Personal Taxes

Budget 2026. Income Tax. Personal Taxation. Analysis of Income Tax Reliefs and Excemptions.

Today, Tuesday, 7^th October 2025, the Minister for Finance, Paschal Donohoe and the Minister for Public Expenditure, Infrastructure, Public Service Reform & Digitalisation, Jack Chambers presented Budget 2026.  In this series of articles, we have outlined some of the tax changes that we consider most relevant under the following headings (a) Personal Tax, (b) Business Taxes, (c) VAT, (d) Housing/Property, (e) Agri-taxation, (f) Investments and (g) Global Mobility and Employment.

PERSONAL TAX

No increases to the income tax rate bands and tax credits

• Unlike in previous recent Budgets, there were no increases to the income tax rate bands and tax credits announced in Budget 2026.  However, there will be a reduction in the tax rate, from 41% to 38%, in relation to certain investments including Exchange Traded Funds (ETFs), certain Irish domiciled funds, certain life assurance policies, equivalent offshore funds and certain foreign life assurance policies

Universal Social Charge

• The reduced Universal Social Charge for qualifying medical card holders will be extended until 31^st December 2027.  This applies to medical card holders earning less than €60,000 per year.  This ensures that such individuals continue to pay a reduced USC rate of 0.5% on the first €12,012 of their income with 2% on the balance.

National Minimum Wage

• From 1^st January 2026, the National Minimum Wage will increase to €14.15.  The 2% USC rate band will increase from €27,382 to €28,700.  This means that the salary of a full-time employee on the minimum wage will remain outside the 3% rate of USC.  Incomes of less than €13,000 continue to remain exempt from USC.

Rent Tax Credit (RTC)

• The Rent Tax Credit (RTC), which was due to expire on 31^st December 2025, has been extended for three more years to 31^st December 2028.  The maximum value of the RTC will remain at €1,000 for single individuals and €2,000 for jointly assessed couples or civil partners.

Mortgage Interest Relief

• Mortgage Interest Relief has been extended to 31^st December 2026. It will remain at current levels for 2025, however, it will reduce by 50% for 2026.  As you’re aware, this tax credit can be claimed for taxpayers who have made increased mortgage interest payments in relation to a qualifying loan for a principal private residence in 2025 when compared to 2022. For 2025 the relief is capped €6,250 per property.  This equates to a maximum tax credit of €1,250.  For 2026, the maximum tax credit of €625 will be available, based on the increase in interest paid in 2026 as compared to the mortgage interest paid in 2022.  There is no change to the qualifying criteria and the relief remains available to homeowners with an outstanding mortgage balance of between €80,000 and €500,000, as of 31^st December 2022.

Auto Enrolment (AE) Retirement Savings Scheme

• The Finance Bill 2025 will include additional amendments to the tax treatment for the Auto Enrolment (AE) Retirement Savings Scheme which will address the tax treatment of AE retirement savings on the participant’s death as well as exempt AE provider schemes from Investment Undertaking Tax and exempt employer AE contributions from USC.

Micro-generation

• For, households that sell electricity back to the grid from micro-generation, the Income Tax relief that exempts income of up to €400 per annum, is extended, for three years, up to 31^st December 2028.

Benefit-in-Kind Relief

• As you may remember, in Finance Act 2023, a temporary universal reduction to the Original Market Value of some vehicles for the purposes of calculating BIK was introduced.  This temporary universal relief of €10,000 applied to the Original Market Value of vehicles in Category A to D.  Budget 2026 extended this Benefit-in-Kind Relief by one year i.e. this relief will remain at €10,000 for 2026.  It will then reduce to €5,000 in 2027 and €2,500 in 2028.  It will be abolished from 2029.

• From 1^st January 2026, there will be a new vehicle category (A1) for employer provided vehicles with zero-emissions, for Benefit in Kind purposes.   It will apply with BIK rates of between 6% to 15% from 2026, depending on business mileage.  Where an employee undertakes high business mileage, the lower threshold of the upper mileage band will be permanently reduced from 52,001km to 48,001km.

Uilleann Pipes and Irish Harps

• Finally, for those involved in the manufacture of Uilleann Pipes and Irish Harps, the exemption from Income Tax of a maximum profit of €20,000 generated from the manufacture, maintenance and repair of uilleann pipes and early Irish harps is being extended for three years to 31^st December 2028.

