14 Oct 2016 | 02.15 pm
Budget 2017: The Main Points
At a glance summary of Budget 2017 from KPMG
14 Oct 2016 | 02.15 pm
The 12.5% corporation tax rate will not be changed.
CGT entrepreneur relief to be amended to reduce rate of tax from 20% to 10%. The lifetime cap of €1m to be reviewed in future budgets.
New SME focused share based remuneration scheme to be introduced in Budget 2018, subject to further consultation and EU state aid approval.
The Minister confirmed that further amendments to section 110 TCA 1997 will be introduced in the Finance Bill, after consultation has taken place.
Knowledge Development Box to be modified to provide for additional benefits for small companies. No further details provided.
A consultation process will take place focusing on the modernisation of the PAYE system to be effective from 1 January 2019.
Universal Social Charge (USC) to be dropped by 0.5% for the 3 lower bands – down to 0.5%, 2.5% and 5%.
Incomes of €13,000 or less are exempt from USC and there is an increase to the ceiling of the band on which the reduced 2.5% rate of USC will be payable, from €18,668 to €18,772. The revised rates will be:
- €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%
- PAYE income in excess of €100,000 @ 8%
- Self-employed income in excess of €100,000 @ 11%.
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 2.5%.
Special Assignee Relief Programme (“SARP”) and Foreign Earnings Deduction (“FED”) extended to 2020.
A change is being made to FED to reduce the foreign work days required from 40 to 30 and to extend it to cover Columbia and Pakistan.
Earned Income Tax Credit for self-employed being increased by €400 to €950.
Homecarer’s tax credit increased by €100 to €1,100.
Rent a Room scheme relief to be increased by €2,000 to €14,000 per annum.
Mortgage interest relief to be extended beyond December 2017 to 2020 – details to be provided in next year’s Budget.
DIRT will be reduced by 2% each year for the next 4 years. This will result in DIRT falling to 33% by 2020.
Income Tax Credit introduced for fishermen of €1,270.
The Start Your Own Business Relief is to be extended for a further two years.
Help-to-Buy scheme to be introduced to help first time buyers acquire newly built houses. A rebate will be available for income tax paid over the last four years, up to a maximum of 5% of the purchase price up to €400,000. Relief is available for new houses up to €600,000, with no relief available for houses above this amount. The maximum benefit is €20,000 and it applies to homes purchased from 19 July 2016 until 2019.
Interest deduction available to residential landlords being increased on a phased basis. Will increase from 75% to 80% in 2017 for new and existing mortgages. Will increase by 5% each year thereafter until it reaches 100%.
The Living City Initiative to be expanded by including landlords and removing the cap on maximum floor size.
Home Renovation Scheme to be extended by two years to 2018.
The Minister confirmed the reduced 9% VAT rate for the tourism and hospitality sector will be retained.
Duty on a packet of 20 cigarettes will be increased by 50 cent (including VAT) from midnight 11 October 2016 with a pro rata increase on other tobacco products. No change to the Duty rates on beer, cider or other alcohol products.
A tax on sugar sweetened drinks (“sugar-tax”) to be introduced in April 2018 (following a consultation process).
The reduced rate of Alcohol Products Tax on beers produced in microbreweries is being extended to apply to microbreweries which produce not more than 40,000 hectolitres per annum.
To help combat climate-change, measures are being introduced to promote the use of natural gas and other ‘green’ fuels.
The availability of accelerated capital allowances for energy efficient equipment to be extended to sole traders and other non-corporates.
VRT relief for electric and hybrid vehicles to be extended by five and two years respectively.
The fuel inputs used to create high efficiency electricity in combined heat and power plants are being exempted from carbon tax.
Capital Acquisitions Tax
Capital acquisition tax thresholds to be increased as follows for gifts/inheritances taken on or after 12 October 2016:
- Category A Threshold (children): Increase by €30,000 to €310,000
- Category B Threshold (relatives): Increase by 8% to €32,500
- Category C Threshold (unrelated): Increase by 8% to €16,250.
It is proposed that a review of the application of stamp duty to Irish shares will be undertaken in 2017.
The flat-rate addition for farmers is being increased from 5.2% to 5.4% from 1 January 2017.
Payments under the new raised Bog Restoration scheme to be exempt from Capital Gains Tax.
Farm restructuring relief to be extended until the end of 2019.
Farmers having an exceptionally poor year will be allowed to step out of income averaging and to instead pay tax due on current year basis (with any deferred liability becoming payable over subsequent years).
There will be a comprehensive programme of targeted compliance interventions against those engaged in offshore tax evasion. There will be new legislation designed to encourage early disclosures of liabilities in relation to offshore accounts or assets by i) Denying the opportunity to make a qualifying disclosure in this area after 1/5/2017 and ii) Introducing a new strict liability offence for failure to return details of offshore accounts or other assets.
Increasing Revenue staff resources by 50 (full time equivalent) on audit and investigation activities as well as enhancing ICT systems capacity for data matching and data analytics.