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| Budget 2016 - Video & Analysis - KPMG |
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By
Conor O'Brien, Head of Tax & Legal Services, KPMG
Oct 14, 2015 |
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Budget Highlights
BUDGET FRAMEWORK
€750m revenue relieving provisions but no tax increase other than excise on cigarettes.
INCOME TAX
Marginal tax rate for those earning up to €70k reduced to 49.5%.
The entry threshold for Universal Social Charge (“USC”) will be increased from €12,012 to €13,000. Otherwise, rates of USC will be reduced as follows:
- Income up to €12,012 – Rates reduced from 1.5% to 1%.
- Income from €12,013 to €18,668 – Rates reduced from 3.5% rate to 3%.
- Income between €18,669 - 70,044 – Rates reduced from 7% to 5.5%
- Income between €70,045 - €100,000 – 8% (no change)
- PAYE Income in excess of €100,000 – 8% (no change)
- Self-employed income in excess of €100,000 – 11% (no change)
Top rate USC exemption to be retained for all medical card holders and individuals aged 70 and older whose total income does not exceed €60,000.
Introduction of a tapered PRSI tax credit for employees up to €624 per annum.
The entry point to the higher rate of employers’ PRSI of 10.75% to be increased to €376 per week. Earned income tax credit of €550 to be introduced for the self-employed.
Home carer tax credit increased by €190 to €1,000 p.a.
An income tax credit worth up to €5,000 per annum for five years for family farming partnerships to facilitate the transfer of family farms to the next generation.
Extension of general and young farmers' stock relief for a further 3 years.
Profits or gains from the occupation of woodlands are being removed from the High Earners' Restriction.
BUSINESS TAX MATTERS
Introduction of a Knowledge Development Box to provide for a 6.25% corporation tax rate on profits arising to certain IP assets which are the result of qualifying R&D activity that is carried out in Ireland.
Amendments to EIIS announced in Budget 2015 to take effect from midnight tonight. They have been pending EU State Aid approval for the past year.
Start-up relief from corporation tax being extended for new start-ups commencing to trade over the next three years.
Country-by-Country Reporting to be introduced in the Finance Bill. Commercial Road Tax to be simplified and reduced.
Bank Levy extended to 2021.
The scheme of capital allowances for the construction of facilities used in the maintenance, repair, and overhaul and dismantling of aircraft is being amended to comply with State Aid rules. The scheme is also being commenced with effect from Budget night.
INDIRECT TAX
The Minister confirmed the reduced 9% rate for the tourism and hospitality sector will be retained. There will be no changes to the reduced VAT rate of 13.5% or the standard VAT rate of 23% in 2016.
Duty on a packet of 20 cigarettes will be increased by 50 cent (including VAT) from midnight tonight with a pro rata increase on other tobacco products. No change to the Duty rates on beer, cider or other alcohol products.
CAPITAL TAXES
New CGT rate of 20% for entrepreneurs on the sale of whole or part of a business applying to capital gains of up to €1m.
The Group A threshold for capital acquisition tax will be increased from €225,000 to €280,000 with effect from 14 October. The Group A threshold typically applies to transfers between parents and their children.
PROPERTY
NAMA to deliver 20,000 houses between now and 2020. 90% of these in the Dublin area and 75% of the overall total will be starter homes.
Local Property Tax revaluation date postponed until 2019.
STAMP DUTY
Existing €5 Stamp Duty on Debit/ATM cards to be replaced with a 12c charge for ATM transactions, subject to a cap of €2.50 or €5 depending on card type.
OTHER MATTERS
The Home Renovation Incentive is being extended until 31 December 2016.
Cap on qualifying spend for film relief increased to €70m, subject to State Aid approval. The pension levy of 0.15% will expire at the end of 2015.
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