For further information, please click: https://www.gov.ie/en/department-of-public-expenditure-infrastructure-public-service-reform-and-digitalisation/publications/your-guide-to-budget-2026/

Accounts Advice Centre provides a tax advisory and compliance service tailored to the needs of our diverse client base, their families as well as collaborating with their advisors.  With over thirty years’ experience in domestic and international tax, we provide an efficient service to ensure that you meet all deadlines and are not exposed to an unnecessary tax interest and penalties.  To discuss what we can do for you, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

PAYE Exclusion Orders. Employers Tax. Global Mobility. Payroll Taxes

Today, 11th August 2025, Revenue have amended their Tax and Duty Manual Part 42-04-01 – PAYE Exclusion Orders.

This guidance material provides details of the new PAYE Exclusion Order application portal, which may be accessed through MyAccount or ROS.  This new application system will allow for faster processing times.

If you require assistance with payroll and in particular with PAYE Exclusion Orders, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

US Taxes, USA Business Tax provisions, One Big Beautiful Bill

On 4^th July 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law.  It introduced several updates to federal informational reporting requirements.

1099-MISC and 1099-NEC

• It significantly raises the reporting threshold for payments made on Forms 1099-NEC and 1099-MISC.

• From 1^st January 2026, businesses will only be required to file a 1099 if their non-employee or miscellaneous income exceeds the threshold amount of $2,000.

• For those individuals working on a freelance or independent contractor/consultancy basis, it’s important to remember that you must report earnings, on your Form 1099-NEC, which have not been reported on form W-2.

• For consultants/contractors/freelancers is also important to keep in mind that while your clients won’t be sending you a 1099-NEC in relation to payments of under $2,000, you’re still responsible for reporting that income in your tax return.  For the client, however, it means that if they pay a contractor/consultant/freelancer less than $2,000 in a calendar year, the general rule is that they won’t be required to issue a Form 1099-NEC.

100% Bonus Depreciation

The One Big Beautiful Bill permanently restores the 100% bonus depreciation for qualifying business property placed in service, on/after 19^th January 2025.  Please be aware, however, if your business had a contract to acquire property prior to 20^th January 2025, the property will not qualify for the 100% bonus, even in situations where the actual acquisition happens after that date.

What is “Bonus Depreciation”?

It’s an additional first-year depreciation to incentivise businesses to invest in qualifying property.  

What does “placed in service” mean?

It means that the asset must be ready and available for its intended business use. For clarity, if you have purchased or financed equipment but it’s not ready and available for the intended business use, then it will not trigger the allowable deduction.

How is “qualifying property” defined?

Qualifying property includes property used in a trade or business or for the production of income and meets the following criteria:

• It must be tangible.

• It must be depreciable under the Modified Accelerated Cost Recovery System (MACRS)

• It must have a recovery period of 20 years or less.

• It must be placed in service after 19^th January 2025

• It can be purchased new or second hand.

• It includes computer systems, equipment, furniture, machinery, certain vehicles, etc.

• The phase-down percentages still apply to some assets, including property that was acquired on/before 19^th January 2025, even if it wasn’t placed in service until after that date.

• The Bonus Depreciation is not limited by taxable income.  Therefore, it can create or increase a net operating loss.

Enhanced Section 179 Deduction Limits

As you’re already aware, under Section 179 businesses can deduct the full purchase price of “qualifying property” during the tax year as opposed to capitalizing the expenses and depreciating them over several years. The new legislation introduced on 4^th July 2025, gives a major boost to the Section 179 deduction.  Under the previous limits for the 2025 tax year, businesses could only expense up to $1.25 million in qualifying property using Section 179.  Beginning in 2025 tax year, the increased deduction limit for certain depreciable business assets has doubled to $2.5 million.

With regard to the Higher Phase-Out Threshold, the deduction starts to phase out for total qualifying property costs over $4 million.  The previous limit was $3.13 million.

In summary, businesses can now deduct up to $2.5 million until their equipment purchases exceed $4 million.  Once purchases reach $6.5 million, the deduction phases out completely.

The OBBBA enhances section 179 expensing for tax years starting after 31^st December 2024.  This means that the changes will apply retroactively to qualifying property placed in service on or after 1^st January 2025.

What’s the difference between Bonus Depreciation and Section 179?

While you may think the 100% bonus depreciation is similar to a Section 179 deduction, you must keep in mind that Section 179 only allows eligible purchases up to $2.5 million to be fully expensed (with a phase-out once purchases exceed $4 million) while there is no dollar limit on the Bonus Depreciation.

For further information, please click: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

If you are seeking a comprehensive and professional U.S. tax advisory of compliance service from U.S. Tax Specialists, including U.S. tax filing, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Income Tax Return. Filing Form 11. Self Assessment Personal Tax Returns. 31st October 2025 Filing Deadline

You will need to file an Income or Personal Tax Return on or before 31^st October 2025 if you are one of the following:

1. A self employed individual, someone working on a freelance/consultancy basis or a contractor.

2. A proprietary director i.e. a Director of a limited company who can control in excess of 15% of the ordinary share capital of the company, either directly or indirectly.

