This is the first budget since the start of the recession in 2008 that gives rather than takes, except for the hard hit self-employed! The following shows some of the main changes.
Income Tax
- 1% reduction in the 41% rate of income tax to 40%.
- Standard Rate Band increased by €1,000 for single taxpayer and €2,000 for a married couple with two incomes.
- Rent A Room Relief scheme increases from €10,000 to €12,000 from 1 January 2015.
- The threshold for the Artists’ Exemption will be increased by €10,000 to €50,000.
- The Seed Capital Scheme is being rebranded as “Start-Up Relief for Entrepreneurs” (SURE) and being extended to individuals who have been unemployed for up to 2 years.
USC Bands & Rates
- The USC entry point was increased from €10,036 to €12,012.
- Reductions in 2% USC band to 1.5% and the 4% USC band to 3.5%. The 7% rate remains for earnings above €17,577.
- New USC rate of 8% for those earning over €70,000, and 11% for self-employed people earning more than €100,000.
- Medical card holders and over-70s earning less than €60,000 liable to a maximum USC of 3.5%.
Water Charges Tax Credit
- Income tax relief payable, in arrears, will be available at the 20% standard rate in respect of water charges up to a maximum of €500 per household per year.
Corporation Tax Reform
- The 12.5% Corporation Tax rate will not change.
- Irish residency rules will be changed in order to stop the use of the “double Irish”, so that a company incorporated in Ireland will be Irish tax resident. This will apply for new companies from 1 January 2015 with a transition period until the end of 2020 being provided for existing companies.
- R&D tax credit base year restriction is to be removed.
- Start-up companies’ exemption has been extended to 2015 but the relief will be reviewed in 2015.
- Accelerated capital allowances scheme for energy efficient equipment to be extended for a further three years.
Property Sector
- The 7 year CGT exemption will expire on 31 December 2014.
- Home Renovation scheme has been extended to the end of 2015 and now is open to rental properties.
- The Windfall tax will be abolished from 1 January 2015. This was an 80% tax on certain disposals of land which were rezoned after October 2009.
- First time buyers will receive a refund of DIRT on savings used to buy a home between now and 2017. The savings however cannot exceed 20% of the purchase price.
VAT
- Increase in the Farmer’s Flat-Rate Addition from 5% to 5.2% from 1 January 2015.
Foreign Earnings Deduction (FED)
- FED has now been extended up to the tax year 2017. With effect from 1 January 2015, the number of states will be extended to include Japan, Singapore, South Korea, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Mexico, and Malaysia.
- Time spent travelling to a relevant state or from a relevant state to Ireland or to another relevant state will now be deemed to be time spent in a relevant state.
- Also from 1 January 2015 the number of qualifying days abroad will be reduced from 60 to 40 and the minimum stay reduced from 4 to 3 days.
Miscellaneous
- Pension Levy will be reduced to 0.15% in 2015 and will expire at the end of 2015.
- A packet of 20 cigarettes has increased by 40 cent.
Farmers
- Income averaging increased from 3 to 5 years.
- Income averaging extended where there is on-farm diversification.
- Improved income tax incentives to encourage the long term leasing of farm land.
- Exemption from stamp duty for long term leases of farm land.
- CGT retirement relief has been extended to include land which has been leased for up to 25 years.
- Land let under conacre arrangements will qualify for CGT retirement relief where the land is disposed of before 31 December 2016.
- The extension of consanguinity relief, which reduces the stamp duty rate from 2% to 1% in the case of transfers between relatives, where the transferor is 65 or younger and the transferee is an active farmer.
- CAT agricultural relief – can only be availed of by active farmers or individuals who are not active but who lease the property on a long term basis for agricultural use to farmers. These changes are to take effect from 1 January 2015.
Stamp Duty
- Consanguinity relief which applies a rate of stamp duty equal to ½ the normal rate of ad valorem stamp duty on certain conveyances or transfers on sale of non-residential land between certain closely related persons is being extended for a further three years to apply to transfers or conveyances executed prior to 1 January 2018.
- The relief will be confined to a conveyance or transfer of land by a person who is less than 66 years of age. The transferee must be a farmer who will, from the date of the transfer or conveyance, spend not less than 50 per cent of his or her normal working time farming with a view to the realisation of profits.