2018 t e g d Bu
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BUDGET OVERVIEW Middle-income earners and two-income families were the main, albeit modest, beneficiaries of Budget 2018 with a combination of USC cuts and a widening of the top income tax band likely to deliver an increase just under 1 % in average take-home pay.
The biggest revenue-raising measure and the one that drew the ire of the building lobby was a trebling of stamp duty on commercial property transactions from 2% to 6%, which is expected to net the exchequer nearly €400 million a year.
In his first Budget, Minister for Finance Paschal Donohoe also announced a raft of measures to tackle the housing crisis, including a new State-run lending vehicle to get builders on to sites, a doubling of the proposed vacant site tax levy and a bigger capital allocation for social housing.
As expected, Mr Donohoe’s tax measures centred on cuts to the USC, which benefitted anyone earning more than €13,000 a year, the income limit at which people are liable for the charge. He also increased the earned income credit for the self - employed by €200 to €1,150, falling well short of PAYE parity of €1,650.
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3 HEALTH
SOCIAL WELFARE
• €680 million in extra funding, bringing total funding to €15.3 billion for 2018.
• State pension, disability and jobseekers allowance will rise by €5 per week.
• Extra 1,800 frontline staff across acute, mental health, primary and disability sectors.
• Christmas Bonus - 85% of weekly payment will be paid out this year.
• €90 million for a new Access Plan to help patients get the most appropriate care.
• €25 cap on prescription charges for over 70s, reduced to €20.
• €55 million will go to the National Treatment Purchase Fund.
• Prescription charges for all medical card holders under 70 from €2.50 per item to €2 per item. • The threshold for the Drugs Payment Scheme is dropping from €144 to €134. • The home carer credit will rise by €100 to €1,200.
EDUCATION • €10 billion on education, 16% of total expenditure. • 1,300 additional posts, pupil teacher ratio will drop at national school level to 26:1.
JUSTICE
• 1,000 additional SNAs can be recruited in time for September 2018.
• Additional allocation for Justice will be €63 million.
• €1.7 billion for special education needs.
• 500 civilians to be hired in 2018.
• 800 new Gardai to be hired and trained in 2018.
• National Training Fund levy up from 0.7% to 0.8% in 2018.
HOMEOWNERS RAINY DAY FUND • €1.5 billion fund established. • Transferred from Ireland Strategic Investment Fund.
• Mortgage Interest Relief for people who bought 2004-2012 to be tapered 75% in 2018, 50% 2019, 25% 2020.
4 INCOME TAX, RATE BANDS & PRSI
THE SUGAR TAX
• No reduction in the higher rate of income tax of 40%.
• 30c per litre on drinks with over 8 grams of sugar per 100ml.
• Increase in the standard rate tax band of €750 to €34,550 for single individuals and €43,550 for married one income earners.
• 20c on drinks between 5 and 8 grams per 100ml.
• No change to PRSI.
ARTS & SPORTS INFRASTRUCTURE • €9 million extra allocated for public transport and roads up to €414 million to 2018.
USC • 2.5% rate falls to 2%, with ceiling for the new rate increasing from €18,772 to €19,372. • 5% of USC falls to 4.75%. • USC and PRSI will merge over time. • The new increased national minimum wage of €9.55 per hour won’t pay upper rates of USC.
• €2.5 million for the Irish language and the Gaeltacht. • €111 million capital is being provided for sport next year.
CLIMATE CHANGE • €36 million to expand energy efficiency programmes. • €17 million to fund the rollout of renewable heat incentive and electric vehicles. • 0% benefit in kind on company cars to incentivise the take up of electric cars. • Relief from CGT and CAT of leased farmland for solar panels.
5 FARMING & RURAL
COMMERCIAL PROPERTY
• Increase in funding of €64 million for Agriculture, to a total of €1.5 billion in 2018.
• Stamp duty on commercial property sales is to increase from 2% to 6%.
• €25 million loan scheme for the agri-food sector dealing with Brexit.
• Vacant site levy increase from 3% to 7%.
• Stamp duty relief of 1% for inter-family farm transfers for another three years.
• €750 million made available from the ISIF to fund commercial investment in housing via a new vehicle, Home Building Finance Ireland.
• Rural Affairs budget increased to €19 million for Sustainable Rural Development.
