Tuesday 25 July 2017

The Dirty Dozen: tweaks that took us all by surprise

Charlie Weston and Brendan Keenan

THE Budget contained a number of measures that were little noticed when it was announced on Tuesday night.

Here are a 'dirty dozen' of the measures that proved to be a surprise, as they were not signalled in the four-year austerity plan.

Stamp duty

First-time buyers did not have to pay any stamp duty up to now. From yesterday they will have to shell out 1pc of the value of properties worth up to €1m.

This will mean an additional €3,000 on a property that sells for €300,000, according to Ronan O' Driscoll at Savills Ireland.

Redundancy payments

Redundancy payments, apart from statutory redundancy amounts, will only be tax-free up to €200,000. For amounts above this the tax will be 20pc.

This is to discourage 'golden parachutes'.

Medical cards

People with medical cards did not have to pay the income levy or the health levy up to now.

But the merging of these two levies into the universal social contribution (USC) will mean that people with a medical card, whose income is greater than €4,000, will pay the new charge, the Department of Finance confirmed. However, the spokesman added that state pensions may be excluded from this.

Pensions

Employers will have to pay 50pc PRSI on their employees' contributions to a pension scheme. This is in addition to the application of PRSI and USC to the employees' contributions themselves.

Childcare

Childcare provided by employers will now be treated as a benefit for the employee, who will pay income tax and PRSI on the value of the childcare, raising €6m a year for the Exchequer.

Previously, this facility was exempt from tax.

Start-ups

The three-year exemption from corporation tax for start-up companies is being extended to companies starting in 2011.

But the value of the relief will be limited to the amount of employer's PRSI paid by the company on behalf of employees, which may mean no relief for one-person start-ups.

Gift tax

The amounts that can be given or left to relatives, tax free, are being reduced by 20pc. This is a significant change, raising €40m in a full year.

The new limit for a gift or inheritance to a child is €332,804, and €33,280 for a sibling or lineal descendant.

Capital gains tax

Capital gains tax (CGT) was left unchanged at 25pc. In the National Recovery Plan, it was suggested that a threshold beneath which tax was not paid would be index linked to inflation allowing it to rise each year. This system operated in the 1980s. However there was no mention of the indexation of gains against inflation in Tuesday's budget.

Approved retirement funds

The annual 'imputed' distribution, or tax, applied to assets in an approved retirement fund at the end of each year goes from 3pc to 5pc, with effect from December 31 this year.

Rent relief

The tax credit available to those who rent out their own home drops from €400 to €320 for a single person. For a couple, the credit drops from €800 to €640.

Home-carer tax credit

For a spouse caring for children or a handicapped person, the carer tax credit - which is a tax free portion of income - drops from €900 a year to €810.

Car benefit in kind

The benefit in kind for those who have a company car will in future be based on the car's level of CO2 emissions, with cars with lower emissions getting relief.

Irish Independent

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