Wednesday 29 January 2020

What budget 2017 means for you – the experts speak

Eleanor Collier

What does Budget 2017 mean for your finances and what are the direct implications for you and your pocket?

From reductions in the gap between self-employed and PAYE workers, the Help-to-Buy Scheme, childcare subsidies, property, VAT and Rent-A-Room, Finance Minister Michael Noonan and Public Expenditure Minister Paschal Donohoe have announced sweeping changes to varying reactions still unfolding across the sectors.

Three KPMG financial and real-estate experts spoke to and gave their reaction to what Budget 2017 means for Irish people across tax rates, property and the self-employed: 

Cautious and Prudent – But Some Disappointment

“This budget is cautious and prudent in its approach”, says Conor O’Brien, Partner and Head of Tax and Legal Services, KPMG in Ireland.

“There are no new personal taxes, some modest USC relief on the first c. €70,000 of income and efforts to improve access to housing,” he says.

“While a halving of the CGT rate applicable to qualifying disposals by entrepreneurs to 10% is to be welcomed, there will be some disappointment that an opportunity has been lost to make Ireland more attractive to entrepreneurs, particularly in relation to the relatively low €1m limit that applies to such gains when compared to STG£10m in the UK.”

‘Help-to-Buy’ Scheme Will Help Supply

Budget 2017 has introduced a number of measures to help address issues with housing supply.  The key measure is the Help to Buy scheme, which gives first-time buyers a rebate of income tax paid over the previous four tax years, up to a maximum of 5 per cent of the purchase price of a new home up to a value of €400,000. 

On this move, Jim Clery, Head of Real Estate with KPMG in Ireland says: “We hope this will assist first time buyers to raise the necessary deposit to acquire their first home.  It is highly targeted at first time, new build, owner-occupiers with 80%+ mortgages.”

“We think it should help supply to increase.  Other measures will assist certain landlords as well as householders who rent rooms in their home. No specific tax measures have been announced aimed at releasing land or building new properties, which is a pity, though relaxation of the Living City initiative may have an impact.”

On inheritance …

Building on improvements in Budget 2016, this year’s Budget delivers further increases in the tax-free thresholds for those inheriting property and other assets.  Jim Clery points out that “An increase of €30,000 in the Group A Threshold (Parent-Child) builds on last year’s increase of €55,000, and now brings the threshold broadly back to levels last seen in 2011 which is to be welcomed in the context of improving property values.” 

“For children inheriting property worth more than €310,000 in 2017, it represents a tax saving of close to €10,000 and €18,000 when one takes account of the 2016 and 2015 changes respectively and delivers a cumulative benefit of €28,000.  The Government states a target threshold for children is €500,000, to be achieved over the lifetime of the Government.”

Budget Has Reduced the Gap

The 2017 Budget has reduced the gap between Self-employed individuals and PAYE workers in relation to the earned income / PAYE tax credit differential. 

“Whilst PAYE and Self Employed workers earning up to €70,000 will each benefit from the reduced USC rates, self-employed individuals will also get the benefit of the increase of €400 in the earned income credit which has been increased to €950” notes Robert Dowley, Partner, Private Client Services, KPMG in Ireland.  

“Nevertheless the self-employed credit still remains some €700 below the equivalent PAYE credit,” he points out.


What does Budget 2017 mean for you?  Check now and use this KPMG Budget 2017 Calculator to calculate exactly how the Budget affects your finances.

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