Budget 2018 A Bitter Sweet Compromise?
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Overview
Finance Minister Paschal Donohoe’s first Budget contained few surprises and followed the UK’s lead on the introduction of a Sugar Tax. The influence of the opposition ensured no huge deviations on Budget Day with both of the main parties claiming credit for the positive aspects of the Budget. Housing was always going to be a focal point and spending was significantly increased to over €1.8 billion next year, with 3,800 social houses to be built. The increase in the vacant property Levy should have the desired effect of freeing up additional development sites, but the increase of Stamp Duty from 2% to 6% would appear to be counterproductive. Tax cuts were focused on slight reductions in the Universal Social Charge, slight increases in tax bands and some income tax credits. The retention of the 9% VAT rate for Tourism and related services remains highly significant.
Summary Main Points The Main Discussion points in the budget were as follows: • Universal Social Charge rate reductions • Earned Income (Self Employed) Tax Credit increased by €200 to €1,150 • Home Carer tax credit increased by €100 to €1,200 • Increase in Social Welfare Payments by €5 (from late March 2018) • Duty on Cigarettes increased by 50c per packet (20) • Sugar Tax on drinks to be introduced up to 30 cent per litre • Stamp Duty on Commercial Property Increased from 2% to 6% • Vacant Property Levy increased from 3% in first year to 7% in second year and subsequent years
John Canty & Co. Chartered Accountants and Registered Auditors 3 Denny Street, Tralee, Co. Kerry. www.jcantyaccountants.ie
Personal Taxation
Social Welfare
• Revised Universal Social Charge Rates
• Increase in Social Welfare including state pension payments by €5
• 0.5% on income up to €12,012 •
• 2% between €12,013 and €19,372
Business / Farming
• 4.75% between €19,373 to €70,044 • Home Carers Tax Credit increased by €100 to €1,200
• Earned Income Tax Credit increase to €1,150
• Lower Rate Tax Band increased by €750 to €34,550
• Brexit Loan Scheme (€300m) • Stamp Duty on Commercial Property Increased from 2% to 6%
Stamp Duty • Stamp Duty on Commercial Property Increased from 2% to 6%
Housing
• Consanguinity Stamp Duty Relief (family transfers) at a
• Vacant Site Levy to be increased from 3% to 7%
rate of 1% extended for three further years
for year two and subsequent years • House Building Finance Ireland to be created to provide funding(€750m) to developers
Families
• CGT Exemption period reduced from 7 to 4 years
• Prescription Charge down to €2 per item
• Help to buy scheme retained for First Time Buyers
• Monthly threshold for Drugs Payment Scheme reduced to €134 • Mortgage Interest relief to be phased out by 2020
John Canty & Co. Chartered Accountants and Registered Auditors 3 Denny Street, Tralee, Co. Kerry. www.jcantyaccountants.ie
Business Reaction
Other Taxes Corporation Tax
‘…to reflect on a journey made, to
• No change in 12.5% tax rate
recognise both what our country has achieved and what we want to achieve.’
Capital Gains Tax • CGT Exemption period reduced from 7 to 4 years
Paschal Donohoe Finance Minister
Inheritance Tax
“The Government has taken significant steps today towards insulating
• No changes in gift or inheritance tax thresholds
the economy from externals shocks today with the announcement of a
Revenue Compliance
support other housing measures announced today.’
17% increase of €790million in public capital. These measures will also
• Additional Funds allocated to Revenue Commissioners
Tom Parlon, Construction Industry Federation(CIF)
VAT
“Budget 2018 makes steady progress in reducing high rates
• Retention of 9% VAT Rate for Tourism sector
of tax for low- and middle-income earners but there is still some
Miscellaneous
the challenges of Brexit”
• Duty on Cigarette increase by 50c per packet (20) • No change to alcohol, petrol or diesel
way to go before Ireland finds the sweet spot to protect us against Shauna Greely, Chartered Accountants Ireland President
John Canty & Co. Chartered Accountants and Registered Auditors 3 Denny Street, Tralee, Co. Kerry. www.jcantyaccountants.ie