Budget 2014

Posted in Budget, Regulations, Taxation

Income Tax

With effect from 1 January 2014 the One Family Parent Tax Credit will be replaced by the Single Person Child Carer Credit. This credit will only be available to the principal carer.

Tax Relief at Source (TRS) for medical insurance relief will be restricted to the first €1,000 per adult and the first €500 per child insured.

Top slicing relief will no longer be available for ex-gratia payments from 1 January 2014.

DIRT rate will increase from 33% to 41% from 1 January 2014.

Tax relief for interest on a loan to acquire an interest in a partnership will no longer be available for new loans taken out from 15 October 2013. Relief in respect of loans taken out before this date will be withdrawn on a phased basis over four years.

Pensions

Relief is still available for pension contributions at the marginal rate.

The Standard Fund Threshold will be reduced from €2.3m to €2m from 1 January 2014.

0.6% levy on pension fund assets will increase to 0.75% for the year 2014. This levy will reduce to 0.15% for the year 2015.

Corporation Tax

No change to the corporation tax rate of 12.5%.

R&D Tax Credit

The first €300k of expenditure (previously €200k) will qualify without reference to the 2003 base year.

The limits on the amount of expenditure on R&D outsourced to third parties which can qualify for the relief is to be increased from 10% to 15%.

VAT

The reduced VAT rate of 9% for tourism related services is being retained.

The threshold for the cash receipts basis is to be increased from €1.25m to €2m with effect from 1 May 2014.

Increase in farmer’s flat rate addition from 4.8% to 5% from 1 January 2014.

 

Capital Gains Tax

No change to the CGT rate of 33%.

CGT Retirement Relief

CGT retirement relief is being extended to disposals of farmland where the land is leased for a period of at least 5 years and the disposal of the farmland is not to a child of the owner.

Property Purchase Incentive

Finance Act 2012 introduced an exemption from CGT for properties purchased prior to 31 December 2013 and which were held for 7 years prior to disposal. This relief has been extended to properties purchased pre 31 December 2014.

CGT Entrepreneurial Relief

A new CGT incentive is being introduced to encourage entrepreneurs to invest and re invest in assets used in new productive trading activities.

The measure will apply where an individual, who has paid CGT on the disposal of an asset makes an investment in a new business in the period 1 January 2014 to 31 December 2018 and subsequently disposes of this investment no earlier than 3 years after the date of investment. The CGT payable on the disposal of this new investment will be the lower of:

(i)

The CGT paid by the individual on a previous disposal of assets in the period from 1 January 2010 or

(ii)

50% of the CGT due on the disposal of the new investment.

Commencement of this measure is subject to EU State Aid approval.

Start Your Own Business (SYOB)

An exemption from income tax for the first two years for individuals, who have been unemployed for 15 months and who start a new business has been introduced. The relief is likely to be restricted to profits of €40,000.

Further details will be available in the Finance Bill.

Home Renovation Incentive Scheme

The Budget provides for a Home Renovation Incentive Scheme which will run from 1 January 2014 to 31 December 2015. The scheme provides for tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure on works costing between €5,000 and €30,000 carried out on a principal private residence. Qualifying expenditure is expenditure subject to the 13.5% VAT rate.

The credit will be given over two years following the year in which the work is carried out.

The work must commence on or after 1 January 2014 and must be carried out during 2014 and 2015. Homeowners must be LPT compliant to qualify for the relief.

PRSI

From 1 July 2011 the lower rate of employer PRSI was halved to 4.25% for all jobs that pay up to €356 per week. The rate will be restored to 8.5% from 1 January 2014.

CAT

No changes announced in the Budget.

RCT

No changes announced in the Budget.

 

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