TAX FACTS & FIGURES

BUDGET16

Greyfriars, WaterfordT: 051 870152 F: 051 871214E: tax@fitzgeraldpower.ie

Personal taxTax rates and bandsNo changes to income tax rates or bands.USC bands and ratesFavourable adjustments to the lower USCbands and rates. Rates reduced to 1%, 3%and 5.5% with some adjustments to thebands. The rate of 8% for income over€70,044 and the 11% rate for relevantincome over €100,000 remainunchanged.Entry threshold for USC increased from€12,012 to €13,000 i.e. where income isless than €13,000 it is exempt from USC.

PRSIA tapered PRSI credit (maximum level of€12 per week ) for employees insured atClass A who earn between €352.01 and€424 in a week. Lower rate of 8.5%employer PRSI to apply to weeklyearnings of up to €376.01 (up from€356.01).

Tax credits:• home carer tax credit - an increase in

the home carer tax credit from €810 to€1,000 and increase in the incomethreshold from €5,080 to €7,200; and

• earned income credit - welcomeintroduction of an earned income creditof €550 for the self-employed andbusiness owners/managers who areineligible for a PAYE credit on theirincome.

Incentives:• Home Renovation Incentive (HRI)

extended until 31 December 2016; and• profits or gains from the occupation of

woodlands removed from the highearners’ restriction.

Agri-food sectorGeneral stock relief, stock relief foryoung trained farmers, stock relief forregistered farm partnerships and theStamp Duty exemption for young trainedfarmers extended to 31 December 2018.A new farm succession transferpartnership model to be introduced,subject to EU state aid approval.

Child benefitChild benefit is to increase by €5 permonth to €140 per child from January2016.

State pension€3 increase per week for pensioners andcarers aged 66 and over.

Pensions:• tax relief for pension contributions

continues at the marginal rate of tax;• pension levy - the 0.15% pension levy

introduced for 2014/2015 will beabolished with effect from 31 December2015.

Local Property Tax (LPT)The Minister for Finance will be makinga proposal to Government to postpone therevaluation date for the Local PropertyTax from 2016 to 2019.

Banking LevyIt is proposed to extend the banking levy,which is currently due to expire in 2016,by five years to 2021, subject to a reviewtaking place of the methodology used tocalculate the levy.

+50c

No pension levy willapply from 2016

onwards

KDB 6.25%

Film relief cap increased to €70 million

Relief for cashlesstransactions

USC rates cut 20 cigarettes are beingincreased by 50c

National MinimumWage increased to €9.15

an hour.

Corporate tax Knowledge Development Box (KDB)Profits arising from certain patents andcopyrighted software, which are theresult of R&D carried out in Ireland, willbe taxed at a rate of 6.25%. The KDBwill be in line with the recent OECDguidelines and will be the first and onlybox of its kind in the world to meet thenew standards of the OECD’s “modifiednexus” approach.

International corporate tax – OECDBase Erosion Profit Shifting (BEPS)The Government has published an updateon Ireland’s international tax strategy andreaffirms its commitment to the OECDBEPS project. The 12.5% corporation taxrate on trading profits will not bechanged as the OECD has confirmed thateach country is free to set its corporationtax rate.

The Government intends to finalise theMultilateral Instrument (MLI) by the endof 2016 and deliver on a number ofchanges as proposed by the OECD aspart of the BEPS project.

In order to enhance transparency in ourtax system, Minister Noonan hasimplemented the Country by Countrytransfer pricing reporting regime asoutlined in the BEPS project. This appliesfor accounting periods commencing on orafter 1 January 2016.

Employment and Investment Incentive Scheme (EIIS)The amount of finance that can be raisedby a company under EIIS has increasedfrom €2.5m to €5m annually. This will besubject to a lifetime maximum of €15m,up by €5m. The scheme will now beavailable to all SMEs irrespective of theirgeographical location. Finally, thescheme has been expanded by allowinginvestments in the extension,management and operation of existingnursing homes. These changes areeffective from midnight tonight.

