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Budget 2016 – Main Points

Brenda Nicholson Budget 2016

Brenda Nicholson (Finance Manager)

On a positive note the Budget 2016 tax changes will mean gains for taxpayers ranging typically from €500 a year to €1,000, with some running close to €1,500 a year.

Families generally do well, due to the increase in child benefit and some tweaks to income tax.

The self employed have also benefitted with the introduction of an Earned Income Tax Credit to the value of €550 for those with earned income & no access to the PAYE credit, e.g. business owner/managers not eligible for the PAYE tax credit.

However, the Budget gains vary significantly, and many of those earning about €25,000 are not favoured by the way the Budget is structured.

Below are the headline changes in yesterday’s budget.

Families with young children

  • Free GP care extended to under 12s (subject to agreement with GPs)
  • Additional free pre-school childcare
  •  €5 increase in child benefit.
  • In addition, two-week’ paternity leave for fathers will become a statutory requirement as of September 2016.

 PAYE Worker

  • Changes to the USC, Rates are now 1% (From 1.5%), 3 % (from 3.5%) and 5.5% (from 7%) are the main change delivering increases in take-home pay.
  • The entry level  has been raised to €13,000.
  • The minimum wage will increase by 50 cent, from €8.65 per hour to €9.15.
  • PRSI – A PRSI credit to be introduced for those earning between €350 and €424.

* Minister Noonan has promised that USC is to be “progressively” abolished over the coming years, however no dates given.

Housing

  • The National Asset Management Agency will provide an additional 20,000 housing units over the next five years, equivalent to 80 new units each week.
  • Local Property Tax the amount homeowners pay in local property taxes is to be frozen until 2019.
  • There will be an extra €17 million diverted towards providing emergency accommodation, bringing the total to €70 million, and €500 million will be made available over the next year to build and acquire new homes.

New jobs in Education & Garda Siochana

  • Extra funding for the Department of Education will create 2,260 new teaching posts in the next year, which includes 600 additional resource teaching positions. This will bring the pupil-teacher ratio in schools down from the current level of 28:1 to 27:1.
  • Some 600 additional posts will be created within An Garda Síochána as part of a €2.2 billion allocation to the Department of Justice.

Social welfare

  • The Christmas bonus will be reinstated to 75 per cent of the pre-abolition rate for all social welfare recipients.
  • There will an increase of €190 in the Home Carer Tax Credit to bring it up to €1.000. Increase in home carer’s income threshold from €5,080 to €7,200.
  • There will be a €3 increase in the old age pension along with an increase of €2.50 in the fuel allowance, bringing the payment up to €22.50 per week.
  • Pension levy is being abolished

Capital Acquisitions TaxBudget 2016 Summary

  • The Capital Acquisitions Tax threshold has also been increased to €280,000 from the previous level of €225,000.
  • The Capital Gains Tax is to drop from 33 per cent to 20 per cent for entrepreneurs selling their businesses, up to a limit of €1 million,
  • 3 Year relief for Start-Up Companies This is being extended for new start-ups commencing to trade over the next 3 years.
  • Film Tax Credit Increase in the cap on eligible expenditure to €70M.
  • Research & Development there are plans for a Knowledge Development Box incentive for conducting research & development in Ireland. Income that qualifies for the KDC will be subject to a reduced rate of corporation tax of 6.25%.
  • Micro Breweries – Qualify from a special tax relief, to further assist their development, the relief will now be available upfront thus reducing the cash-flow burden of the current rebate scheme.

 Stamp Duty

  • Abolish current €2.50/€5 p.a. charge on ATM cards & combined (ATM & Debit) cards from 1 st January 2016 & introduce a new 12c ATM withdrawal fee capped at €2.50/€5 p.a.

 Motor Tax

  • Commercial motor tax rates are to be simplified, the 20 existing rates to be replaced by 5 new rates ranging from €92 to €900. The maximum rate had been €5,195.

 Excise Duty

  • Cigarettes to go up by 50cents per pack.  No increase on alcohol or fuel.

