Budget Overview

  • Spending increases and tax cuts of €1.3bn. .

 

‘Help to buy’ scheme

  • A new ‘help to buy’ scheme will see first time buyers entitled to a 5% grant on newly-built homes (signing contract date after 19/7/2016) up to the value of €20,000, includes self builds. A rebate will be available for income tax paid over the last 4 years, up to a maximum of 5% of the purchase price up to Euro 400,000. Relief is available for new houses up to Euro 600,000, with no relief available for houses above this amount.
  • Applies to new properties including self-build but second-hand homes will not be included.
  • Must take out a mortgage of minimum of 80%.

 

USC reductions

  • As predicted, Universal Social Charge (USC) bands for all workers to be cut by half a percent to the 3 lower bands – down to 0.5%, 2.5% and 5%
  • It will increase the entry threshold for USC by €104 to take those on minimum wage outside of the top rates.

 

Capital Acquisition Tax

  • Capital acquisition tax thresholds to be increased as follows: – Category A Threshold (incl gifts to children): Increase by €30,000 to €310,000 – Category B Threshold: Increase by 8% to €32,500 – Category C Threshold: Increase by 8% to €16,250

 

Entrepreneurs / Self Employed

  • Entrepreneur relief to be amended to reduce special capital gains tax rate from 20% to 10%. The lifetime cap of Euro 1m to be reviewed.
  • The Start Your Own Business Relief is to be extended for a further 2 years.
  • ‘Earned Income Tax Credit’ for self-employed being increased by €400 to €950
  • New SME focused share based remuneration scheme to be introduced in Budget 2018.

 

Renewable Energy / Combating Climate Change

  • Extension of the scheme of accelerated capital allowances for investment in energy-efficient equipment to sole traders.
  • Extension of the relief from vehicle registration tax on electric vehicles for a period of 5 years giving the motor industry and motorists the confidence to invest in this cleaner technology:
  • Extension of the VRT relief for hybrid vehicles for 2 years;
  • Natural gas used as a vehicle fuel will be taxed at the EU minimum rate of excise for a period of 8 years;
  • Introduction of a relief from carbon tax for solid fuels that include a biomass element to incentivise the development of these greener fuels; and

 

Landlords

  • The interest restriction on rented property introduced in 2009 is to be phased out.  The deduction available for qualifying interest payments on residential rental properties has been increased from 75% to 80% in 2017 and will be increased further by 5% per annum thereafter until the restriction is fully phased out.

 

Farmers

  • New low interest loans to be available at a rate of 3.0%
  • Income averaging – can now step out for a year including 2016.
  • The flat-rate addition for farmers is being increased from 5.2% to 5.4%.

 

Fishermen

  • A new Fishers Income Tax Credit has been introduced of €1,270 per annum for Fishers who have fished for wild fish or wild shellfish for at least 80 days in a tax year.

 

Hospitality

  • The Minister confirmed the reduced 9% VAT rate for the tourism and hospitality sector will be retained.

 

Rent a Room

  • There will be a boost for those who want to earn extra money by renting out a room in their home – the tax free rental allowance under the ‘rent a room scheme’ is being increased to €14,000 per year.

 

Sports

  • Minister Donohoe also says there will be a new round of Sports Capital Grants in 2017.

 

Home Renewal Incentive Scheme

  • Extended for a further 2 years to 2018.

 

Home Care

  • Homecarer’s tax credit increased by €100 to €1,100.

 

Deposit Income

  • DIRT – The rate of income tax on deposits has reduced from 41% to 39% and it is due to reduce by 2% per annum for a further three years to 2020 when the rate will be 33%.

 

Tax Compliance

  • €5 million to be allocated to employ an additional 50 Revenue staff.

 

Budget Briefing 2016