For a summary of today’s budget changes click on the link above. I have outlined below some points of interest
Local Property Tax (LPT) is to be introduced from 1 July 2013 and will be administered by the Revenue Commissioners. A half year of LPT will be payable in 2013 with a full year payable in subsequent years. The tax will be charged at 0.18% of the market value of the property up to €1million. A rate of 0.25% will apply to any excess value over €1 million. The 0.18% rate is fixed for the lifetime of the Government but a ‘local decision factor’ allowing local authorities to vary the 0.18% rate by up to + / – 15% will apply from 2015. LPT includes exemptions up to 2016 or new and previously unoccupied homes and also for first time buyers in 2013. The NPPR (non principle private residence) charge will cease in 2014
The Household Charge will cease with effect from 1 January 2013.
No increases to income tax credits, rates or bands.
PRSI base has been broadened by increasing the annual minimum contribution for the self-employed to €500 and removing the €127 weekly PRSI allowance.
Unearned income including rental, investment, dividends and deposit income will be subject to PRSI for PAYE employees from 1 January 2014.
Motor tax and Vehicle Registration Tax (VRT) will be increased from 1 January 2013.
A Ten Point Tax Plan introduced for SME’s including farms, to enhance cash flow, to reduce administrative burdens and to assist companies to grow and expand into new markets and products.
The duration of the payment period for Jobseekers Benefit is being reduced by 3 months from 12 months to 9 months.
Child Benefit will be reduced by €10 per month from €140 per month to €130 per month and this rate will now apply to the first, second and third child
Capital Acquisitions Tax (CAT) – the current rate of 30% is being increased to 33%. This increase applies in respect of gifts or inheritances received after 5th December 2012. The current group tax free thresholds are being reduced by 10%. This reduction applies in respect of gifts or inheritances taken after 5 December 2012. The threshold rates will now be:
Group 1 – €225,000
Group 2 – €30,150
Group 3 – €15,075
Capital Gains Tax (CGT) – the current rate of 30% is being increased to 33%. This increase applies in respect of disposals made after 5th December 2012.
Tax relief on pension contributions will continue at the marginal rate of tax. Tax relief on pension contributions will only serve to subsidise pension schemes that deliver income of up to €60,000 a year. This will take effect from the 1 January 2014. Consultation on the specific changes required to the existing regime will continue with, among others, the pensions sector and the Departments of Public Expenditure and Reform and Social Protection.
The Pension Levy announced as part of the Jobs Initiative will not be renewed after 2014.
Provision will be made in the Finance Bill for allowing people to access up to 30% of the value of their Additional Voluntary Contributions (AVCs). Any amounts withdrawn will be subject to tax at the individual’s marginal rate of income tax, as marginal rate income tax relief was provided on the contributions as they were paid in. This option will be available for a 3 year period from the passing of the Finance Bill 2013.
Exit Tax Rates – the rate of exit tax that applies on life assurance policies and investment funds is being increased by 3 percentage points and will increase from 33% to 36%. The increased rate will apply to all payments including deemed payments made on or after 1 January 2013.
Deposit Interest Retention Tax (DIRT) – the rate of DIRT is being increased from 30% to 33% and 30% to 36% for other longer term deposit accounts. The increased rates will apply to all payments including deemed payments made on or after 1 January 2013
BIK on preferential loans – For the 2013 year of assessment an increase has been announced in the specified interest rate used in calculating he taxable benefit in relation to preferential loans, other than home loans from 12.5% to 13.5%. For the same period, the specified rate used to calculate the taxable benefit in relation to home loans is decreased from 5.0% to 4.0%.
Universal Social Charge for those over age 70. Currently those aged 70 and over, and full medical card holders, pay a rate of USC reduced by 3% on income over €10,036 (for example, 4% instead of the standard 7%). From 1 January 2013 those over 70 earning €60,000 and above will pay the standard USC on all their income.
Existing pension thresholds
•No changes to the €200,000 tax free retirement lump sum limit
•No change to the earnings cap of €115,000 for tax relief purposes on contributions to PRSAs, Personal Pensions, and employee/AVC contributions to occupational pension schemes
•No change to ARF and vested-PRSA requirement of €119,800 in an AMRF or used to purchase an annuity, or a guaranteed pension income for life of €18,000.
From 1 January 2013 those receiving ex gratia redundancy payments over €200,000 will no longer be able to avail of top slicing relief. Instead tax will be due at the individual’s marginal rate.
If you have any queries please contact me.
Tel. 087 2608988