The Minister for Finance, Public Expenditure and Reform Paschal Donohoe T.D. delivered Budget 2019 today, 9th October 2018.
A number of changes aimed at easing the tax burden on low and middle income earners were announced in this year’s budget which include the following:
The income tax standard rate band will increase by €750 for a single earner.
This will raise the entry point to the 40% income tax rate
a) from €34,550 to €35,300 for single earners and
b) from €43,550 to €44,300 for married couples (with one earner).
The marginal rate of tax on income on earnings up to €70,044 per annum is now 48.5%.
The marginal rate of tax for those earning over €70,044 will remain at
a) 52% for employees and
b) 55% for self-employed individuals earning in excess of €100,000.
BENEFIT IN KIND
The 0% rate on BIK on electric cars has been extended to 2021 subject to a €50,000 cap in car value.
UNIVERSAL SOCIAL CHARGE
There will be a reduction in the third band of USC from 4.75% to 4.5%.
There will be an increase of €502 in the existing lower band of USC. This is worth a maximum of €139 per annum. In other words, the band to which the 2% USC rate applies will be increased from €19,372 to €19,874.
There will be a €200 increase in the Earned Income Credit for the Self Employed from €1,150 to €1,350.
There will be a €300 increase in the home carer credit from €1,200 to €1,500. This credit can be claimed by a jointly assessed couple where one spouse/civil partner works in the home to care for children or other dependents, as defined.
The weekly income threshold for the higher rate of employer’s PRSI will be increase from €376 per week (€19,552 per annum) to €386 per week (€20,072 per annum).
There will be a 0.1% increase in employers’ PRSI in 2019 from 10.85% to 10.95% and from 10.95 to 11.05% in 2020.
The National Training Fund Levy will increase from 0.8% to 0.9% from 1st January 2019. The levy forms part of employer’s PRSI for Class A and Class H employments.
There is strong reaffirmation of the Government’s long-term commitment to 12½% corporation tax rate.
Key Employee Engagement Programme (KEEP)
There are Increases to the KEEP scheme. The scheme provides for tax relief for certain share remuneration provided to key employees by unquoted SMEs. The three separate amendments are as follows:
Further clarification on these measures is expected in the forthcoming Finance Bill.
Film relief, which was due to expire at the end of 2020, has been extended until 2024.
Three Year Start Up relief
The Start up Relief from corporation tax has been extended until end of 2021.
Controlled Foreign Company (CFC) rules
Controlled foreign corporation rules are to take effect from 1st Jan 2019.
Capital Gains Tax Exit Tax
CGT Exit Tax at 12½% is to apply from midnight on 9th October 2018 for companies ceasing to be Irish tax resident on any unrealised capital gains arising as well as in situations where the company transfers assets out the State. This new exit tax regime is to ensure compliance with the EU Anti-Tax Avoidance Directive (ATAD) by 1st January 2020.
The Minister has proposed removing the restriction on income averaging for farmers with income from a non-farming source.
The current situation is that where a farmer or his/her spouse
a) carries out another trade or profession or
b) owns more than 25% of the share capital of a trading company
then they cannot avail of the income averaging provisions.
Stamp Duty Relief for Young Trained Farmers
The Young Trained Farmer Stamp Duty Relief which was due to expire at the end of 2018 will be extended for a further three years to 31st December 2021.
The current stock relief measures will be extended for a further 3 years up to and including 31st December 2021.
Interest relief for landlords
Interest relief on loans used to purchase, improve or repair a rental property will be increased from 85% in 2018 to 100% in 2019.
Review of local property tax
Any future changes will be moderate and affordable.
The Minister confirmed that the reduced 9% VAT rate which applies to certain tourism activities will be increased 13½% from 1st January 2019.
The 9% VAT rate which applies to the provision of facilities for taking part in sporting activities is being retained.
The 9% VAT rate which applies to certain printed matter will also be retained, e.g. newspapers
The VAT rate on e-books and electronically supplied newspapers will be reduced from 23% to 9% with effect from 1st January 2019.
The CAT Group A tax free threshold has been increased to €320,000 for gifts and inheritances received on or after 10th October 2018.
Group A generally applies to gifts and inheritances from parents to their children.
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