Budget 2016

Taxation

Income tax

The Home Carer's Tax Credit that is given to married couples or civil partners where one spouse or civil partner works in the home caring for a dependent person is increasing from €810 to €1,000 for 2016. The home carer’s income threshold is increasing from €5,080 to €7,200.

A new Earned Income Credit of €550 is being introduced for taxpayers earning self-employed trading or professional income in certain cases and to business owner/managers who are ineligible for a PAYE credit on their salary income.

Universal Social Charge (USC)

Incomes of €13,000 (was €12,012) or less will be exempt from USC in 2016. Once your income is over this limit, you will pay the relevant rate of USC on all of your income. The rates and thresholds for USC will change as follows:

2015		2016
Income up to €12,012	1.5%	Income up to €12,012	1%
€12,012.01 to €17,576.00	3.5%	€12,012.01 to €18,668.00	3%
€17,576.01 to €70,044.00	7%	€18,668.00 to €70,044.00	5.5%
Income above €70,044.01	8%	Income above €70,044.01	8%
Self-employed income in excess of €100,000.01	11%	Self-employed income in excess of €100,000.01	11%

Medical card holders and people aged 70 years and over whose aggregate income does not exceed €60,000 will pay a reduced rate as follows:

• The first €12,012 @ 1%
• Income over €12,012.01 @ 3%

PRSI

Employee PRSI

A new weekly tapered PRSI credit of €12 is being introduced for employees insured at Class A whose earnings are between €352.01 and €424 in a week. A similar PRSI credit will apply to Class E and Class H employees with weekly earnings between €352.01 and €422 or €424, respectively.

The maximum PRSI credit of €12 per week applies to gross weekly earnings of €352.01. A person earning €352.01 pays €14.08 PRSI (4%). After the €12 credit is deducted they will pay PRSI of €2.08.

For people earning between €352.01 and €424, the credit of €12 is reduced by one-sixth of earnings over €352.01. For example, a person earning €377 would get a PRSI credit of €7.83 – this is one-sixth of the difference between €377 and €352.01 subtracted from the maximum credit of €12. There is no PRSI credit once earnings exceed €424 (January 2016). This provision will reduce the weekly PRSI bill for over 88,000 employees.

Employer PRSI

The lower 8.5% Class A rate of employer PRSI will apply to weekly earnings up to €376. This threshold will increase from the current €356 (January 2016). This provision will benefit 26,000 employers. These PRSI provisions will cost €21 million in 2016.

Excise duties

The excise duty on a packet of 20 cigarettes is increasing by 50 cent (including VAT) with a pro-rata increase on other tobacco products, with effect from midnight on 13 October 2015.

The rate of Motor Tax is being reduced for all vehicles above 4,000kgs, with a new annual rate of €500 for vehicle between 4,000kgs and 12,000kgs and €900 for vehicles over 12,000kgs.

Capital Acquisitions Tax

The Group A tax-free threshold, which applies primarily to gifts and inheritances from parents to their children, is being increased from €225,000 to €280,000. This increase applies in respect of gifts or inheritances received on or after 14 October 2015.

Stamp duty

The current €2.50 per annum charge on ATM cards and €5 on combined (ATM and debit) cards is being abolished from 1 January 2016.

A new 12 cent fee per ATM withdrawal is being introduced from 1 January 2016. The total fee paid per annum per card will be capped at €2.50 on ATM cards and €5 on combined (ATM and debit) cards.

Contactless payments

The transaction limit on contactless payments is being increased from €15 to €30 on 31 October 2015.

Local Property Tax (LPT)

Following a review of the Local Property Tax, it is proposed that the revaluation date for the Local Property Tax should be postponed from 2016 to 2019. The postponement of the date means that home owners will continue to pay LPT based on the original valuations that applied for 2013-2016.

The review also proposes some changes as regards exemptions from LPT for properties significantly affected by pyrite.

Other income tax measures

The Home Renovation Incentive is being extended until 31 December 2016.

The changes announced to the Employment and Investment Incentive scheme in Budget 2015 are being commenced and the scheme is being amended to include expansion works on existing nursing homes.

General Stock Relief , Stock Relief for Young Trained Farmers, Stock Relief for Registered Farm Partnerships and the Stamp Duty Exemption for Young Trained Farmers are being extended until 31 December 2018.

