The following is a summary of the tax changes announced by the Minister for Finance and Public Expenditure and Reform. Changes are effective from 1st January 2018 unless stated otherwise.
Income Tax
The tax credits and tax bands changes are in bold.
Tax Credit
| Tax Credit |
2017 € |
2018 € |
| Single Person |
1,650 |
1,650 |
| Married or in a Civil Partnership |
3,300 |
3,300 |
| Employee Tax Credit |
1,650 |
1,650 |
| Earned Income Tax Credit Max |
950 |
1,150 |
| Widowed Person or Surviving Civil Partner (without qualifying child) |
2,190 |
2,190 |
| Single Person Child Carer Tax Credit |
1,650 |
1,650 |
| Incapacitated Child Credit Max |
3,300 |
3,300 |
| Blind Tax Credit: Single Person
Married or in a Civil Partnership – One Spouse or Civil Partner Blind Married or in a Civil Partnership – Both Spouses or Civil Partners Blind |
1,650
1,650
3,300 |
1,650
1,650
3,300 |
| Widowed Parent: Bereaved in 2017
Bereaved in 2016
Bereaved in 2015
Bereaved in 2014
Bereaved in 2013
Bereaved in 2012 |
– 3,600
3,150
2,700
2,250
1,800 |
3,600
3,150
2,700
2,250
1,800
– |
| Age Tax Credit:
Single or Widowed or Surviving Civil Partner
Married or in a Civil Partnership |
245
490 |
245
490 |
| Dependent Relative |
70 |
70 |
| Home Carer Tax Credit |
1,100 |
1,200 |
| Personal Circumstances |
2017 € |
2018 € |
| Single or Widowed or Surviving Civil Partner, without qualifying child |
33,800 @ 20%
Balance @ 40% |
34,550 @ 20%
Balance @ 40% |
| Single or Widowed or Surviving Civil Partner, qualifying for Single Person Child
Carer Credit |
37,800 @ 20%
Balance @ 40% |
38,550 @ 20%
Balance @ 40% |
| Married or in a Civil Partnership, one Spouse or Civil Partner with Income |
42,800 @ 20%
Balance @ 40% |
43,550 @ 20%
Balance @ 40% |
| Married or in a Civil Partnership, both Spouses or Civil Partners with Income |
42,800 @ 20%
with increase of 24,800 max.
Balance @ 40% |
43,550 @ 20%
with increase of
25,550 max.
Balance @ 40% |
|
|
Tax Rates and Tax Bands
The exemption limits for persons aged 65 years and over remain unchanged:
| Personal Circumstances |
2017 € |
2018 € |
| Single or Widowed or a Surviving Civil
Partner, 65 years of age & over |
18,000 |
18,000 |
| Married or in a Civil Partnership, 65 years of age &
over |
36,000 |
36,000 |
The above exemption limits are increased by €575 for
each of the first two dependent children and by €830 for the third and subsequent children.
Marginal Relief may apply, subject to an income limit of twice the relevant exemption limit.
Mortgage Interest Relief
Relief is extended to existing recipients for a further three years on a tapered basis. Qualifying interest applies for each of the three years at the following rates:
|
2017 |
2018 |
2019 |
2020 |
| Qualifying Interest |
100% |
75% |
50% |
25% |
The interest ceilings are also reduced for each of the three years as follows
| First time buyers |
|
2017 € |
2018 € |
2019 € |
2020 € |
| Single (unmarried or not in a civil partnership) |
10,000 |
7,500 |
5,000 |
2,500 |
| Married, in a civil partnership, widowed, or a surviving
civil partner |
20,000 |
15,000 |
10,000 |
5,000 |
| Non-first time buyers |
|
2017 € |
2018 € |
2019 € |
2020 € |
| Single (unmarried or not in a civil partnership) |
3,000 |
2,250 |
1,500 |
750 |
| Married, in a civil partnership, widowed, or a surviving
civil partner |
6,000 |
4,500 |
3,000 |
1,500 |
No relief will be available from 1 January 2021.
