INCOME TAX & Universal Social Charge (USC)
- Increase in the standard rate band of Income Tax by €1,000 from €32,800 to €33,800 (single) and €1,000 from €41,800 to €42,800 for a married couple with one earner.
- Married standard rate band for two earners will increase to a maximum of €67,600.
- There is a reduction in the higher rate of Income Tax from 41% to 40%
- People earning less than €12,012 per annum will be exempt from USC (up from €10,036).
- Where earnings per annum are above the exemption limit, the rates of USC and relevant earnings threshold have been revised as follows:
o First €12,012 liable to USC at 1.5%
o €12,013 - €17,576 liable to USC at 3.5%
o €17,577 - €70,044 liable to USC at 7%
o In excess €70,045 liable to USC at 8%
- Self-employed income in excess of €100,000 will fall liable to USC at 11%.
- Medical card holders and those over 70 with an aggregate income that does not exceed €60,000 will pay a maximum 3.5%.
Other Income Tax Incentives
The threshold for Artist’s exemption will be increased by €10,000 to €50,000. The exemption is also being extended to non-resident artists.
Where an individual lets a room (or rooms) in their sole or main residence as residential accommodation, the income is exempt from income tax where the aggregate of the gross rents is below €12,000, up from €10,000.
Water Charges Tax Credit
Tax relief at 20% will be provided on water charges, up to a maximum of €500, per annum.
Home Renovation Incentive
Tax relief is currently available at a rate of 13.5% on qualifying expenditure (minimum €5,000, maximum €30,000) on home renovations and improvement work carried out in 2014 & 2015. Relief is now being extended to include rental properties owed by landlords subject to Income Tax.
DIRT Exemption for First Time Buyers
First time buyers will be exempt from DIRT on savings, up to a maximum of 20% of the value of the property, allowing them to retain 100% of the interest earned on funds saved.
The Government have confirmed that the rate of Corporation Tax on trading profits will remain at 12.5%. However, Ireland’s company tax residency rules are to be updated in the Finance Bill 2015.
- Default rule that all companies incorporated in Ireland will be regarded as tax resident in Ireland.
- Changes to come into effect from 1 January 2015, with transitional period to 2020 for existing companies trading in Ireland.
Capital Allowances on Intellectual Property Expenditure
- The current 80% cap on the aggregate amount of allowances and related interest expense that may be claimed will be removed.
- Specified intangible assets will be amended to explicitly include customer lists.
- Accelerated Capital Allowances for Energy Efficient Equipment extended to end of 2017.
R&D Tax Credit
The tax credit applies to amount of qualifying expenditure incurred by a company in a given year that is in excess of the amount spent in 2003. From 1 January 2015 this 2003 base year restriction will be removed.
Employment & Investment Incentive (EII)
• Company limits to be increased.
• Holding period increased by one year, to 4 years.
• Include medium-sized companies in non-assisted areas and internationally traded financial services subject to certification by Enterprise Ireland.
• The operating and managing of hotels, guest houses and self-catering accommodation will remain eligible for a further 3 years.
Seed Capital Scheme
The scheme is to be rebranded as “Start-Up Relief for Entrepreneurs” (SURE) and will include individuals who have been unemployed up to two years.
Foreign Earnings Deduction
List of qualifying countries to be expanded and the minimum number of qualifying days abroad is being reduced from 60 to 40 days. The minimum stay in a country is reduced to 3 days.
CAPITAL GAINS TAX (CGT)
Property Purchase Incentive
The existing relief from CGT, in respect of the first 7 years of ownership, on properties purchased between 7th December 2011 to 31st December 2014 will not be extended beyond 31 December 2014.
80% rate of tax on profits/gains from land disposals or land development will be abolished from 1 January 2015 and instead the standard rate of CGT (33%) will apply.
- 9% rate for the Tourism & Hospitality industry remains in place.
- The farmer’s flat-rate addition increased from 5% to 5.2%.
- Consanguinity relief, which applies to transfers of non-residential property to certain relatives, is due to expire on 31 December 2014.
- Stamp Duty relief will be extended for non-residential land transfers between certain close relatives
- 40c on a pack of cigarettes.
- No increase on alcohol products.
- Petrol & Diesel duty unchanged.
- No reduction in basic social welfare rates.
- Child Benefit to increase by €5 per child effective 1 January 2015 with a further €5 increase effective 1 January 2016.
- Living alone allowance for individuals over 66 increased to €9 per week.
- Abolition of the 0.6% pension levy at the end of 2014. The 0.15% levy will expire at the end of 2015.
For further information in relation to any of the above, please contact Niall Grant (firstname.lastname@example.org) or Nicola Foster (email@example.com) or call our office on 01-4786600.