Budget 2018

The Minister for Finance delivered the Budget 2018 proposals today 10th October 2017. The following is a synopsis of the main taxation changes.

Personal Tax:

a)Income Tax Credits & Bands:

Income tax Standard rate band increases by €750:

Single persons:  Standard rate band increases from €33,800 to €34,550.

Married persons: Standard rate band increases from €42,800 to €43,550.

Home Carer Tax Credit:

Increase from €1,100 to €1,200.

Earned Income Credit:

The Earned Income Tax Credit of €950 increases to €1,150.

b)USC:

No change to Income Exemption of €13,000.

No change to USC rate for income/earnings between €0 and €12,012.

Rate reduction of 0.5% on earnings between €12,013 and €19,372.(Band widened by €600).

Rate reduction of 0.25% to 4.75% on earnings between €19,372 and €70,044. Earnings between €70,045 and €100,000 remain liable at 8% rate.

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

PAYE income in excess of €100,000 will be liable at 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%, a rate reduction of 0.5%.

c)Mortgage Interest Relief:  

Tapered extension of mortgage interest relief will apply for remaining recipients, owner occupiers who took out qualifying mortgages between 2004 and 2012.

75% of existing relief will apply to 2018; 50% to 2019; 25% to 2020.

d)BIK on Electric Cars:

Reduced to 0% for one year, following which a review of BIK on vehicles will be carried out. Elecrticity used in the work place for such vehicles will also be exempt from VAT.

e)Key Employee Engagement Programme (KEEP).

A share based remuneration incentive is being introduced to facilitate the use of share based remuneration by unquoted SME companies. Gains arising to employees will be liable to Capital Gains Tax on disposal instead of income tax/USC/PRSI. This incentive will be available from 01 January 2018 for a 6 year period.

f)Pre Letting expenses: Rented Residential Property.

A new income tax deduction for pre letting rental expenses of a revenue nature incurred on a property that has been vacant for a period of 12 months or more is to be introduced.

A cap on allowable expenses of €5,000 per property will apply. A clawback of relief granted will also apply where the property is withdrawn from the rental market within 4 years.  The tax relief will apply to qualifying expenses incurred up to the end of 2021.

Corporation Tax/Business Tax

  • Capital allowances for Intangible Assets: This will also include related interest expense. It will be restricted to 80% of the relevant income derived from the intangible asset.
  • Accelerated Capital Allowances for Energy Efficient Equipment: This measure has been extended to 31-12-2020.
  • National Training Fund Levy: This is being increased from 0.7% to 0.8%

VAT:

  • VAT rate on sunbed services s being increased from 13.5% to to 23% in order to deter sunbed use.
  • A scheme is being introduced to allow charities to claim a refund of some of the VAT they incur, in proportion to the level of non public funding that they incur.

Capital Taxes

  • An amendment to section 604A of the Taxes Act reduces the timeframe for holding qualifying assets from 7 to 4 years.
  • From now on agricultural land placed under solar infrastructure will continue to qualify for Capital Acquisition Tax agricultural relief and Capital Gains Tax retirement relief provided not more than 50% of the total farm acreage is so used.

Stamp Duty:

  • Stamp Duty on Non-Residential Property is being increased from 2 % to 6%.
  • Consanguinity Relief is being extended.

Excise Duties:

  • Tobacco: 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 10 October 2017.
  • Sugar Tax: A tax on sugar sweetened beverages is to be introduced from 1st April 2018. (20 cents per litre on drinks containing 5 to 8 grams per 100mls and 30 cents where the content exceeds 8 grams).

New Compliance Measures:

  • Employer PAYE Compliance Project: A range of compliance interventions with employers is to take place to prepare for PAYE Modernisation, including enhancing ICT capacity for data matching and analytics.
  • eCommerce/Online Business Compliance Project: Building on knowledge gained in National Compliance Imperative in 2017.
  • Tax avoidance and base erosion capacity: Build high level technical capacity to tackle complex tax avoidance and transfer pricing cases. Also to support role in MAPS (Mutual Agreement Procedure Statistics)

 

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