A new farm succession transfer partnership model is being introduced, subject to EU State Aid approval.

Profits or gains from the occupation of woodlands are being removed from the high earners’ restriction.

Social Welfare

The total social protection budget in 2016 will increase by over €250 million. Total expenditure in 2016 will be €19.638 billion.

Payments to families and children

An extra €98 million is being provided to support families with children in 2016.

Paternity Benefit

A new Paternity Benefit is being introduced for fathers availing of the new 2 weeks’ statutory paternity leave. It will be paid at €230 per week in respect of births from September 2016. The PRSI contribution conditions will be the same as those for Maternity Benefit (September 2016).

Child Benefit

The rate of Child Benefit will increase by €5 to €140 per month for each child (January 2016). Families with twins receive one and a half times the normal monthly rate for each child. Families with multiple births receive Child Benefit at double the normal monthly rate for each child.

 

Family Income Supplement (FIS)

Family Income Supplement thresholds will be increased by €5 for each of the first two children per week. The threshold for the third and all other children will increase by €10 (January 2016).

The level of FIS payment will continue to be based on 60% of the shortfall between net weekly family income and the applicable weekly family threshold. This measure will cost €18 million. It will benefit nearly 60,000 families and over 131,000 children. It will also result in an additional 1,500 households and 3,365 children becoming eligible for FIS.

School Meals Programme

An additional €3 million is being provided towards the School Meals Programme, increasing the funding to €42 million in 2016.

Older people and carers

State pensions

The weekly rate for people getting State pensions will increase by €3 per week. Payments to carers and widowers, widows and surviving civil partners aged over 66 will also increase by €3 per week (January 2016).

Increases for Qualified Adults aged under 66 years will go up by €2 and increases for qualified adults aged 66 years or over will go up by €2.70 (January 2016). These changes will benefit 583,000 recipients of payments and 93,500 dependants.

Carers

The name of the Respite Care Grant will be changed to the Carer’s Support Grant to better reflect how it is used by recipients. The grant will increase by €325 to €1,700 per year for each person being cared for (June 2016). This will benefit 86,000 carers.

Carer’s Allowance will be paid for 12 weeks (currently 6 weeks) after the death of the person being cared for (January 2016).

Free travel

There is €3 million in additional funding for the Free Travel Scheme in 2016. This provision will provide for the increased numbers of people eligible for the scheme.

People of working age

Jobseeker’s Transitional payment

The earnings disregard for Jobseeker’s Transitional payment will increase from €60 to €90 per week for existing and new recipients. All earnings above €90 will be assessed at 50% rather than the current assessment of 60% (January 2016). This measure will cost €8 million a year and will benefit 5,900 people in 2016.

Employment activation

There will be an increase of €2.50 per week in top-up payments paid towards meals and travel costs for Community Employment (CE), Rural Social Scheme (RSS), Gateway, Job Initiative, Tús and JobBridge participants (January 2016). This will benefit 43,000 people across these five activation schemes.

Fuel Allowance

Fuel Allowance will increase by €2.50 per week to €22.50 per week. Fuel Allowance is paid to people getting long-term social welfare payments - including pensioners, people with disabilities, people parenting alone and jobseekers (January 2016). This provision will benefit 381,000 households.

Christmas Bonus

A 75% Christmas Bonus will be paid in December 2015 to people getting a long-term social welfare payment (minimum payment of €20).

People getting the following payments will receive the Christmas Bonus:

• State Pensions and Widow's/Widower's/Surviving Civil Partner's Pensions
• Invalidity Pension, Blind Pension, Disability Allowance, Carer's Allowance, Domiciliary Care Allowance and guardian's payments
• Long-term Jobseeker's Allowance including Jobseeker's Transition payment, Pre-Retirement Allowance, One-Parent Family Payment, Deserted Wife's Benefit and Allowance and Farm Assist
• Back to Work Allowance, Back to Work Family Dividend, Community Employment, Rural Social Scheme, Tús, Gateway and Job Initiative

This will benefit 1.23 million people at a cost of €197 million.

Pay-Related Social Insurance (PRSI)

Employee PRSI

A new weekly tapered PRSI credit of €12 is being introduced for employees insured at Class A whose earnings are between €352.01 and €424 in a week. A similar PRSI credit will apply to Class E and Class H employees with weekly earnings between €352.01 and €422 or €424, respectively.