Key Employment Engagement Programme (KEEP)
A new share option scheme will be introduced for employees of unquoted Small and Medium Enterprises with effect from 1st January 2018, subject to EU approval. Under this new scheme, any gain realised on the exercise of a qualifying share option, granted in the period
1st January 2018 to 31st December 2023, will be exempt from Income Tax, USC and PRSI, provided certain conditions are met.
Any gain on the subsequent disposal of the shares acquired under KEEP will be subject to Capital Gains Tax (CGT) in the normal way.
Pre-letting Expenses – Rented Residential Property
A new deduction is being introduced for pre-letting expenses of a revenue nature incurred on a property that has been vacant for a period of 12 months or more. The expenditure must be incurred within the 12 -month period before it is let as a rented residential premises.
A cap on allowable expenses of €5,000 per property will apply, and the relief will be subject to claw back if the property is withdrawn from the rental market within four years. The relief will be available for qualifying expenses incurred up to the end of 2021.
Universal Social Charge (USC)
Standard Rates of USC
| USC Thresholds |
| 2017 |
Rate |
2018 |
Rate |
| Income up to
€12,012 |
0.5% |
Income up to
€12,012 |
0.5% |
| Income from
€12,012 to
€18,772 |
2.5% |
Income from
€12,012 to
€19,372 |
2% |
| Income from
€18,772 to
€70,044 |
5% |
Income from
€19,372 to
€70,044 |
4.75% |
| Income above
€70,044 |
8% |
Income above
€70,044 |
8% |
Reduced Rates of USC
| USC Thresholds |
| Individuals aged 70 years or over whose aggregate income for the year is €60,000 or less.
Individuals (aged under 70) who hold a full medical card whose aggregate income for the year is €60,000 or less. |
| 2017 |
Rate |
2018 |
Rate |
| Income up to
€12,012 |
0.5% |
Income up to
€12,012 |
0.5% |
| Income above
€12,012 |
2.5% |
Income above
€12,012 |
2% |
Note 1. ‘Aggregate’ income for USC purposes does not include payments from the Dept. of Employment Affairs and Social Protection.
Note 2. A ‘GP only’ card is not considered a full medical card for USC purposes.
Exempt Categories remain unchanged.
| 2017 |
2018 |
| Where an individual’s income for a year does not exceed €13,000 |
Where an individual’s income for a year does not exceed €13,000 |
| All Dept. of Employment Affairs and Social Protection payments |
All Dept. of Employment Affairs and Social Protection payments |
| Income already subjected to DIRT |
Income already subjected to DIRT |
3% Surcharge (non-PAYE income)
The surcharge of 3% on individuals who have non-PAYE income that exceeds €100,000 in a year remains unchanged.
PRSI Contribution Rates
| PRSI |
A1 |
S1 |
B1 |
| Employee |
4.0% |
4.0% |
0.9%* |
| Employer |
10.75% |
Nil |
2.01% |
- B1 employee rate increases to 4% for income > €1,443 per week.
Value Added Tax (VAT)
Sunbed Services
The VAT rate on sunbed services will be increased from 13.5% to 23% with effect from 1 January 2018.
Charities
A compensation scheme is being introduced for charities which are unable to reclaim VAT on inputs. A capped amount will apply to the scheme, with pro-rata payments made where the amount claimed exceeds the amount available. Details of the scheme will be made available when complete.
Corporation Tax (CT)
Accelerated capital allowances for energy-efficient equipment
The accelerated capital allowances scheme for energy- efficient equipment is being extended for a further three years until 31st December 2020.
Capital allowances for intangible assets
A cap of 80% will apply in respect of the amount of capital allowances for an intangible asset, and any related interest expense, that may be deducted from relevant trading income arising from the intangible asset in an accounting period.
The cap applies in respect of expenditure incurred on intangible assets on or after 11th October 2017.
Details will be included in the Finance Bill.
Excise
Sugar Sweetened Drinks Tax (SSDT)
Subject to formal approval by the European Commission, the SSDT will be introduced, in April 2018. It will apply to first supplies in the State of water and juice based drinks with added sugar and a total sugar content of 5g or more per 100 millilitres.
| Sugar content
(per 100 millilitres) |
Rate |
| between 5g and 8g |
20 c per litre |
| 8g or more |
30 c per litre |
Drinks supplied in concentrated form will be assessed on the basis of the sugar content of the drink at the dilution level intended for consumption.
