres per annum.
  3. Vehicle Registration tax: The VRT reliefs available for the purchase of hybrid electric vehicles are being extended to 31/12/2018. The relief for Electric vehicles and electric motorcycles are being extended to 31/12/2021.

New Compliance Measures:

  1. Section 110 and Funds Changes: Draft amendments to section 110 will be included in the Finance Bill to address these unintended uses of the section.
  2. Tackling offshore tax evasion: A comprehensive program of targeted compliance interventions against those engaged in offshore tax evasion.
  3. Increase resource to confront non-compliance: increased revenue staff resources on audit and investigation activities as well as enhancing ICT systems capacity.

 

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