The maximum PRSI credit of €12 per week applies to gross weekly earnings of €352.01. A person earning €352.01 pays €14.08 PRSI (4%). After the €12 credit is deducted they will pay PRSI of €2.08.

For people earning between €352.01 and €424, the credit of €12 is reduced by one-sixth of earnings over €352.01. For example, a person earning €377 would get a PRSI credit of €7.83 – this is one-sixth of the difference between €377 and €352.01 subtracted from the maximum credit of €12. There is no PRSI credit once earnings exceed €424 (January 2016). This provision will reduce the weekly PRSI bill for over 88,000 employees.

Employer PRSI

The lower 8.5% Class A rate of employer PRSI will apply to weekly earnings up to €376. This threshold will increase from the current €356 (January 2016). This provision will benefit 26,000 employers. These PRSI provisions will cost €21 million in 2016.

Local Property Tax (LPT)

Following a review of the Local Property Tax, it is proposed that the revaluation date for the Local Property Tax should be postponed from 2016 to 2019. The postponement of the date means that home owners will continue to pay LPT based on the original valuations that applied for 2013-2016.

The review also proposes some changes as regards exemptions from LPT for properties significantly affected by pyrite.

Housing tax reliefs

The Home Renovation Incentive is being extended until 31 December 2016.

Rent Tax Relief will continue to be reduced, as announced in Budget 2011:

Maximum qualifying amounts for 2016
Single under 55 years	€400
Single over 55 years	€800
Married or in a Civil Partnership, Widowed or a Surviving Civil Partner, under 55 years	€800
Married or in a Civil Partnership, Widowed or a Surviving Civil Partner, over 55 years	€1,600

No new changes were announced to Mortgage Interest Relief, which only applies to mortgages taken out by 31 December 2012. The previously announced rates and ceilings will apply in 2016 in accordance with the tables published by Revenue.

Employment

Minimum wage

From 1 January 2016, the statutory minimum wage will increase to €9.15 from €8.65 per hour.

Paternity leave

Statutory paternity leave of 2 weeks is to be introduced, together with a new Paternity Benefit, in respect of births from September 2016.

Small and medium businesses

Extension of 3-year corporation tax relief for start-up companies

This measure provides relief from corporation tax on trading income (and certain capital gains) of new start-up companies in the first 3 years of trading. This relief is being extended to 2018.

Earned Income Credit

An Earned Income Credit of €550 is being introduced for taxpayers earning self-employed trading or professional income and for business owners or managers who are ineligible for a PAYE credit on their salary income.

Revised CGT entrepreneur’s relief

A reduced rate of Capital Gains Tax (CGT) is being introduced for individuals who propose to sell their business. A lower CGT rate of 20% will apply to the net chargeable gains arising on disposals of assets comprising the whole or a discrete part of a trade or business, subject to a lifetime limit of €1 million on such gains, with effect from 1 January 2016.

Reduced fees for card payments

Interchange fees are charged to retailers for both debit and credit card transactions. To reduce the costs to retailers of accepting card payments, a maximum fee limit is now being set on interchange for both debit and credit cards. Both of these limits will come into force on 9 December 2015. Some smaller schemes will be exempted from these new limits until 9 December 2016, to give them time to restructure their business models as required.

Employment And Investment Incentive (EII) and Start Up Relief For Entrepreneurs (SURE)

The EII and SURE are being amended to comply with State aid rules. In addition, expansion works to existing nursing homes will qualify for the EII and the changes announced to the EII in Budget 2015 are being commenced from 13 October 2015.

Knowledge Development Box

The Knowledge Development Box (KDB) is being introduced to encourage companies to develop intellectual property in Ireland. The KDB will provide that a corporation tax rate of 6.25% will apply to the profits arising to certain intellectual property assets which are the result of qualifying research and development activity that is carried out in Ireland.

Excise duty relief for microbreweries

The tax relief reducing the standard rate of Alcohol Products Tax by 50% on beer produced in microbreweries will now be available upfront as well as through a rebate.

Valued Added Tax (VAT)

The 9% rate of VAT is being retained for tourism-related activities.