FAMILIES & CHILDREN
• CGT relief reduced from 7 to 4 years.
EXCISE & VAT • 9% VAT rate for the tourism sector to remain.
• An additional €20 million allocation will support a range of childcare measures. • Family income supplement threshold rising by 10% for families with three children. • Tusla’s budget will rise by €40 million to €754 million supporting the introduction of mandatory reporting under Children First Act. • Extended free pre-school programme to be extended from September 2018, to give two year service.
• A packet of 20 cigarettes will increase by 50 cents. • There are no changes to alcohol excises. • There are no changes to motor tax, petrol, diesel or VAT. • VAT on sunbed services to be increased from 13% to 23%.
6 SMES & SELF EMPLOYED • Earned Income Tax Credit increased by €200 to €1,150 per annum • Capital Gains Tax reduced to 10% when selling a company, limited to €1 million • Brexit loan scheme of up to €300 million, at competitive rates, including food businesses • €871 million total budget for Enterprise, to allow 40 more staff to be recruited • Keep Employee Engagement Programme targeting key workers with tax breaks on share options.
SOCIAL HOUSING • €1.83 billion for housing. • 3,800 new social homes will be built next year. • Housing assistance payment will rise by €149 million. • €116 million for homeless and emergency accomodation services.
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TAX CREDITS FOR YEAR 2018
PERSONAL
INCOME TAX RATES 2018
2018 2017
SINGLE PERSON
MARRIED PERSON
€
€
2018
2018 (two incomes)
Single
1,650
1,650
20% of 1st €34,550
20% of first €69,100*
Married
3,300
3,300
40% Balance
40% balance
Widowed Person
2,190
2,100
Single Child Carer
1,650
1,650
Home Carer Credit
1,200
1,100
Earned Income Credit
1,150
950
PAYE
1,650
1,650
WIDOWED PARENT BEREAVEMENT
2018 2017
In Year of Assessment
3,600
3,600
Incapacitated Child
3,300
3,300
Dependent Relative
70
70
BLIND PERSON
2018 2017
Single/Married
1,650
1,650
Both Blind
3,300
3,300
AGE CREDIT
2018 2017
Single/Widowed
245
245
Married
490
490
*Transferable between spouse up to a max of €43,550 for any one spouse
Single Parents
(One Income)
20% of 1st €38,550
20% of 1st €43,550
40% Balance
40% Balance
INCOME EXEMPTION LIMITS SINGLE/WIDOWED 65 years or over
MARRIED COUPLES 65 years or over
2018 2017 €
€
18,000
18,000
2018 2017 €
€
36,000
36,000
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UNIVERSAL SOCIAL CHARGE EMPLOYEE & SELF-EMPLOYED
2018
2017
0% on total earnings <€13,000 per annum
0% if earnings <€13,000 per annum
0.5% on €0 to €12,012 per annum
0.5% on €0 to €12,012 per annum
2% on €12,013 to €19,372 per annum
2.5% on €12,013 to €18,772 per annum
4.75% on €19,373 to €70,044
5% on income between €18,773 to €70,044
8% on €70,045 to €100,000
8% on income between €70,045 to €100,000
PAYE INCOME - 8% on excess over €100.000
PAYE INCOME - 8% on excess over €100.000
SELF EMPLOYED INCOME 11% on excess over €100,000
SELF EMPLOYED INCOME - 11% on excess over €100,000
PRSI EMPLOYER
2018
2017
Contribution for Class A
PRSI
PRSI
10.05%
10.05%
TRAINING LEVY
0.80%
0.70%
10.85% on all income
10.75% on all income
TOTAL
EMPLOYEE SELF EMPLOYED/ DIRECTORS CONTRIBUTION PRSI
2018
2017
*4% on all income
*4% on all income
2018
2017
**4% on all income
**4% on all income
* Not applicable if earnings less than €18,300 p.a. (€352 p.w.) **4.00% subject to a minimum payment of €500
Please note that this Budget Briefing is merely a general guide and should not be used as a substitute for professional financial advice. Decision making should be based on sound professional advice, taking into account your individual circumstances. While we have made every effort to ensure the accuracy of this Budget Briefing, we do not take any responsibility or liability for any omissions or errors, losses or injuries cause.