Budget 2012: The main points ... from mortgage relief to carbon tax
- The Minister said the primary purpose of this Budget is to support the creation of jobs in the short term, the medium term and the long term.
- He will introduce a Special Assignee Relief Programme, which will allow multinational and indigenous companies to attract key people to Ireland so as to create more jobs and to facilitate the development and expansion of businesses in Ireland.
- "Significant reductions" in the rate of Stamp Duty on the transfer of commercial property, which will also apply to farmland.
- Modifying retirement relief from Capital Gains Tax so it better incentivises the timely transfers of farms and businesses before the current owners reach the age of 66.
- 50pc stock relief for all registered farm partnerships and 100pc stock releif for certain young trained farmers forming such partnerships.
Research & Development
- The first €100,000 of R&D expenditure of all companies will be allowed on a volume basis for the purpose of the R&D Tax Credit.
- The Government was disappointed earlier this year when Aer Lingus and Ryanair were unwilling to provide additional flights to Ireland in exchange for the abolition of the Air Travel Tax.
- A special allocation will be made in the Revisted Estimates Volume early in the new year in relation to The Gathering in 2013 and it will be launched on St Patrick's Day.
Mortgage Interest Relief
- The Minister is going to fulfil the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30pc for first time buyers who took out their first mortgage between 2004 and 2008.
- NAMA has policy guidance where it can approve rent reductions when they are shown to be in excess of current market levels and viability is threatened. It allows for the appointment of an independent valuation of market rent where necessary. If a tenant is not getting satisfaction in negotiations he can contact NAMA directly.
- Stamp Duty for commercial property transfers will be reduced from the current top rate of 6pc to a flat rate of 2pc on all amounts from midnight.
First time buyers
- For those who wish to buy a home in 2012: First time buyers will get mortgage interest relief at a rate of 25pc rather than the 15pc proposed by the previous Government.
- Government ‘progressing’ with the implementation of recommendations made by a review group recently
- Department now estimates the General Government Deficit for 2011 will be 10.1pc of GDP, less than the 10.6pc required by the EU/IMF. Target for 2102 is 8.6pc of GDP.
- Full measures already announced account for €600m; Announcing additional new tax measures today worth €1bn approximately.
- Two pillar banks have SME lending targets of €3bn each this year, €3.5bn each next year and €4bn each in 2013.
Legacy property tax reliefs
- Property relief surcharge of 5pc will be imposed on investors with an annual gross income of over €100,000.
Reliefs in Section 23-type investments
- Will not be terminated or otherwise restricted for investors with annual income under €100.
Universal Social Charge:
• From 1 January, exemption level will be raised from €4,004 to €10,036. Revenue will collect USC on a cumulative basis next year.
• Marginal rate of taxation on income is now 53% for PAYE workers and 55% for the self-employed.
• The top 5% of earners pay 44% of income tax according to Revenue records.
• The Programme for Government states that there will be no increase in income tax. This is the key issue for this Budget.
• ‘’I want to make clear that there will be no increase in income taxes in this Budget – no increases in rates, no narrowing of bands and no reductions in personal tax credits’’.
• Wages and salaries in January will be no less than wages and salaries in December, so people will continue to have discretion on how they spend their income.
• Iincreased by 2pc to 23pc
• Removal of the remaining 50% employer PRSI relief on employee pensions. Broadening PRSI base to cover rental, investment and other forms of income from 2013.
Approved Retirement Fund
• Increasing the rate of notional distribution on the highest value Approved Retirement Funds and similar products to 6%. Increase the rate of tax on the transfer of an ARF on death to a child over 21 from 20pc to 30pc.
• Abolishing the "citizenship" condition for payment of the Domicile Levy so as to ensure that "tax exiles" cannot avoid it by renouncing their citizenship. Intends to keep the contentious issue of the tax treatment of tax exiles under constant review.
Capital Acquisitions Tax
• From 25pc to 30pc after today.
Capital Gains Tax
• From 25pc to 30pc after today.
Capital Acqusitions Tax
- Reducing the Group A Tax-free threshold from €332,084 to €250,000.
- IRT from 27pc to 30pc.
• Increase in Carbon Tax on fossil fuels from €15 per tonne to €20 per tonne. Applied to petrol and auto-diesel from midnight.
• Allowing farmers a double income tax deduction for increased costs arising from the change in carbon tax.
• Not be applied until May 2012.
• No increase of Carbon Tax to solid fuels, so no increase for coal or peat.