Ocean.ie have compiled a summary of the main budget headlines indexed by category from the budget speech. If you have any questions about how it might affect you, drop us a line using the contact form or comment function below.

Business Taxation

  • Commitment to maintain the 12.5% rate of corporation tax
  • New funding sources and incentives to be introduced for aviation sector
  • Real Estate Investment Trusts (REITs) to be introduced
  • Doubling of initial spend qualifying for R&D credit from €100,000 to €200,000
  • Increase in the close company de-minimis threshold (from €635 to €2,000)
  • Reforming the 3 Year Corporation Tax Relief for Start-up Companies to allow unused credits to be carried forward. This will help SMEs and start-ups to navigate their early years.

Capital Gains taxCapital Gains Tax/Capital Acquisitions Tax

  • 10% decrease in CAT thresholds. CAT and CGT rates to increase by 3% (to 33%) from midnight
  • Relief from CGT for disposals of farm land for restructuring from January 2013 to December 2015. Subject to EU State Aid approval

Income Tax

  • Tax deduction on charitable donations available at 31% blended rate of income tax for 2013
  • DIRT increase from 30% to 33% from 1 January 2013
  • From 1 July 2013 income tax will apply to maternity benefit payments but no USC applicable to maternity benefit payments
  • Income Tax rates, bands and credits to remain unchanged.
  • Scope of PRSI extended to cover “other income” such as rental income, dividends, interest income on deposits and savings for all other persons from 1 January 2014. You should note that self-employed individuals already pay PRSI on “other” income, so there is no change for these individuals.
  • The minimum level of annual PRSI contribution by self-employed individuals will increase from €253 to €500
  • The weekly PRSI allowance will be removed for employees however anybody earning less than €18,304 will continue not be assessable to PRSI
  • Top slicing relief on ex-gratia payments and retirement lump sums no longer available on amounts over €200,000 with effect from 1 January 2013
  • AVCs of up to 30% of pension value can be withdrawn but will be taxed at marginal rate of Income Tax
  • The reduced rate of USC for those over 70 years of age with an income in excess of €60,000 will be discontinued from 1 January 2013 and the standard rates of USC will apply
  • Tax relief will only be permitted for pension contributions up to a level that provides income of up to €60,000 per annum. This will take effect from 1 January 2014. Further clarification on this issue will be published shortly.
  • Tax relief on pension contributions will continue at the marginal rate of income tax
  • The pension levy will not be renewed after 2014
  • Tax relief for investment in qualifying films will be extended to 2020. The scheme will be amended such that the relief will take the form of a tax credit model from 2016
  • Increase from 12.5% to13.5% in the specified interest rate used in calculating the taxable benefit from preferential loans, other than home loans. The specified rate for home loans will be decreased from 5% to 4%
  • The rate of exit tax that apply to life assurance policies and investment funds is to be increased by 3% and will now be 33% for payments made annually or more frequently and 36% for payments made less frequently than annually. The new rates will apply from 1 January 2013.

Beers and cigarettesIndirect Tax

  • Excise duty increases for alcohol and cigarettes from midnight tonight;
  • Beer and cider increase of 10c per pint
  • Sprits 10c increase per measure
  • Wine €1 increase per 75cl bottle
  • Cigarettes increase of 10c per pack of 20
  • Extension of carbon tax to solid fuels. Rate of €10 per tonne to be applied from 1 May 2013. This will increase to €20 per tonne from 1 May 2014
  • VRT for all motor tax bands will increase with effect from 1 January 2013
  • No increase on excise duty for Petrol or Diesel
  • VAT rate for tourist industry to remain at 9% for 2013
  • Rebate of excise duties on diesel from 1 July 2013 for hauliers who have a tax clearance certificate
  • Cash receipts basis threshold to be increased from €1,000,000 to €1,250,000

 

Cash and PropertyProperty and Property Tax

Property tax to be introduced from 1 July 2013

The main features of the tax will be as follows:

  • The Revenue Commissioners will collect the Property Tax
  • Tax imposed on market value as assessed by the owner. The initial valuation will be valid up to and including 2016. Valuation guidance will be issued by the Revenue Commissioners
  • Property tax will be levied at 0.18% for the first €1m and 0.025% thereafter on the excess
  • Properties with a value of more than €100,000 and less than €1,000,000 will be assessed at the mid-point of valuation bands of €50,000 width
  • Rates to remain unchanged for lifetime of the current government
  • Voluntary deferral will be available for property tax for low income earners. Interest will be charged on deferred amounts at a low rate

Using an example of a property in the €150,000 – €200,000 threshold the half year charge in 2013 will be €157 resulting in an additional liability of €57, having regard to the abolition of the household charge

Other example:

Property with value of €250,000 is in the €200,001 to €250,000 band, the mid-point of which is €225,000. €225,000 x 0.18% is €405 for a full year (2014 onwards) and €202 for 2013.

  • Exemption from local property taxes for new and newly acquired or previously unoccupied homes acquired before 31 December 2016.
  • Relief will also apply to first time buyers and residents in unfinished estates during this period
  • NPPR charge to cease from 1 January 2014
  • Mortgage interest relief to end on 31 December 2012 as planned
  • The household charge will cease to have effect from 1 January 2013

Medical CostsMedical and Social Welfare

  • Medical card for couples earning between €1,200 to €1,400 per week to be replaced with a GP only card
  •  Drug payments prescription scheme threshold increased from €132 to €144
  • Prescription charge to increase from 50 cents to €1.50
  •  Increase in child care places for low income workers
  • Child benefit payments to be reduced by €10 per month per child
  • Reduction in electricity and telephone allowances
  •  Period for jobseekers benefit to be reduced by 3 months
  •  Weekly fuel allowance will not be reduced
  •  No reduction to primary social welfare rates
  •  Social expenditure ceiling for 2013 to be €20.2 Billion
  • Individuals over 70 years of age with an income of €600 – €700 per week and couples with an income of €1,200 – €1,400 per week will have their medical card replaced with a GP only card

Miscellaneous Measures

  • The Standard Fund Threshold for pension funds to remain at €2,300,000
  • AIB to contact 1,500 homeowners per month in respect of management of mortgage position
  • Increase in funds available for credit support for small businesses from €100m to €400m
  • Troika has agreed that proceeds of state asset sales to be used to support investment in infrastructure and job creation
  • Extra funds to be allocated to Department of Jobs Enterprise and Innovation to support job growth and export companies
  •  Reduction in public service pay bill and pensions of €1billion during the period 2013-2015
  •  Abolition of two year severance payment plan for current members of the Oireachtas
  • Reduction of 10% in party leader’s allowance
  • Current system of unvouched expenses for members of the Oireachtas to be abolished

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