3. A Holder of an investment fund i.e. where an individual acquires a material interest in certain investment funds, that person may be deemed to be a chargeable person for that period. This means that they must file the relevant tax return and include details of the fund in that return.

4. If you receive income and gains in relation to certain investment funds.

5. If you have an eight year anniversary in relation to your investment fund.

6. A landlord with long term commercial or residential rentals.

7. An individual with short-term lettings including the provision of self-catering accommodation, Airbnb income, etc.

8. If you have deposit interest, dividend income, shares in lieu of dividends, foreign rental income, etc.

9. If you carry out professional services on which PSWT is charged.

10. If you have disposed of assets.

11. If you are a non-domiciled person who has remitted taxable foreign income or gains to Ireland.

12. If you have received, earned or generated income from any source, other than your Irish employment.

The tax return deadline is Wednesday 19th November 2025 for those that file their Tax Return and pay their associated Tax liability through ROS.

If you do not use ROS, then the tax deadline is 31^st October 2025.

In summary, you are required to:

• File your 2024 self-assessment Income Tax Return
• Pay the balance of your 2024 Income Tax liability and
• Pay your 2025 preliminary tax

On or before either (a) 31^st October 2025 or (b) 19^th November 2025 if you file through ROS

For further information, please click the link:  Revenue eBrief No. 088/25

For assistance in preparing your Income Tax Return by the 31st October 2025 deadline, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Income Tax Returns, Corporation Tax Returns, Level 1 Compliance Intervention, Revenue Non-Filer

As part of the Irish Revenue Commissioners’ Annual Non-Filer Programme, Notices will be sent to taxpayers who are currently registered for Income Tax or Corporation Tax but who have not filed Income Tax or Corporation Tax Returns for tax years up to and including 2023.  Tax Agents will receive a ROS Inbox Notification on 31^st January 2025 providing them with a list of clients who have been issued with a Reminder to File Notice.  Please be aware that this notice is what is deemed to be a Level 1 Compliance Intervention.

If you have received a Notice but you are no longer considered to be a “Chargeable Person”, the advice is to cancel your Income Tax or Corporation Tax registration as soon as possible.

For full information on who is deemed to be a “Chargeable Person” please click:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-41a/41a-01-01.pdf

According to Revenue’s “Reminder to file – Income Tax Return” Notice:

“This notice is a Level 1 Compliance Intervention in accordance with Revenue’s Compliance Intervention Framework. The non-filing of a required tax return by chargeable persons can result in a penalty charge and a more detailed review by Revenue. It is also an offence for which a person can be prosecuted. Further information on your rights and obligations under Revenue’s Compliance Intervention Framework can be found on www.revenue.ie.

In addition, if the tax return(s) is not filed it may lead to the loss or refusal of tax clearance.”

According to Revenue’s “Reminder to file – Corporation Tax Return” Notice:

This notice is a Level 1 Compliance Intervention in accordance with Revenue’s Compliance Intervention Framework. The non-filing of a required tax return can result in a more detailed review by Revenue. It is also an offence for which a person can be prosecuted. It can also result in the restriction of certain reliefs, and the loss or refusal of tax clearance. Further information on your rights and obligations under Revenue’s Compliance Intervention Framework can be found on www.revenue.ie.

For further information, please click:

https://www.revenue.ie/en/tax-professionals/tdm-wm/compliance/returnscompliance/it-and-ct-returnscompliance/income-tax-and-corporation-tax-non-filer-programme.pdf

If you receive a Level 1 Notification and you are required to file Tax Returns for outstanding years, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Spanish Tax Advice. Personal and Income Tax. Spanish Tax Compliance. International and Cross Border Tax Services for residents, non-residents, employees, individuals, etc.

The Spanish system has two types of Personal Income Tax: (i) PIT for Spanish resident individuals and (ii) NRIT for individuals who are not resident in Spain.  Spanish resident individuals are generally liable to PIT on their worldwide income wherever it arises  Non-resident individuals are chargeable to NRIT on their Spanish source income only.

RESIDENCE

An individual is liable to Spanish tax based on his or her residence.

An individual is deemed to be Spanish resident if he or she spends more than 183 days in the tax year (i.e. the calendar year) in Spain or if the individual’s main centre of business or professional activities or economic interests is located in Spain.

It is important to bear in mind that temporary absences from Spain are ignored when calculating the number of days for the purposes of establishing residency except where tax residence in another jurisdiction can be proven.

Where the individual does not satisfy the above 183 day rule, he or she will not be considered Spanish tax resident for the calendar year in question and as a result, Spanish source income including capital gains will be liable to NRIT.

