The measures introduced in Budget 2015 today are broadly in line with recent press reports. The good news is overall there are no increases in tax rates. The following are the key tax changes.

Income Tax

  • The top rate of income tax has been reduced to 40%.  The standard rate band has been increased to €33,800 (€1,000 increase).
  • However, the reduction of 1% has been offset by an increase in the USC rate for employees on earning over €70,000 and the self-employed on income over €100,000.
  • A new income tax credit for water charges paid at the standard rate up to a maximum of €500 per household (credit is worth a maximum of €100).
  • The Home Renovation Incentive has been extended to rental properties which are subject to income tax for works done from midnight tonight until 31 December 2015 (does not apply to Irish companies).


USC

  • The USC thresholds and rates have been amended. The new thresholds and rates are as follows:

 

Income Rate
           <€12,012 1.5%
Next        €5,564 3.5%
Next      €52,468 7%
Next      €29,956 8%

 

  • PAYE income in excess of €100,000 @ 8%
  • Self-employed income in excess of €100,000 @ 11%


Corporation Tax

  • No change to 12.5% rate.
  • The “double Irish” structure is to be phased out for existing companies by the end 2020 and is abolished for new companies from 1 January 2015.
  • Changes were announced to the R+D tax credit base year which is to be phased out from 1 January 2015.
  • A new Knowledge Development Box (Similar to the UK Patent Box) is to be introduced in the 2016 Finance Bill.
  • The exemption for Corporation tax for start- up companies is to be extended for a further 3 years.
  • The EIIS (BES) scheme is to be broadened to include nursing homes and International traded financial services.  The holding period for the shares has been extended to 4 years. The maximum that can be raised has been increased to €5m annually subject to a lifetime limit of €15 million.


Pensions

  • The Pension Levy of 0.6% is been abolished from 1 January 2015 and the remaining levy of .15% will be abolished at the end of 2015.


Capital Taxes

  • No change to the rate of CAT, CGT and DIRT.
  • The Windfall tax on lands rezoned is abolished with effect from 1 January 2015. Normal CGT rate will apply or income tax / corporation tax rates where trading in land.
  • The capital gains tax relief on properties held for 7 years has not been extended beyond 31 December 2014.
  • First time buyer will be exempt from DIRT on deposit interest in respect of savings to purchase their first house (capped at 20% of the purchase price).


VAT

  • No change to standard 23% rate.
  • 9% tourism rate to continue for 2015 but will be monitored.


Stamp Duty

  • There was no change to stamp duty.


PRSI  

  • No change to PRSI.


Farming

  • There is a major overhaul of farming tax to encourage farmers to actively farm their lands or lease to other farmers.
  • This includes increasing the income exemption on leases and removing the current 40 year age threshold.
  • Allowing the relief where the lessee is a company.
  • Allowing retirement relief to apply where land has been leased for up to 25 years.
  • Curtailing Agricultural relief where the land has not been actively farmed.
  • Extending stamp duty relief on transfers between close relatives.
  • Increasing the range of income averaging from 3 to 5 years.
  • Increasing the farmers flat rate addition from 5% to 5.2%.


Motor Taxes

  •  No changes to rates of motor tax and VRT.


Excise Duty

  • No increase on diesel and petrol.
  • A 40 cent increase on a 20 pack of cigarettes.

 

Please note that this is a general summary and no action should be taken without taking detailed advice.