Royal Canal Financial Control Services

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Budget 2011

7 December 2010

Personal Taxation
– 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

Budget 2011Budget 2010
Capital Gains Tax Rate25%25%
Capital Acquisitions Tax RateTax Free Allowance Reduced25%25%
Income Levy
€0 – €75,036See universal social charge2%
€75,037 – €174,979See universal social charge4%
€174,980+See universal social charge6%
Income Tax Rates
27%/30% – see above25%
Tax Credits
Single Person€1,650€1,830
Married Couple€3,300€3,660
PAYE Credit€1,650€1,830
Rate Bands
Single/widowed with dependent children€36,800€,40,400
Married -one income earner€41,800€45,400
Married – two income earners€65,600€72,800
Contribution CeilingNo limit€75,036
Health Levy
Lower RateSee universal social charge2.5%
Higher RateSee universal social charge5%
ThresholdSee universal social charge€500
Universal Social Charge
< €4,0040%N/a
€ 0 – €10,0362%N/a
€10,037 – €16,0164%N/a

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.

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