In situations where an individual may be deemed to be tax resident in two jurisdictions in the same tax year, it is essential that the individual consult the relevant Double Taxation Agreement to establish what relief or exemption from Spanish Tax may be available.

Generally speaking, the credit for Spanish tax withheld on foreign source income and capital gains tax will be the lower of:

a)      Actual foreign tax withheld on the foreign source income which is equivalent to the Spanish PIT or NRIT

b)      Average effective PIT rate applied to the foreign source income taxed in the other jurisdiction.

 COMPLIANCE

Individuals must file a Tax Return and pay the relevant taxes within six months of the end of the calendar year i.e. 30^th June following the year end, being 31^st December.

Married couples may elect to file their tax returns either jointly or separately.

There are strict filing deadlines for non-resident individuals.  Please be aware that there are no deadline extensions available.

There are a number of penalties to consider including:

a)      Penalties for the underpayment of taxes range from 50% to 150% of the unpaid tax liability.

b)      Penalties for the late payment of taxes range from 5% to 20% where such payments are made on a voluntary basis and not as part of an audit or investigation.

c)      Statutory Interest on late payments will also apply.

WORK PERMITS / VISAS

Individuals entering Spain from outside the E.U., as either employees or self employed individuals, must obtain a work and residence permit prior to commencing their self employed or employment activity in Spain.

The Work and Residence permits are issued for a twelve month period.

It is possible to renew this permit two months in advance of its expiry date and always advisable to do so before the permit has expired.

For individuals entering Spain from E.U. member states, there is no requirement to possess a Work and Residence Permit.

For E.U., EEA or Swiss individuals who wish to remain in Spain beyond a three month period, they are required to register with the Spanish Authorities and obtain the Central Registry for Foreigners Certificate.

TAXES

For general taxable income received by Spanish resident individuals, progressive tax rates ranging from 19% to 48% are applied. These rates depend on the Autonomous Community in which the individual is deemed to be tax resident.  As a result, tax liabilities can vary from one autonomous region to another.

Dividends, Interest, Capital Gains and Savings Interest are taxed at the following rates:

• 19% for the first € 6,000 of taxable income.
• 21% for the following €6,000 up to €50,000 of taxable income.
• 23% for income exceeding €50,000.

Non resident individuals are taxed at a flat rate of 24% on Spanish source income.  This rate is reduced to 19% for individuals who are tax resident in an EU member state or an EEA country with which there is an effective exchange of tax information treaty in place.

Income Tax is levied on the gross Spanish source income but there are no deductions or tax credits available for offset with the exception of certain expenses for E.U. tax resident individuals.

Investment income (i.e. Interest and dividends) arising for non resident individuals are liable to 19% tax although this figure may be reduced depending on the Double Taxation Treaties in place.  It is important to bear in mind that Interest for EU residents in tax exempt.

From 2016 onwards Capital gains will be taxed at 19% if arising from the transfer of assets.

Royalty income is liable to tax at 24%

Pensions are taxed at progressive rates ranging from 8% to 40%.

SOCIAL SECURITY

As a general rule, all employees working in Spain must be registered with the Spanish social security administration. The employer is obliged to make employer and employee contributions depending on the category of each employee and social security contributions are paid on salaries/wages.

The general contribution rate for employees is 6.35%.

The general contribution rate for employers is 29.9% in addition to a variable rate for general risk.

These rates depend on the activities engaged in by the companies as well as the employee’s employment and educational category.

Inbound assignees may continue to make social security contributions in their home countries in line with International Social Security Agreements and E.U. regulations and as a result claim an exemption from paying social security contributions in Spain.

To qualify for the exemption E.U. nationals must obtain the necessary official certification from the relevant Social Security Authorities in their country of origin.

There are three situations in which an exemption from Social Security in Spain may be claimed:

1. In situations where a social security agreement between Spain and the individual’s country of origin exists which provides for such an exemption.

2. Where the individual continues to be employed by an employer resident in the country of origin and as a result he/she continues to contribute to the social security system of his/her home country.

3. Where the individual remains in Spain for between one and five years depending on the conditions of the social security agreement in place between Spain and that individual’s country of origin.

For further information, please click: https://sede.agenciatributaria.gob.es/Sede/en_gb/irpf.html

If you have Spanish Rental Properties or you wish to employ Spanish resident individuals to work remotely, please contact us for a range of cross border personal and business tax services at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Budget Ireland, Personal Tax, Business Tax, Capital Gains Tax (CGT), Corporation Tax, Cross Border Taxes

Today the Minister for Finance Michael Noonan T.D. delivered Budget 2017.  Until the Brexit negotiations begin, it is impossible to know the impact for Ireland.  However today’s Budget gave Minister Noonan the opportunity to affirm the stability of Ireland’s tax policies, while at the same time introducing measures to promote economic growth.  Unless otherwise stated, the following tax changes will take effect from 1^st January 2017.  We will be examining them under Personal Tax, Business Taxes, Capital Acquisitions Tax, Property Taxes, etc.