 

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Budget 2016 – Main Points

Brenda Nicholson Budget 2016

Brenda Nicholson (Finance Manager)

On a positive note the Budget 2016 tax changes will mean gains for taxpayers ranging typically from €500 a year to €1,000, with some running close to €1,500 a year.

Families generally do well, due to the increase in child benefit and some tweaks to income tax.

The self employed have also benefitted with the introduction of an Earned Income Tax Credit to the value of €550 for those with earned income & no access to the PAYE credit, e.g. business owner/managers not eligible for the PAYE tax credit.

However, the Budget gains vary significantly, and many of those earning about €25,000 are not favoured by the way the Budget is structured.

Below are the headline changes in yesterday’s budget.

Families with young children

  • Free GP care extended to under 12s (subject to agreement with GPs)
  • Additional free pre-school childcare
  •  €5 increase in child benefit.
  • In addition, two-week’ paternity leave for fathers will become a statutory requirement as of September 2016.

 PAYE Worker

  • Changes to the USC, Rates are now 1% (From 1.5%), 3 % (from 3.5%) and 5.5% (from 7%) are the main change delivering increases in take-home pay.
  • The entry level  has been raised to €13,000.
  • The minimum wage will increase by 50 cent, from €8.65 per hour to €9.15.
  • PRSI – A PRSI credit to be introduced for those earning between €350 and €424.

* Minister Noonan has promised that USC is to be “progressively” abolished over the coming years, however no dates given.

Housing

  • The National Asset Management Agency will provide an additional 20,000 housing units over the next five years, equivalent to 80 new units each week.
  • Local Property Tax the amount homeowners pay in local property taxes is to be frozen until 2019.
  • There will be an extra €17 million diverted towards providing emergency accommodation, bringing the total to €70 million, and €500 million will be made available over the next year to build and acquire new homes.

New jobs in Education & Garda Siochana

  • Extra funding for the Department of Education will create 2,260 new teaching posts in the next year, which includes 600 additional resource teaching positions. This will bring the pupil-teacher ratio in schools down from the current level of 28:1 to 27:1.
  • Some 600 additional posts will be created within An Garda Síochána as part of a €2.2 billion allocation to the Department of Justice.

Social welfare

  • The Christmas bonus will be reinstated to 75 per cent of the pre-abolition rate for all social welfare recipients.
  • There will an increase of €190 in the Home Carer Tax Credit to bring it up to €1.000. Increase in home carer’s income threshold from €5,080 to €7,200.
  • There will be a €3 increase in the old age pension along with an increase of €2.50 in the fuel allowance, bringing the payment up to €22.50 per week.
  • Pension levy is being abolished

Capital Acquisitions TaxBudget 2016 Summary

  • The Capital Acquisitions Tax threshold has also been increased to €280,000 from the previous level of €225,000.
  • The Capital Gains Tax is to drop from 33 per cent to 20 per cent for entrepreneurs selling their businesses, up to a limit of €1 million,
  • 3 Year relief for Start-Up Companies This is being extended for new start-ups commencing to trade over the next 3 years.
  • Film Tax Credit Increase in the cap on eligible expenditure to €70M.
  • Research & Development there are plans for a Knowledge Development Box incentive for conducting research & development in Ireland. Income that qualifies for the KDC will be subject to a reduced rate of corporation tax of 6.25%.
  • Micro Breweries – Qualify from a special tax relief, to further assist their development, the relief will now be available upfront thus reducing the cash-flow burden of the current rebate scheme.

 Stamp Duty

  • Abolish current €2.50/€5 p.a. charge on ATM cards & combined (ATM & Debit) cards from 1 st January 2016 & introduce a new 12c ATM withdrawal fee capped at €2.50/€5 p.a.

 Motor Tax

  • Commercial motor tax rates are to be simplified, the 20 existing rates to be replaced by 5 new rates ranging from €92 to €900. The maximum rate had been €5,195.

 Excise Duty

  • Cigarettes to go up by 50cents per pack.  No increase on alcohol or fuel.

 

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