Budget 2017

There were no surprises in Budget 2017 as most of the substantive issues had already been flagged.  However, we welcome the move to narrow the tax differential between the employed and self-employed by way of increased earned income credit, however, we would have liked to see a reduction in the USC surcharge of 3% on income from self-employment.

Ireland’s 12.5% corporation tax rate on trading income will remain.  A review of our corporation tax code will be carried out which will hopefully retain the focus on our competitiveness, particularly in light of the opportunities that will arise for Ireland post-Brexit.

Measures were introduced to help first time buyers get a deposit together, to encourage landlords to invest. 

Download Budget 2017 Summary PDF

UNIVERSAL SOCIAL CHARGE

The three lower rates of USC have been reduced by 0.5%

€0 to €12,012 @ 0.5%

€12,013 to €18,772 @ 2.5%

€18,773 to €70,044 @ 5%

€70,045 to €100,000 @8% - no change

The changes to USC ensure that the salary of a full time worker on the minimum wage will remain outside the top rates of USC. However, with the higher rate remaining at 8% the marginal tax rate remains at 52%.

INCOME TAX

There have been no changes to income tax rates and 20% bands.

• Home Carer Tax Credit

The Home Carer Tax Credit has been increased from €1000 to €1100.

• Earned Income Credit

The minister is continuing to narrow the tax differential between the self-employed and those in the PAYE system by increasing the Earned Income Tax Credit by €400 bringing it to €950.

CORPORATION TAX

The Minister has stated that Ireland’s 12.5% corporation tax rate on trading income will not be changed and nobody is asking for it to be changed.

CAPITAL ACQUISITIONS TAX

The current Group A tax free threshold which applies primarily to gifts and inheritances from parents to their children is being increased from €280,000 to €310,000. Category B & C thresholds are also to be increased by 8%.

CAPITAL GAINS TAX

• Revised CGT Entrepreneurial Relief

A reduced CGT rate of 10% will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in qualifying chargeable gains.

HOUSING

A number of measures have been introduced to address the shortage of new houses being built and the lack of supply in the rental market.

• Help to Buy Scheme

An income tax rebate incentive is being introduced to assist first time buyers of new homes to fund the deposit. 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. No rebate will be paid on house purchases in excess of €600,000. The house must be a new build and applicants must take out a mortgage of at least 80% of the purchase price.

The scheme will apply to the purchase of newly built primary residences by first time buyers from the 19th of July this year until the end of 2019.

• Home Renovation Incentive (HRI)

The HRI is being extended by two years until 31 December 2018.

• Mortgage Interest Relief - landlords

Full interest deductibility will be restored for landlords on a phased basis by instalments of 5 per cent per annum until the full 100 per cent, deductibility, is restored.

• Rent a Room Scheme

The Rent-a-Room scheme is increasing by a further €2,000 to bring it to €14,000 per annum. 

• Living City Initiative

The Living City Initiative was initially introduced to encourage urban renewal and promote the renovation of city centre properties for residential and commercial use. The scope of the initiative is now being expanded by including landlords and removing the cap on maximum floor size.

EXCISE DUTIES

Extra 50 cents on a packet of cigarettes bringing the price of cigarettes in the most popular price category to €11.

OTHER INCOME TAX MEASURES

• DIRT Interest

DIRT interest is to be reduced from 41% to 33% by 2020 at the rate of 2% each year for the next 4 years.

• Sugar Tax

The Minister intends to introduce a tax on sugar-sweetened drinks. The introduction of the tax will be aligned with the UK’s tax proposal on sugar sweetened drinks, in terms of time-frame and structure. The proposed introductory date is April 2018.

MEASURES TO SUPPORT BUSINESS

• Start your own business relief

The Start Your Own Business tax relief is being extended for 2 years until the end of 2018.

• Share Based Incentive Scheme

A new SME focused Share based Incentive Scheme will be announced in Budget 2018

• VAT

Retention of the 9% VAT rate for the tourism and hospitality sector.

Contact Imelda Prendergast Director OSK for all your comments and queries in relation to Budget 2017.