PERSONAL TAX

1)   USC Reductions

There will be a half per cent reduction to the first three USC rates i.e. 1%, 3% and 5.5% to 0.5%, 2.5% and 5% respectively.  The aim is to ease the tax burden on low and middle income earners earning up to €70,044 per year.

There will also be an increase in the entry point to the 5% band from €18,668 to €18,772.

There has been no change to the 8% or 11% USC rates.

While the reduction in USC rates is a welcome reduction in the overall tax burden, the top marginal rate for employed individuals with earnings over €70,044 is still 52% and 55% for self-employed individuals with income in excess of €100,000.

2)   Home Carer Credit

There is an increase in the Home Carer Tax Credit by €100, to €1,100 for 2017.

An individual who cares for one or more dependent persons may claim the Home Carer Tax Credit.  These include children, an older person, an incapacitated individual, etc.

Who can claim it?

A jointly-assessed couple in a marriage/civil partnership where one spouse/civil partner cares for one or more dependent individuals.

3)   Earned Income Tax Credit

The Earned Income Credit has increased from €550 to €950.

The tax credit is expected to increase to €1,650 in 2018.  This will see self-employed individuals being on a par with employees, who are currently entitled to a PAYE tax credit of €1,650.

Budget 2016 introduced an Earned Income Tax Credit of €550 for self-employed individuals and includes proprietary directors, with earned income who were not otherwise entitled to the PAYE Tax Credit.

 4)   Deposit Interest Retention Tax (“DIRT”)

The rate of DIRT has been reduced from 41% to 39%.

In his Budget speech, Minister Noonan also committed to reducing the DIRT rate by a further 2% in the next three years until it reaches 33%.

 5)   Fisherman’s Income Tax Credit

Fishermen can claim a new income tax credit of up to €1,270.  This is provided they spend at least 80 days in the tax year, fishing for wild fish or shellfish.

Capital Acquisitions Tax thresholds

The 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.

Group B threshold, which applies primarily to gifts and inheritances to parents, brothers, sisters, nieces, nephews, grandchildren, etc., is being increased from €30,150 to €32,500.

The Group C threshold, which applies to all relationships other than Group A or B, is being increased from €15,075 to €16,250.

PROPERTY

1.    Help to Buy Scheme

Minister Noonan announced the new “Help to Buy” scheme for First Time Buyers of newly-built houses today.  This new tax incentive is aimed at assisting first time buyers in meeting the acquisition deposit limits set by the Central Bank.  Under this scheme, first-time buyers will receive a rebate of income tax of the previous four years.  The rebate will be up to 5% of the value of a newly constructed home, up to a maximum value of €400,000.

A full rebate (which will be calculated on a maximum of €400,000) will apply to houses valued between €400,000 and €600,000.  In other words, where the new house is valued between €400,000 and €600,000, the rebate will still apply but it will be capped at €20,000.

A rebate cannot be claimed on house purchases in excess of €600,000.

The scheme will be back-dated to cover new houses acquired between 19^th July 2016 and December 2019.

A number of conditions must be met as follows:

The property must be a new build or a self-build.  It must have either been purchased or built as the First Time Buyer’s main or primary residence.

Second-hand properties will not qualify for this relief.

The First Time Buyer must take out a mortgage of at least 80% of the purchase price.

 2.    Interest on rental properties

For landlords of residential property, 100% relief for mortgage interest incurred on the acquisition or development of residential rental properties will be restored on a phased basis over the next five years.

The Relief will increase by 5% per annum, beginning with 80% interest relief in 2017. This change will apply to both new and existing mortgages.

Under this new measure, the relief will be increased by 5% every year over the next five years.  This will ultimately bring the relief in line with that currently available to landlords of commercial property.

3.    Rent-a-Room relief

The annual tax free income limit for Rent-a-Room Relief is being increased by €2,000 from €12,000 to €14,000 per annum for 2017 and subsequent years.

4.    Home Renovation Incentive

The Home Renovation Incentive which offers a tax incentive of up to approximately €4,000 for homeowners wishing to renovate a property has been extended for another two years until the end of 2018.

It was originally introduced in Finance Act 2013 and was due to expire at the end of 2016 but Minister Noonan announced today that this will now be extended to the end of 2018. This is seen as of great benefit to the Irish construction industry.

