This was a Budget that probably needed no introduction with the amount of details disclosed in the Media in the past few weeks.
Budget 2017 had a little bit of this and a little bit of that to try to keep all happy.
- Operative from 19th July 2016, first time buyers are to get a tax rebate for the previous four years up to a maximum of 5% of the purchase price of a new home of up to €400,000. The rebate will apply to new homes costing up to €600,000 but limited to €20,000 of a rebate.
The rebate will be included in full in the calculation of the deposit required under the Central Bank mortgage lending rules.
A mortgage of at least 80% of the house cost must be drawn down.
As the rebate can only be paid when the purchase is complete, it remains to be seen if the Mortgage Provider will lend the additional funds until the tax rebate is received or if the Bank of Parents will be called upon.
- The Home Renovation Scheme providing for a repayment of VAT on improvements to second hand homes is being extended to 31 December 2018.
- For Landlords interest relief is currently restricted to 75% of the interest paid in calculating profit rent. This is being increased to 80% for 2017 and will move up in 5% increments each succeeding year to bring it to 100% interest relief.
- The Rent- a Room exemption for tax is to be increased from €12,000 to €14,000. No mention made of tax on Airbnb income.
- The Living City Initiative relief is to be extended to include Landlords.
- Microbreweries will get the 50% reduction of Alcohol Product Tax on the first 30,000 hectolitres of beer per annum as before, but the output threshold for such breweries to qualify is increased to 40,000 hectolitres per annum.
- The Entrepreneurs’ CGT Relief will apply a CGT rate of 10% on the first €1m of gain.
- The Start your Own Business scheme will be extended for a further two years.
- The 9% VAT rate for the hospitality sector will be continued.
- There will be no change to Ireland’s 12.5% Corporation Tax rate.
Farming /Fishing Supports
- The Farmers Flat Rate subvention is to be increased from 5.2% to 5.4% from 01 January 2017.
- Farmers can average their income for tax over a five year period. A Farmer can now step out of averaging for one year and pay tax on the actual profits of that year instead. This can be utilised for 2016.
Any liability that would be due under averaging and not paid will become payable over subsequent years.
- Farm Restructuring Relief will be extended to 31 December 2019.
- A special fund is to be established to provide highly flexible loans at below 3% to assist Farmers with their cash flow.
- The scheme of Accelerated capital allowances for energy efficient equipment is being extended to sole traders so that Farmers may now qualify.
- The raised bog restoration scheme payments will be exempted from CGT.
- Fishermen who fish at least 80 days in a year for wild fish or wild shellfish will be entitled to a new tax credit of €1,270 per annum.
Other Tax Measures
- The Universal Social Charge is to be reduced by 0.5% on the on the three lowest rates as follows:
- The 1% rate will drop to 0.5% and apply on the first €12,012 of income
- The 3% rate will drop to 2.5% and apply to income from €12,012 to €18,772
- The 5.5% rate will drop to 5% on income from €18,772 to €70,044
- For income over €70,044 the rate continues at 8% unless you are self-employed and earn more than €100,000 when the rate increases to 11%
- The top rate of USC will be 2.5% for medical card holders and persons over 70 who earn less than €60,000 per annum
- Those earning less than €13,000 per annum continue to be exempt from USC
- The lifetime CAT threshold for gifts/ inheritances taken by children from their parents is being increased from €280,000 to €310,000.
The blood relative threshold is being increased from €30,150 to €32,500 and the stranger threshold is being increased from €15,075 to €16,250.
There was no mention in the Budget of any amendments to the CAT Dwelling House Exemption; however this may be addressed when the Finance Bill is published.
- The Home Carer credit is increased from €1,000 to €1,100.
- The Foreign Earnings deduction for employees working in specific foreign markets is being extended to 31 December 2020 and will now include Colombia and Pakistan. The minimum number of days for travel is being reduced to 30.
- The Special Assignee Relief Programme is being extended also to the end of 2020.
- DIRT is to be reduced by 2% each year from next year until it reduces to 33% in 2020.
- Mortgage interest relief will be extended from end of 2017 to the end of 2020
- The Earned Income Tax credit for self-employed persons will be increased from €550 to €950.
- A new share option scheme for SME’s will be introduced following EU approval.
- The inability of Charities to reclaim VAT is to be reviewed again.
- VRT relief on hybrid electric vehicles is to be extended to 31 December 2018 and on electric vehicles it is to be extended to 31 December 2021
- Cigarettes are to be increased by 50 cent per pack of 20 with corresponding increases on related tobacco products with effect from midnight 11 October 2016.
- Fuel inputs used to create high efficiency electricity in combined heat and power are being fully exempted from Carbon Tax.
- There is also a continuation of investment in Social Housing and increased funding has been announced for the recruitment of front line staff in the Public Sector (nurses, Gardaí & teachers).
- A “Sugar Tax” is to be introduced in April 2018 following a consultation process.
- State Pension will rise by €5 per week with effect from March 2017.
- All weekly social welfare payments to increase by €5 per week including the carer’s allowance, disability allowance and jobseeker’s benefit and allowance with effect from March 2017. There will be no increase in the monthly Child Benefit payment.
- Increase in the 2016 Christmas Bonus for Social Welfare Recipients to 85%.
- New Single Affordable Childcare Scheme with a universal subsidy of €80 per month for children aged 6 months to 3 years for all families who avail of Tusla registered childcare.
- Means tested subsidies will also be payable towards the cost of childcare for children from 6 months to 15 years.
- Medical card for all children who receive domiciliary care allowance.
- Prescription charges for over 70s reduced to €20 from €25 from 1stMarch 2017
Should you have any queries regarding Budget 2017 or require any assistance please contact Declan O’Luanaigh or any member of the tax team who will be happy to advise you!
Tel: +353 (0)1 6767 244/ +353 (0)1 7998 300
Fax: +353 (0)1 6768 377