Capital Gains Tax (CGT)
CGT incentive for land and buildings held for minimum period of seven years
An amendment will be made to section 604A of the Taxes Consolidation Act 1997.
The amendment will provide that gains in respect of land or buildings that were acquired between 7 December 2011 and 31 December 2014 will be exempt from CGT if they are sold after four years and within seven years from the date they were acquired.
Capital Acquisitions Tax (CAT) / CGT
Leasing of agricultural land for solar energy production – CAT agricultural relief and CGT retirement relief
Amendments will be made to CAT agricultural relief and CGT retirement relief so that the leasing of agricultural land for the production of solar energy will not affect entitlement to the reliefs, where the area of the land which is leased for that purpose does not exceed 50% of the total area of the land concerned.
Further details will be included in the Finance Bill.
Exempt Class Thresholds
Despite expectations that the CAT thresholds would be increased, no change was announced in the Budget, so therefore the current thresholds will apply unchanged for 2018:
| Threshold
Class |
Applies to |
Threshold |
| A |
Children inheriting
from parent |
€310,000 |
| B |
Inheriting from other
blood relatives |
€32,500 |
| C |
Inheriting from
strangers |
€16,250 |
The CAT rate stays the same at 33%.
Stamp Duty
Transfer or conveyances of non-residential property
The stamp duty on the purchase or transfer of non- residential property (including land) is increased from 2% to 6%. The new rate takes effect for conveyances or transfers of such property that are executed on or after
11 October 2017. Stamp duty is payable by the purchaser.
A stamp duty refund scheme will be introduced in relation to commercial land purchased for the development of housing. Developers will need to have commenced the relevant development within 30 months of the land purchase to qualify for the refund.
Consanguinity relief and agricultural property
The consanguinity (blood relative) rate of stamp duty was due to expire on 31 December 2017 but is to be extended for another three years. On or after 11 October 2017, it is to be charged at 1% of the consideration instead of being set at half the rate of stamp duty that applies to non-residential property. This means that the amount of stamp duty payable will remain unchanged.
This relief applies to transfers of agricultural property between certain blood relatives where the transferee is a young trained farmer who intends to farm the land or lease the land to someone who farms the land for a period of six years.
Benefit in Kind – electric cars & vans
From 1st January 2018 to 31st December 2018, where an employer provides an employee or director with an electric car or van, no taxable benefit will arise for them.
This exemption is limited to cars or vans which derive their motive power solely from electricity (no exemption is available in respect of hybrid cars or vans).
DIRT
Last year’s Budget provided for a phased reduction in the DIRT rate from 41% in 2016 to 33% by 2020:
DIRT Rates
2016 2017 2018 2019 2020
41% 39% 37% 35% 33%
In 2018 the DIRT rate will therefore fall to 37%.
Exit tax
The Budget speech made no mention of a reduction in the exit tax rate from its current 41%.
Social Welfare
State Pension increases by €5 pw from end March 2018
There is a general €5 pw increase to all Social Welfare pensions, including the State Pensions (Contributory and Non-Contributory) from the end of March 2018.
The new maximum State Pension (Contributory) from March 2018 will be €243.30 pw, or €12,695 pa.
Pensions
The Minister made no reference to changes in private pension tax reliefs or taxation of benefits despite significant discussions in recent weeks.
Income Tax Relief on Personal Contributions
|
Age attained during year |
% of Net Relevant Earnings (max
€115,000) |
| Less than 30 |
15% |
| 30 – 39 |
20% |
| 40 – 49 |
25% |
| 50 – 54 |
30%* |
| 55 – 59 |
35% |
| 60 and over |
40% |
- The 30% limit above also applies to certain professional sportspeople (e.g. professional golfers) under 50 in relation to their income from their sports occupation.
Finance Bill 2017
The Finance Bill will be published on 19th October 2017.
