There was much speculation about Ireland’s Budget 2015 over the last few weeks and it was well publicised that, for the first time in seven years,Ireland was going to have a non-austerity Budget.
However, while the Government was keen to emphasise that the positives, the Opposition was quick to mention water charges. Our summary of the changes unveiled today are below and you can check out our Budget Calculator here.
- Increase in the standard rate band by €1,000 from €32,800 to €33,800, for single individual and from €41,800 to €42,800 for a married one-income couple.
- Top rate of income tax reduced from 41% to 40%
Universal Social Charges (USC)
- Incomes of less than €12,012 are exempt from USC
- For incomes of greater than €12,012, USC should be applied at the following rates and bands:
€0 to €12,012 @ 1.5%
€12,013 to €17,756 @ 3.5%
€17,577 to €70,044 @ 7%
€70,044 to €100,000 @ 8%
- PAYE income in excess of €100,000 @ 8%
- Self-employed income in excess of €100,000 @11%
- Extension of the exemption from the 7% rate of USC for medical card holders whose aggregate income does not exceed €60,000, who will now pay a maximum rate of 3.5% USC.
- Individuals aged 70 years and over whose aggregate income is €60,000 or less will pay a maximum rate of 3.5% USC.
- Home Renovation Incentive (HRI) – this incentive is being extended to include rental properties owned by landlords subject to income tax.
- Rent a Room Relief – the threshold is being increased to €12,000 per annum
- DIRT – First Time Buyers Relief in the form of a refund of DIRT on savings used to buy a home from midnight on 14 October until the end of 2017 (maximum of 20% of price)
- 80 per cent windfall tax on rezoned development land to be abolished and be replaced with 33 per cent capital gains tax
- €2.2 billion three-year plan for social housing
Employment Related Taxes
Foreign Earnings Deduction (FED)
- FED is being extended for a further 3 years until the end of 2017
- Qualifying countries are being extended to includeChile,Mexicoand some additional countries in the Middle East & Asia
- The number of qualifying days abroad is being reduced from 60 to 40
- The minimum stay in a country is reduced to 3 days
- Travelling time is being included as time spent abroad
Special Assignee Relief Programme (SARP)
- SARP is being extended for a further 3 years until the end of 2017 and the upper salary threshold is being removed.
- The residency requirement is being amended to only require Irish residency and the exclusion of work abroad is also removed.
- The requirement to have been employed abroad by the employer is reduced to 6 months.
- Further details will be provided in the Finance Bill.
- Minister announcesIrelandwill introduce a knowledge development box, similar to that in theUS, to further attract FDI
- R&D base year to be phased out by year end 2015
- DOUBLE IRISH’ to be abolished with effect from 1 January 2015 for new companies, and to be phased out for existing companies by the end of 2020
- Changing the residency rules to require all companies registered inIrelandto also be tax resident
- A new strategy for financial services inIrelandis currently being developed and will be launched next year
- 3 year corporation tax relief for start-ups extended
Farming and Agri-Food Sector Changes
- CAT relief for agricultural property to be targeted to ensure it is used by active farmers
- CGT retirement relief to be broadened
- Stamp duty relief to be extended for non-residential land transfers between certain close relatives, and stamp duty on agricultural leases in excess of five years to be removed
- No milk quotas from 2015
- €5 million in additional capital to Horse Racing Ireland for 2015 for investment in race courses
- New tax package similar to agriculture sector to be developed for the marine
- Annual excise relief production ceiling for microbreweries to be increased from 20,000 to 30,000 hectolitres
- The threshold for the artists’ exemption will be increased by €10,000 to €50,000
- 1,700 new teaching posts, including 365 special needs assistants
- Film tax credit scheme will go ahead in 2015, hopes to increase the €50m cap in 2016
- A new ‘Back to Work Family Dividend’ will be introduced to provide an additional incentive for families to move from the welfare system to work. This will allow families to retain the full Qualified Child increase of €29.80 per week per child for 12 months after their return to work and 50% of the payment in the second year.
- Water Charges – tax relief at 20% will be provided on water charges, up to a maximum of €500 per annum. This relief will be allowed a year in arrears.
- Tobacco – price of packet 20 cigarettes will be increased by 40 cents with effect from midnight on 14 October 2014
- No change on alcohol, petrol, diesel and motor tax
- Child benefit increased by €5 per month per child, with promise of further €5 increase in Budget 2016
- Reduced 9 per cent rate of VAT for tourism industry to be extended
- 0.6% pension levy to be abolished from the end of 2014, and the additional 0.15% pension levy will expire at the end of 2015