THE Minister for Finance, Michael Noonan, delivered the first budget of the newly formed minority government on Tuesday, October 11.
With three-quarters of the €1.3bn available going on spending, the result will be small, incremental tax savings for almost everyone.
The self-employed fared OK. While improved access to social welfare benefits are to be welcomed, the promised re-alignment of tax credits with our counterparts in the PAYE sector fell short at just €400 against the €550 earned income tax promised. Our summary looks at all the need-to-know measures for business owners, the self-employed and landlords.
EARNED INCOME TAX CREDIT
Budget 2016 introduced the earned income tax credit which sought to address the discrepancy in the tax system between the self-employed and PAYE workers. While the expectation was that the credit would increase by €550 in 2017, the increase has been limited to €400.
UNIVERSAL SOCIAL CHARGE RATE CUT
The 1 per cent, 3 per cent and 5.5 per cent rates have all been reduced by .5 per cent. The 8 per cent rate and 11 per cent rate for self-employed income over €100,000 also remains in place.
LANDLORDS & HOMEOWNERS
Restoration of full 100 per cent deduction of mortgage interest against the rental income of landlords with residential properties on a phased basis over five years.
Rent a room relief increased to €14,000 pa.
Home renovation scheme extended by two years to end of 2018.
SOCIAL WELFARE BENEFITS FOR SELF-EMPLOYED
From 2017 there will be increased coverage of certain social insurance benefits for the self-employed and proposed entitlement to the Invalidity Pension & Treatment Benefit Scheme.
Start your own business relief has been extended for a further two years.
CAPITAL GAINS TAX AND INHERITANCE/GIFT TAX
Budget 2017 has further modified the relief for entrepreneurs who sell business assets. This cuts the rate payable on business assets that meet certain criteria to 10 per cent rather than 33 per cent, up to an overall limit of €1m in chargeable gains.
Tax-free threshold rate for gifts and inheritances from parents to children, such as the family home, has been increased by €30,000 to €310,000. With house prices increasing across the country, in particular, in Dublin, this increase will ensure that children inheriting the family home will have less pressure to sell the home in order to meet any CAT bill that may arise.
FIRST TIME BUYERS GRANT – HELP TO BUY SCHEME
The Government has moved to ease the burden on those first-time buyers looking to fund a deposit to buy a new house by introducing a ‘Help to Buy Scheme’.
The initiative will take the form of a tax rebate limited to 5 per cent of the value of the house.
The scheme is to last until December 2019 and will only be available to those who buy new houses, not second-hand houses and apartments.
Max allowable relief is €20,000. The 5 per cent will be applied to the purchase of new homes to a purchase price of €400,000. Houses bought with a purchase price of between €400,000 and €600,000 will receive the max relief of €20,000. No relief is available on houses worth over €600,000.
CHILDCARE SUBSIDY
A childcare subsidy is to be introduced and paid directly to the childcare provider and is seen as an attempt to tackle one of the barriers for working parents, especially women, in getting back to work after starting a family.
The scheme is not yet finalised but what we do know is that it will take effect from September 2017.
ALSO IN BRIEF…
€1.2 billion in funding specifically for housing to the Department of Housing, Planning, Community & Local Government for 2017.
The national minimum wage will increase by 10c to €9.25 per hour in 2017.
The Home Carer Tax Credit has been increased by €100 to €1,100 for 2017.
The rate of DIRT will be reduced by 2 per cent in 2017
Additional €500m for health, more gardaí, teachers and funding for public sector pay
Pension and other social welfare to increase by €5 per week from March.
9 per cent VAT rate retained for tourism sector and in light of Brexit
Excise on cigarettes to go up by 50c. Price of diesel, petrol and alcohol remain the same.
For more information contact:
Kevin Kelly
TaxAssist Accountants Dun Laoghaire
A: 7 Patrick Street, Dun Laoghaire, Co Dublin
T: 01 9010457
E: kevinkelly@taxassist.ie
W: www.taxassist.ie/dunlaoghaire
or
Garry O’Rourke
TaxAssist Accountants Dundrum
A: 6 Main Street, Dundrum, Dublin 14
T: 01 9696200
E: garryorourke@taxassist.ie
W: www.taxassist.ie/dublinsouth