Budget 2017 can be summarised as lots of little things for lots of people.
The main points relating to personal and business financial planning are as follows:
* USC rate bands cut by 0.5%, from 1% to 0.5% ; 3% to 2.5% and 5.5% to 5%
* DIRT reduced by 2% per annum for the next four years.
* Self employed earned income tax credit increasing by €400 to €950
* Capital Acquisitions Tax category A threshold (parents to children) increasing by €30k to €310k. Category B and C thresholds increasing by 8%
* Ireland’s 12.5% corporate tax rate will not be changed.
* Entrepreneur relief: CGT rate of 20% reduced to 10% on disposals of qualifying assets (limit €1m)
* Start your own business scheme extended by two years
* VAT for tourism industry maintained @9%
* Help to buy scheme to rebate income tax paid up to 5% of the purchase price of new houses for first time buyers up to value of €400k. 5% of €400k applies on new houses up to a value of €600k, but no rebate on houses costing over €600k
* Interest deductability for landlords to be increased in phases to 100% (to 80% in 2017)
* Rent a room scheme rises to €14k (tax free income allowed for renting out a room)
* Home Renovation Scheme extended by two years to end-2018
* State pension payments to increase by €5 per week from March 2017
The fact that the size and timing of a €5 increase in the weekly state pension caused so much consternation among government parties should tell you one thing if you are one of the 53.3% of Irish workers with no pension savings. Taking it to a personal level, If the state struggled to pay an increase amounting to the cost of one newspaper and a cup of coffee per week, can you really risk not having control of your income in retirement? The key takeaway is start saving for your pension now – the earlier you start, the better the outcome. It’s simple to set up, and you get very attractive upfront tax relief.
The ‘help to buy’ tax refund for first time buyers will help some people to buy their first home, but does nothing to solve the main cause of the housing crisis in Ireland which is a lack of supply due primarily to issues surrounding planning regulations, availability of development financing, and investment in social housing. The issue of VAT charged on supply of new builds was not addressed.
The increase in tax free allowance for the transfer of assets from parents to children by €30k to €310k is a welcome step back toward pre-crisis levels. Categories B (other family) and C (all other) thresholds for capital acquisitions tax both increase by 8%.
Single Affordable Childcare scheme will commence in September 2017. This will include means tested subsidies for children aged six months to fifteen years with universal subsidies for all children aged six months to three years. It also includes an increase to the free pre-school scheme.This is a welcome measure to start addressing the high cost of childcare in Ireland which is a major dis-incentive for many people returning to the workforce.
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Disclaimer: The content of this article is for general information purposes only. It does not constitute investment advice as it does not take into account the investment objectives, knowledge and experience or financial situation of any particular person or persons. You are advised to obtain professional advice suitable to your own individual circumstances. Ardbrack Financial Limited makes no representations as to the accuracy, validity or completeness of the information contained herein and will not be held liable for any errors or omissions.