So how will the budget changes affect the PAYE worker in 2013?
No surprise in the fact that the Minister for Finance Michael Noonan delivered a tough budget on Wednesday 5th December, but what are the main changes that will impact the PAYE worker for 2013? We have outlined them below:
Top ten budget changes to affect the PAYE worker
- INCOME TAX – There were no changes to the Income Tax rates, no reduction in income tax credits and no adjustments to the tax bands.
- UNIVERSAL SOCIAL CHARGE – The only change to USC is for pensioners. The reduced rate of USC for those over 70 years of age with an income in excess of €60,000 will be discontinued from 1 January 2013 and the standard rates of USC will apply.
- PRSI – the € 127 weekly PRSI allowance has been abolished.
- PENSION CHANGES – From 1 January 2014 tax relief on pension contributions will be allowable where the pension schemes will deliver income up to €60,000 per annum. An individual will now be allowed a once-off option to withdraw up to 30% of the value of additional voluntary contributions (AVCs) pre-retirement. Withdrawals will be liable to tax at the individual’s marginal rate. This option will be available for 3 years from the passing of the Finance Bill 2013.
- TERMINATION PAYMENTS – Top Slicing Relief will no longer be available from 1 January 2013 on ex-gratia lump sums in respect of termination and severance payments where the non-statutory payment is €200,000 or over.
- BIK AND PREFERENTIAL LOANS – From 1 January 2013 the specified interest rate used in calculating the taxable benefit for preferential loans will increase from 12.5% to 13.5%.
- MATERNITY BENEFIT – Maternity benefit will be taxable for all claimants with effect from 1 July 2013. This benefit is not liable to USC.
- OTHER INCOMES – With effect from 1st January 2014 PAYE employees will be subject to PRSI on their unearned income including rental, investment, dividends and bank deposit interest.
- MORTGAGE INTEREST RELIEF – Enhanced mortgage interest relief introduced in last year’s budget will end on 31 December 2012. Thereafter anyone who purchases a new residential property will no longer qualify for mortgage interest relief.
- HOME LOANS – The specified rate used to calculate the taxable benefit from home loans will decrease from 5% to 4%.
(Director) BBS (Hons), MBPICS – Shannon Office
Joe Robbins is co-founder of CareerWise Recruitment. A graduate of the University of Limerick (Degree in Business Studies, 1985), Joe worked in the UK for five years where he specialised in materials management, production management and plant management for a number of companies.
He returned to Ireland in 1992 to become Operations Manager for a Cork-based start-up, FMC Automotive Division which was subsequently taken over by Snap-on Equipment. Joe managed the business re-location of this company to Shannon in 1997 before setting up CareerWise Recruitment in 1999.
He is a committee member of the Chartered Institute of Personnel and Development (CIPD) Mid-West region, and a former Director and Vice President of the Shannon Chamber of Commerce. Joe is former Chairperson of the Sixmilebridge Camogie Club and current Chairperson of the Clare County Camogie Board.