The rate of credit and the expenditure thresholds remain unchanged.

 5.    Living City Initiative

This Initiative provides tax relief on the refurbishment of properties in designated areas in Ireland’s six cities.

The conditions of the Living City Initiative are being amended as follows:

• Landlords can qualify for the relief where they let qualifying residential property.
• The current cap on the maximum floor space of a residential property has being removed.

BUSINESS TAX

There were a number of welcome changes for business owners in today’s budget:

I.          Revised Entrepreneur Relief

Minister Noonan announced a reduction in the preferential Capital Gains Tax rate, from 20% to 10%, for those qualifying for Entrepreneur Relief on the disposal of certain business assets, including shares, provided conditions are met.

There was no change to the €1m lifetime limit on chargeable gains.

II.     Foreign Earnings Deduction (“FED”)

This scheme which was due to expire in December 2017 has been extended until the end of 2020.

The minimum number of qualifying days spent abroad for Foreign Earnings Deduction Relief has been reduced from 40 days to 30 days.

The list of qualifying countries has been extended to include two additional countries: Colombia and Pakistan.

III.          Share-based remuneration regime for SMEs

The Minister signalled his intention to develop a SME focused, share based incentive scheme which would be introduced in Budget 2018.

The Minister noted that any new regime would have to satisfy EU State Aid rules.

IV.            Start Your Own Business scheme

The Start Your Own Business relief, which was due to expire on 31^st December 2016, has been extended for a further two years.

The cap on eligible expenditure is being increased from €50 million to €70 million, subject to State Aid approval.

AGRI SECTOR

The following changes were introduced for individuals operating in the Agri sector in light of the challenges posed from Brexit:

• The flat-rate addition for VAT unregistered farmers is being increased from 5.2% to 5.4% from 1^st January 2017.

• The extension of the scheme of accelerated capital allowances for energy efficient equipment to sole traders and non-corporates.  Previously this scheme only applied to companies who could claim relief for expenditure on qualifying plant and equipment.

A new income tax payment option for farmers was introduced whereby farmers can opt to ‘step out’ of income averaging to allow for “unexpectedly poor income” and pay tax based on their actual profits in that year.

The tax deferred must be paid in subsequent years however the period over which the deferred tax must be paid is as yet unclear. Therefore this is a tax deferral scheme and not an actual tax saving.  Farmers can opt to avail of this “step out” in 2016.

A new low cost loan fund is to be established for farmers, with an interest rate of less than 3% per annum. These loans will enable farmers to improve their cashflow management and reduce the cost of their short term borrowings.

The CGT relief for farm restructuring was introduced to facilitate sales, purchases and swaps of land parcels and to ensure more efficient farm structures.  Although the terms of the relief remain unchanged, this relief, which was due to expire on 31^st December 2016, has been extended to 31^st December 2019.

Payments under the raised bog restoration incentive scheme will be exempt from Capital Gains Tax.

INTERNATIONAL TAX

Special Assignee Relief Programme (“SARP”)

The SARP regime, which was due to expire at the end of 2017, has been extended for a further three years until the end of 2020.

This Relief exempts 30% of the income of between €75,000 and €500,000 of employees assigned to work in Ireland for a minimum of twelve month provided certain conditions are satisfied.

No other changes were announced in relation to SARP.

Tackling offshore tax evasion

The Irish Revenue will be carrying out a comprehensive programme of targeted compliance interventions.  They will be focused on offshore tax evasion.

Revenue will be paying attention to information it receives under FATCA, EU and OECD information exchange initiatives etc.

From 1st May 2017, individuals involved in illegal offshore tax planning will not have the opportunity to make a qualifying voluntary disclosure.

Also, legislation will introduce a new strict liability offence, for failure to return details of offshore assets/accounts.

Consultation on modernising PAYE

Minister Noonan announced a Revenue consultation regarding the proposed modernisation of the PAYE system to take effect from 1^st January 2019.

The consultation process will begin today regarding the implementation of a real time PAYE / Tax reporting regime for employers.   He advised that it would be similar to that which currently operates in the UK.

 OTHER MEASURES

• There was no change to the VAT rates.  The 9% VAT rate applying to tourism related activities remains unchanged.

• The Minister intends to extend mortgage interest relief to 2020. The details of the extension will be set out in Budget 2018.

• A tax on sugar-sweetened drinks will be introduced in 2018.  This will coincide with a similar regime in the UK. A public consultation on the form and implementation of the tax was released today by the Department of Finance. It will run until 3^rd January 2017.