Film reliefThere is to be an increase in the cap foreligible expenditure qualifying for filmrelief from €50m to €70m; this limit willbe reviewed going forward.

Other measuresCorporation tax relief for start-upcompanies has been extended for afurther three years. This is based on thenumber of employees and loss-makingcompanies may carry forward unusedrelief.

The Start-Up Relief for Entrepreneurs(SURE) has been extended by includinginvestments in the extension,management and operation of nursinghomes.

The scheme of capital allowances for theconstruction of facilities used in themaintenance, repair, overhaul anddismantling of aircraft is being amendedto comply with EU state aid rules. Thescheme commences from 14 October2015.

Indirect taxes

• VAT - no change in any of the existingVAT rates, including the 9% rate fortourism sector and farmer’s flat rateaddition, which remains at 5.2%;

• Excise - the excise duty on 20cigarettes is being increased by 50c(including VAT) with effect frommidnight 13 October, with pro rataincreases for other tobacco products.This will increase the price of mostpopular brands to €10.50. There are nochanges in the rate of duty on petrol,diesel or alcohol;

• Commercial road tax on goodsvehicles - the rates of motor tax and thenumber of tax classes will besignificantly reduced from 1 January2016.

The current number of classes will bereduced from 20 to 5 with rate rangingfrom €92 - €900 (the current maximumis €5,195);

• Micro-breweries - micro-breweriesqualify for a special relief from alcoholproducts tax where output does notexceed 30,000 hectolitres per annum.As a cash flow measure, this relief willbe available upfront as well as bymeans of a rebate;

• Electronic payments - to encouragethe use of electronic payments by debitcards and discourage the withdrawal ofcash from ATMs, the €2.5/€5 StampDuty on ATM/debit cards will bereplaced with a 12c charge per ATMtransaction (subject to overall cap atthe existing annual stamp duty level).There will be no charge for debit cardtransactions. The transaction limit oncontactless payment cards is beingraised from €15 to €30 from 31October 2015; and

• VAT and charities - the Department ofFinance is examining proposals set outin the VAT on Charities Working GroupReport, published in October 2015, toreduce the VAT burden on charities.This may take the form of a refundprocess.

Capital taxes

• Capital Acquisitions Tax (CAT) - theGroup A tax free threshold has beenincreased from €225,000 to €280,000with effect from 14 October 2015.

This threshold generally applies to giftsand inheritances from parents to theirchildren. No change to other groupthresholds. No change to the rate ofCAT, which is currently 33%; and

• Capital Gains Tax (CGT) –entrepreneurs’ relief - from 1 January2016, a CGT rate of 20% (rather thanthe standard rate of 33%) shall apply tothe net chargeable gain arising on thedisposal by individuals of assetscomprising the whole or a discrete partof a trade or business. This shall besubject to a lifetime limit of €1m.

Thus, based on current CGT rates, themaximum tax benefit is €130,000.

This leaflet is only a summary of the Budget Speech and is not intended to be a comprehensive guide. 13/10/15. Printed by Unique Publishing (01) 860 3477

Tax rates 2015 2016Standard tax rate 20% 20%Higher tax rate 40% 40%Standard rate bandSingle/widowed €33,800 €33,800Married couple one income €42,800 €42,800Married couple two incomes €67,600 €67,600One parent family €37,800 €37,800Home CareHome carer credit €810 €1,000Home carer income threshold €5,080 €7,200Earned income credit €NIL €550Universal Social Charge USC2015 2016First €12,012 1.5% First €12,012 1%Next €5,564 3.5% Next €6,656 3%Next €52,468 7% Next €51,376 5.5%Balance over €70,044 8% Balance over €70,044 8%Relevant income > €100,000 11% Relevant income > 11% €100,000PensionsLevy 2014 - 2015 0.15% abolished with effect from 31.12.2015

CAT €280,000