Largely due to the structure of our latest government, many of the tax measures for 2017 have been made public over the last few weeks, leaving little in the way of any big surprise announcements.
The main changes effecting most people are:
- Reduction in lower USC rates to 0.5%, 2.5% and 5%
- Increase in the 2.5% USC band to €18,772
- Tax rebate for first time buyers of newly built homes in operation from 19 July 2016
- Mortgage interest deduction for rented residential property increased to 80%
- Rent-a-room relief threshold increased to €14,000
- Home Carer Credit increased to €1,100 per year
- Reduction in DIRT charged on savings to 39%
- Self-employed earned income tax credit increased by €400 to €950
- Increase in all three CAT tax-free thresholds
- Increase in price of a packet of 20 cigarettes of €0.50c (pro-rata increase on other tobacco products)
Meanwhile the Special Assignee Relief Programme (SARP) and Foreign Earnings Deduction reliefs have been extended to 2020. The minimum days for the FED has been decreased from 40 to 30 to make it more accessible for SMEs.
The 9% VAT rate for the hospitality sector has been retained which will be welcomed by the industry especially in view of the impending Brexit.
The Start Your Own Business Relief available to those on certain social welfare benefits has also been extended for another two years. This, in my view, is a very good incentive for making a start in business.
Again, a welcome measure for entrepreneurs sees a further decrease in the CGT rate from 20% to 10% on certain disposals of business assets. There is a lifetime cap on this relief of €1 million.
Farmers having a particularly poor year will be able to step out of the income averaging method and pay their tax on an actual year basis. Meanwhile, the flat-rate addition for farmer's will increase from 5.2% to 5.4% . There has also been an improvement to the accelerated capital allowance scheme for energy efficient equipment for sole traders with the full allowance deductible in year one.
A tax credit has been made available for fishermen to incentivise the industry. The credit is €1,270 which would cover an income of approximately €6,350.
The Home Renovation Incentive scheme has been extended to the end of 2018 while the Living City Initiative has been expanded to include landlords.
Relief from VRT has been extended for both electric and hybrid cars.
The finance minister announced plans to implement an incentive for share based remuneration in next years budget and also indicated that a sugar-tax would be implemented and aligned with the corresponding measure in the UK (c. April 2018).
Mr Noonan, interestingly in response to the release of the Panama Papers earlier this year, also indicated that Offshore tax defaulters will not be able to avail of the voluntary disclosure regime and he is seeking mandatory criminal procedures for such offenders.
He also announced plans to review the legislation which has controversially allowed so-called 'vulture funds' to pay very little tax under section 110 of the Taxes Consolidation Act. Another item under review is the non-recovery of VAT for the charity sector.
More in depth analysis to follow on some of the more common announcements made today.