• The excise duty on a packet of twenty cigarettes will increase by 50c (VAT inclusive) from midnight tonight.  A corresponding pro-rata increase will also apply to other categories of tobacco products including smoking tobacco, cigars, etc.

• There is no change to the excise duty on alcohol or fuel.

• The qualifying limit on excise duty for Microbreweries was extended. This will reduce the standard rate of tax (alcohol products tax) by 50% on beers produced in Microbreweries where the output is 40,000 hectolitres or less per year.  Previously the limit was 30,000 hectolitres.

• VRT relief on the purchase of electric vehicles is extended by five years.  The VRT relief for hybrid vehicles is to be extended by two years.

• Relief from carbon tax is being introduced to promote the use of “green fuels.”   In other words, solid fuels that include a biomass element.

For further information, please click: https://www.gov.ie/en/department-of-finance/collections/budget-2017/

If you are looking for an experienced, independent, professional and qualified Chartered Tax Advisor to effectively handle your tax affairs and provide you with peace of mind, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information.  However, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Chartered Tax Advisors, qualified Accountants, Payroll Providers, Help with Preparing Tax Returns, Employee/Employer Taxes, Personal Taxes

The Minister for Finance Michael Noonan T.D. presented his 2016 Budget yesterday.   As you can appreciate, Accountants and Chartered Tax Advisors have widely anticipated this Budget.  In it, he outlined a wide range of changes to the Irish tax system with particular emphasis on:

(i) personal taxation,

(ii) initiatives to begin equalising the tax treatment of the self-employed and employees

(iii) as well as steps to support businesses in Ireland.

We will outline the key features of yesterday’s Budget below.

PERSONAL TAX

Universal Social Charge

The Government introduced comprehensive changes to the Universal Social Charge for 2016, aimed at reducing the tax burden on low and middle income earners.

The entry threshold for Universal Social Charge (“USC”) will be increased from €12,012 to €13,000.

Otherwise, rates of USC will be reduced as follows:

• For Income up to €12,012 – Rates reduced from 1.5% to 1%.

• Income from €12,013 to €18,668 – Rates reduced from 3.5% rate to 3%.

• The Income between €18,669 – 70,044 – Rates reduced from 7% to 5.5%

• Income between €70,045 – €100,000 – 8% (no change)

• PAYE Income in excess of €100,000 – 8% (no change)

• Self-employed income in excess of €100,000 – 11% (no change)

The top rate USC exemption will be retained for all medical card holders and individuals aged seventy years and older providing their total income does not exceed €60,000.

 Income Tax

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

 PRSI (Pay Related Social Insurance) 

Budget 2016 introduced a tapered PRSI tax credit for employees up to €624 per annum.

The entry point to the higher rate of employers’ PRSI of 10.75% will be increased to €376 per week.  This will be a welcome introduction by all employers.  The reason for this tapered PRSI credit being introduced, is to ensure low income earners benefit from the increase to the minimum wage, which will take effect in January 2016.

The credit applies to individuals earning between €18,304 and €22,048 per annum.  it will be subject to a maximum of €12 per week.

Earned Income Tax Credit

The government will be introducing an Earned Income Tax Credit of €550 per annum in 2016.  The aim is to equalise the tax treatment of the self employed with employees paid through the PAYE system.

This new tax credit will be available to individuals who are not eligible for the PAYE Tax Credit.  This includes:

(i) those earning self employed trading or professional income (subject to Income Tax under Cases I and II Schedule D)

(ii) individuals in receipt of Case III Schedule D income as well as

(iii) business owners who, up to now, didn’t qualify for a PAYE credit on their salary.

 Pensions

There was no reference made to tax relief on pensions in this Budget.

The “additional” pension levy of 0.15% will expire at the end of 2015.

Please be aware that the original 0.6% pension levy ended in 2014.

 Home Carer’s Tax Credit

The Home Carer’s Tax credit increased by €190 to €1,000 per annum.

1. An income tax credit worth up to €5,000 per annum for five years was introduced for family farming partnerships to facilitate the transfer of family farms to the next generation.

2. There was an extension of general and young farmers’ stock relief for a further three years.

3. Profits or gains from the occupation of woodlands are being removed from the High Earners’ Restriction.

New tax measures aimed at encouraging and supporting entrepreneurs and small business owners:

• The introduction of a Knowledge Development Box to provide for a 6.25% corporation tax rate on profits arising to certain IP assets which are the result of qualifying R&D activity that is carried out in Ireland. The Minister stated today that the KDB would add “a further dimension to our ‘best in class’ competitive corporation tax offering, which includes the 12.5% headline rate; the R&D tax credit; and the intangible asset regime.”

• The Start-up Relief from corporation tax is being extended for new start-ups commencing to trade over the next three years.  This relief applies where the total corporation tax payable for a period does not exceed €40,000 and the amount of relief available is linked to employer’s PRSI.

