Budget 2016

Budget 2016 Green Shoots of Recovery?

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Summary Main Points

Overview As our economy’s slow recovery gathers pace and with the not too distant General Election edging closer, we looked to this Budget with slight optimism rather than concern. We are back in favour in Europe and our economic growth is the envy of our troubled companions of recent years.

The Main Discussion points in the budget were as follows:

The finance minister, as expected, outlined a broad range of tax reliefs, with most income groups receiving some tax savings.

The Budget was focused on individual taxpayers and reducing their overall tax burden.

• Increase in Child Benefit by €5

• Reduction in Universal Social Charge • Self Employed (incl. Farmers) Tax Credit of €550

• Increase in Old Age Pension by €3 • Increase in Minimum Wage to €9.15(up €0.50)

While there was the welcome retention of the 9% VAT Rate for the hospitality sector, there were little more for businesses to get excited about. The minimum wage increase will be a concern for many small and medium size businesses.

It may prove that increases in individual spending could further boost the economy and help sustain the recent growth levels. Time will show whether these measures are mere election tactics or part of an economic growth strategy.

• Bank Levy extended to 2021 • Duty on Cigarette increase by 50c per packet(20) • Increased Funding for Revenue Commissioners Audit and Investigations to ensure tax compliance • Extend Free GP care to children under 12s (Subject to Negotiation)

John Canty & Co. Chartered Accountants and Registered Auditors 3 Denny Street, Tralee, Co. Kerry. www.jcantyaccountants.ie

Personal Taxation

• Universal Social Charge Rates • Exemption level increased to €13,000 • 1% on income up to €12,012 • 3% between €12,012 and €18,668 • 5.5% between €18,668 to €70,044 • Graduated PRSI Tax Credit • Home carers Tax Credit up to €1,000(from €810) • Marginal Tax rate of less than 50% for those earning less than €70,000.

• Property Tax(LPT) valuation unchanged until 2019

Families

• Child Benefit increased by €5 per child • Statutory paternity leave of 2 weeks to be introduced • • • •

Family income supplement increased Free Childcare places from age 3 to 5 and a half Extension of Free GP Care to all children under 12.

Restoration of Respite Care Grant to €1,700

Business • • • • • •

Self Employed Tax Credit of €550 per year Changes to Employer PRSI limits Increase in Minimum Wage to €9.15(up €0.50) from 1st January 2016.

Commercial Motor Tax to be simplified and substantially reduced Expansion of EIIS scheme Increase in Film Relief

Farming • • • •

Extension of General Stock Relief Tax Credit €550(same as self-employed) Extension of Stamp Duty Relief for Young Trained farmers by 3 years Income Tax Credit worth up to €5,000 per year for 5 years to facilitate farm transfers for family farm partnerships

Construction Sector

• Nama to deliver 20,000 (90% Greater Dublin area) homes by 2020(including 2,000 social housing) • Home Renovation Incentive Scheme(HRI) extended to 31st December 2016

Pensioners

• Increase Old Age Pension by €3 • Fuel allowance increase €2.50 per week.

• Christmas bonus increased by 75% John Canty & Co. Chartered Accountants and Registered Auditors 3 Denny Street, Tralee, Co. Kerry. www.jcantyaccountants.ie

Business Reaction

Other Taxes Corporation Tax

• Extension 3 Year Start Up Relief extended to 2018 • 6.25% Rate on Profits from income relating to “Knowledge Development Box”(Innovation and R&D)

Capital Gains Tax

• Business disposal have reduced CGT rate of 20% for disposal of businesses or part thereof(limit €1M)

Inheritance Tax

• Increase Tax Free Threshold (Group A: parents to child) from €225,000 to €280,000

VAT

• Retention of 9% VAT Rate for hospitality sector

Miscellaneous

• Pension Fund Levy to be abolished • Bank Levy extended to 2021 • Duty on Cigarette increase by 50c per packet(20)

“This Budget is a strong endorsement by Government of the importance of entrepreneurship and small business in Ireland,” SFA Chairman, AJ Noonan “…recognises that entrepreneurs and small businesses are the drivers of economic growth” Chambers Ireland “The crisis is behind us and we are planning ahead. The Government has taken on board the concerns of business, reduced the marginal tax rate and encouraged private investment,” IBEC CEO, Danny McCoy “..The lower VAT rate allows Irish tourism to compete aggressively with competing overseas destinations and to provide our visitors with the good value to match the quality of our welcome.” Fáilte Ireland CEO, Shaun Quinn “…the income tax credit of €550 for farmers and the self-employed, while long overdue, was very welcome and must be built on in future budgets…” IFA President, Eddie Downey

John Canty & Co. Chartered Accountants and Registered Auditors 3 Denny Street, Tralee, Co. Kerry. www.jcantyaccountants.ie