6 December 2011

Personal Taxation
• No changes in Income Tax rates, bands or credits.
• Universal social charge exemption increased from €4,004 to €10,036, and the move to a cumulative system will allow adjustments for under/over payments during the year.

Business Taxation
• Corporation tax exemption for new companies extended to 2014
• Employer’s relief from PRSI on pension contributions made by employees reduced to Nil from 1 January 2012 (currently 50% relief applies)
• No change in the Corporation Tax rate

Relevant Contracts Tax
• No changes to note

Indirect Taxes
• Standard VAT rate increased from 21% to 23% from 1 January 2012, in his speech Mr Noonan, said that this was the front loading of the increases in VAT from the EU/IMF deal and said that there will be no more increases in VAT in the life time of this government.
• Open farms can avail of tourism rate of 9% from 1 January 2012
• Increase in excise duty on cigarettes by 25c; no increase in alcohol excise duty, however legislation due on low cost selling

• Motor tax increases – average increase of 7.5% for cars taxed by engine capacity. But increases of over 50% for those taxed under the CO2 model (e.g. Class A increase of €56 to €160). This adjustment is required to reflect the increase in cars eligible for the lower CO2 model rates (17.69% of cars taxed in 2011 to date qualify, but they only account for 9.46% of the total motor tax income).

Stamp duty
• Abolition of multiple rates for non-residential stamp duty. For such instruments executed after 6 December 2011 a rate of 2% will apply.

Carbon Tax
• Increase of €5 to €20 per tonne on fossil fuels.

This equates to 1.4 cent per litre on petrol, and 1.6 cent per litre on diesel, this will take effect from midnight of the budget.

For a typical domestic oil fill of 1,000 litres of kerosene, the cost has increased by €14.40, and for natural gas €14.46 per kilowatt hour. Carbon tax increases on heating fuel will only take effect from 1st May 2012.

Capital Taxes from 6 December 2011 (midnight)
• Rate of capital acquisitions tax increased from 25% to 30%. Group A threshold to be reduced to €250,000.
• Rate of capital gains tax increased from 25% to 30%.
• New capital gains tax exemption for properties bought until the end of 2013, once property is held for at least seven years.

Miscellaneous Provisions & Announcements
• For items of public expenditure including health and social welfare, please see our Budget 2012 – Public Expenditure Measures page.
• Removal of the 36 day tax exemption for illness benefit.
• Mortgage interest relief to increase to 30% for first time buyers who bought at the height of the boom in the the period 2004 – 2008. A 25% rate applies for first time buyers in 2012, with a 15% rate for non-first-time buyers
• Household charge of €100 to be introduced in 2012, pending the development of a full property tax from 2014. Waiver for those on mortgage supplement and unfinished estates.
• DIRT rate increase by 3% for interest received on or after 1 January 2012

Summary Statistics

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Whilst every care has been taken in the production of this budget summary, neither Royal Canal Financial Control Services nor Ronan Duffy and Co. can be held responsible for any action taken or deferred, resulting from any errors contained therein. For a more comprehensive summary please refer to the government press release.

Related Articles
Budget 2012 – Public Expenditure Measures
Finance Bill 2011
Budget 2011
National Recovery Plan 2011 – 2014

7 December 2010

Personal Taxation
• PRSI
- Abolition of the PRSI ceiling of €75,036
- Class S (Self-Employed) PRSI rate increased from 3% to 4%

• Reduction of 10% in tax credits
• Average rate of total tax now on average industrial wage has increased from 25% to 26% when the 10% decrease in tax credits is taken into account.

Business Taxation
• Corporation tax exemption extended to new start-up companies in 2011 but now linked to level of employer’s PRSI paid. subject to a maximum of €5,000 per employee. If the amount of qualifying employers’ PRSI is lower than the reduction in corporation tax liability otherwise applicable, relief will be based on the lower amount.

Relevant Contracts Tax
• Replacement of 35% RCT rate with two rates on a revenue neutral basis
- 20% for those registered for tax with an established compliance record.
- 35% rate for subcontractors not registered for tax.

• Replacement of monthly repayment system with an offset system.

Indirect Taxes
• DIRT increased from 25% to 27% for payments made annually or more frequently and 30% for payments made less frequently than annually.

• Travel tax cut to €3

Property Transaction Tax from 7 December 2010 (midnight)
• No announcement made on property value tax

• 1% on all property transactions (i.e. transfers) up to €1m and 2% above €1m to replace old stamp duty regime.

• Stamp duty
- Abolition of reliefs – first time buyer relief, exemption for new houses under 125 sq m in size, relief on new houses over 125 sq m in size, consanguinity relief for residential property transfers, exemption for residential property transfers valued under €127,000, site to child relief

Carbon Tax
• No changes noted here but increase in excise on petrol and diesel noted below.

Capital Acquisitions Tax from 7 December 2010 (midnight)
• Tax free thresholds being reduced by 20%

Miscellaneous Provisions & Announcements
• Abolishment of reliefs from 1 January 2011 unless otherwise stated.
- Rent Relief to be phased out over 8 years; the same timeline as previously announced for Mortgage Interest Relief.
- Abolition of tax relief for Trade Union Subscriptions.
- Abolishment of Tax exemption from BIK for Employer Provided Childcare.
- Abolishment of Tax relief for new shares purchased by employees.
- Abolishment of PRSI relief on employee contributions to occupational pensions, employer PRSI relief reduced by 50%

• Restriction of reliefs from 1 January 2011
- Restriction of the tax-free element of ex-gratia termination payments to €200,000 so that payments above this amount will be subject to tax at the marginal rate.
- Ceiling of €40,000 on the tax exempt earnings of artists.
- Introduction of a charge to PRSI on approved profit-sharing schemes, approved save-as-you-earn schemes, unapproved share option schemes, and on share awards.

• Increase in excise duty
- 4c added to litre of petrol, 2c added to litre of diesel.

• Car scrappage scheme extended to 30 June 2011.

• Annual earnings limit to be reduced from €150,000 to €115,000 for 2011. The €115,000 limit will also apply to 2011 contributions where relief is sought against 2010 income.

• Public services bosses pay capped at €250,000 for new contracts including President of the State.

• Once-off (due to harsh weather) €40 extra allowance for those entitled to fuel allowance.

• Minimum wage down by €1 to €7.65

• The student service charge to be replaced with a new flat higher education contribution of €2,000. This will be for only one child in a family at any one time.

• BES Scheme to change to a new scheme and firms can now apply for €10m up from €2m

• All bookmakers taking bets from Ireland to pay 1% for online bets, to be same as those who have betting shops here.

Social Protection payments
• No change in state pension payments. However, decrease of 4% on working age pension with the 2011 new pension rate to be 117% of that paid in 1997.

• Child benefit decrease per month of €10 per child for first two children, and €20 for third child.

• Maternity Benefit down €8 per week

Summary Statistics

…

Whilst every care has been taken in the production of this budget summary, neither Royal Canal Financial Control Services nor Ronan Duffy and Co. can be held responsible for any action taken or deferred, resulting from any errors contained therein. For a more comprehensive summary please refer to the government press release.

Related Articles
National Recovery Plan 2011 – 2014
Finance Bill 2010
Budget 2010
Supplementary Budget 2009
Budget 2009