• The amendments to the Enterprise and Investment Incentive Scheme (EII) announced in Budget 2015 took effect from midnight. They have been pending EU State Aid approval for the past year.  These included an increase in the annual limit companies can raise to €5 million and an increase in the lifetime cap to €15 million. Investments in the extension, management and operation of nursing homes will also qualify for the EII.

• The cap on eligible expenditure for Film Relief is being increased from €50 million to €70 million subject to State Aid approval.

• The entry point to the top rate of employer’s PRSI increases by €20 per week to €376 per month.

• The scheme of capital allowances for the construction of facilities used in the maintenance, repair, and overhaul and dismantling of aircraft is being amended to comply with State Aid rules. The scheme is also being commenced with effect from Budget night.

 CAPITAL TAXES

• A 20% Capital Gains Tax rate will to apply to the disposal in whole or in part of a business up to an overall limit of €1million in chargeable gains.

• Other than the reduced rate of CGT which applies to the disposal of a business, there has been no change to the Capital Gains Tax rate of 33%.

• The Group A threshold for capital acquisition tax will be increased from €225,000 to €280,000 with effect from 14th October 2015. The Group A threshold typically applies to transfers between parents and their children. The current Class B and Class C thresholds remain unchanged and there has been no change to the CAT rate of 33%.

 Local Property Tax (LPT)

The Budget has extended the Local Property Tax revaluation date for the Local Property Tax from 2016 to 2019. This follows recommendations in the “Review of the Local Property Tax” report which has also recommended exemptions for properties significantly affected by pyrite.

NAMA is to deliver 20,000 houses between now and 2020. 90% of these in the Dublin area and 75% of the overall total will be starter homes.

OTHER CHANGES 

1. The Home Renovation Incentive is being extended until 31 December 2016.

2. The existing €5 Stamp Duty on Debit/ATM cards is to be replaced with a 12 cent charge for ATM transactions.  This is subject to a cap of €2.50 or €5 depending on the card type.

3. The reduced 9% rate for the tourism and hospitality sector will be retained.

4. There will be no changes to the reduced VAT rate of 13.5% or the standard VAT rate of 23% in 2016.

FINAL POINT

This is the first time since the Budget in April 2009 that the marginal rate for middle income earners has fallen below the 50% rate.

Capital Gains Tax (CGT) Payments, Disposal of an asset, Investment, Shares, Property, Business Sales.

If you’ve already made or about to make a disposal of a capital asset (e.g. if you have sold certain shares, an investment property, a business, etc.) anytime  between 1^st January and 30^th November 2014 you will be obliged to pay your Capital Gains Tax by 15^th December 2014.  If you decide to wait and dispose of your asset between 1^st December and 31^st December 2014 then your Capital Gains Tax (CGT) payment will be due by 31^st January 2015.

 What happens if you miss these deadlines?

 Interest of 0.0219% per day will be applied to all late payments of Capital Gains Tax.

 What happens if you make a gain in the first part of the year and a loss in the second part?

 Even if you’ve made an overall loss for the year, you will be obliged to pay the Capital Gains Tax arising on any gain you’ve made in the first part of 2014 by the specific payment date being 15^th December 2014.

 You can then submit your claim for a tax refund in January 2015 if a loss arises in the second part of the year.

 Any tax saving tips?

 Plan the timing of your disposals so that capital gains and capital losses arise in the same period thereby enabling you to offset the losses against the gains and effectively reduce any potential tax liability.

 This can be very useful from a cash flow point of view.

 What about filing obligations?

 You must include details of all your capital acquisitions and/or disposals made in 2013 in your 2013 Income Tax Return. 

 This Return must be filed with Revenue by 31^st October 2014.

 There is an extension to 13^th November 2014 if you are using the Revenue Online System (ROS).

 What happens to individuals who are not obliged to file an Income Tax Return?

 You may file a CG1 Form which can be downloaded from the Irish Revenue website www.revenue.ie

 As with the Income Tax Return, the due date for filing is 31^st October 2014.

 Please be aware, there is no facility to file this Form online which means the 13^th November 2014 extension does not apply to the CG1 Form.

Are there any penalties for late filing?

 If you are late filing your Tax Return but manage to do before 31^st December 2014 there will be a 5% surcharge of the amount of tax payable up to a maximum of €12,695.00.

 If you file your Return after 31^st December 2014 a 10% surcharge will be levied up to a maximum amount of €63,485.00.

For further information, please click: https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

For all your Capital Gains Tax advisory or compliance issues, please contact us on queries@accountsadvicecentre.ie.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.