Budget 2015: The Full List of Measures

October 14, 2014

Here is the full list of Tax measures included in Budget 2015.

Some, but not all, of  these measures were unveiled in Minister Noonan’s Budget Speech to the Dáil this afternoon.

Michael Noonan announces Budget 2015.

Michael Noonan announces Budget 2015.

Income Tax 

The standard rate band of income tax increases by €1,000 from €32,800 to €33,800 for single individuals and from €41,800 to €42,800 for married one earner couples.

The higher rate of income tax falls from 41% to 40%.

USC

The USC rates and bands for 2015 are as follows:

Incomes of €12,012 or less are exempt.

  • Otherwise the first €12,012 is @ 1.5%
  • From €12,013 to €17,576, USC is @ 3.5%
  • From €17,577 to €70,044, USC is @ 7%
  • From €70,044 to €100,000, USC is @8%
  • PAYE income in excess of €100,000 faces a USC charge of 8%
  • Self-employed income in excess of €100,000 faces a USC charge of 11%.

There are now 8 different bands of USC, a tax which is now more complex than ever before.

Tobacco 
The excise duty on a packet of 20 cigarettes rises  by 40 cents (including VAT). A  a pro-rata increase on other tobacco products will also take immediate effect.

The excise duty on roll-your-own tobacco rises by an additional 20 cents (including VAT) per 25g pouch, again immediate effect.

Betting Duty
Betting Duty is being extended in 2015 to remote operators and betting exchanges.

Vehicle Registration Tax (VRT)

The VRT reliefs on the purchase of

  • hybrid electric vehicles,
  • plug-in hybrid electric vehicles,
  • plug-in electric vehicles, and
  • electric motorcycles

are being extended to 31 December 2016.

Microbreweries
The special relief on Excise Duty, which cuts the standard rate of Alcohol Products Tax by 50% on beers from microbreweries producing 20,000 hectolitres or less per annum is being extended to microbreweries  produce 30,000 hectolitres or less per annum.

Mineral oil

A 30 day deferral of excise duty on mineral oil is to be introduced.

Natural Gas as a Transport Fuel

The excise rate for Natural Gas and BioGas as a propellant (ie transport fuel) will be set at the current EU Minimum rate and this rate will be held for a period of eight years.

Artists’ Exemption 

The threshold for the artists’ exemption from Income Tax is being increased from €40,000 to €50,000.

The Exemption is also being extended to non-resident artists, who are resident in another EU/ EEA State.

The Foreign Earnings Deduction is being extended for a further 3 years until the end of 2017 and is now widened to  include Chile, Mexico and certain unspecified countries in the Middle East & Asia.

The number of qualifying days abroad is being reduced from 60 to 40.

The minimum stay in a country is cut to 3 days and now includes travelling time.

The Special Assignee Relief Programme is also being extended for a further 3 years, until the end of 2017.

The upper salary threshold is being removed.

The residency requirement is being amended to only require Irish residency.

The exclusion of work abroad is also removed.

The requirement to have been employed abroad by the employer is being reduced to 6 months.

Employment and Investment Incentive
The EII is being amended “to raise company limits, increase the holding period by 1 year and include medium-sized companies in non-assisted areas and internationally traded financial services”. These measures are subject to EU approval.

Hotels, guest houses and self-catering accommodation will remain eligible for a further 3 years, and the operation and management of nursing homes will be included for  the next 3 years.

Seed Capital Scheme
The scheme is being rebranded as “Start-Up Relief for Entrepreneurs” (SURE) and being widened to included those who have been unemployed up to 2 years.

Rent-A-Room  Scheme

The threshold for exempt income under the Rent-A-Room Scheme is being increased from €10,000 to €12,000 per annum.

Water Charges
Tax relief at 20% will be provided on water charges, up to a limit of €500 per annum. Relief will be given annually for charges paid in the previous tax year.

Home Renovation Incentive
The Home Renovation Incentive (which allows a 13.5% tax rebate on refurbishment, extension and improvement work) will now include rental
properties “owned by landlords subject to income tax”.

Capital Gains Tax

The CGT incentive relief, which provided Capital Gains Tax exemption in respect of the first 7 years of ownership, for properties purchased between 7 December 2011 and 31 December 2014 will not being extended beyond 31 December 2014.

Where property purchased in this period is held for seven years, the gains accrued in that period will not attract CGT.

Windfall Tax

The 80% Windfall Tax on land disposal gains & land development profits attributable to planning decisions is being abolished from 1 January 2015.

Farming

The amounts of long term land leasing income exempt from Income Tax rises by 50%.  A new threshold is being introduced for lease periods of 15 or more years, with income of up to €40,000 being exempted.

The long term land leasing income exemption is also being extended to companies which lease land.

The 40 years of age threshold for leasing relief is being abolished.

 

Income averaging, which allows full-time farmers to calculate their income tax position based on rolling average earnings over 3 years, will now be revised to calculate incomes over 5 years.

It is also extended to farmers with other income from “on-farm diversification”.

 

The farmer’s flat-rate addition rises from 5% to 5.2%. This addition VAT-unregistered farmers for VAT incurred on their farming inputs.

 

The deadline for Capital Gains Tax relief for farm restructurings  is being extended to 31 Decemeber 2016.

CGT Retirement Relief can now apply to land that has been leased for up to 25 years in total (increased from 15) ending with disposal.

Retirement Relief is being extended to land currently let under conacre (11 month letting) and which is disposed of by 31 December 2016 or enters a long-term (5-25 years) letting arrangement (ending with disposal) by that date.

CAT Agricultural Relief will now only be available:

  • for agricultural property gifted to or inherited by active farmers, and
  • to individuals who are not active farmers but who lease out the property on a long-term basis for agricultural use to active farmers.

In addition, 5-35 year Agricultural leases  to active farmers will be exempt from Stamp Duty.

Consanguinity relief, which halves the applicable rate of Stamp Duty, will be extended for a period of three years for transferors under 65 years old, where the transferee is an active farmer.

Corporation Tax

The 2003 base year restriction for the R&D Tax Credit is being removed from 1 January 2015.

The limited Corporation Tax relief on trading income (and certain capital gains) of new start-up companies in the first 3 years of trading is being extended until the end of 2015.

This 80% restriction on aggregate capital  allowances in respect of intangible assets (and any interest expense incurred on borrowings to fund the expenditure) will be removed.

The Accelerated Capital Allowances for Energy Efficient Equipment, which incentivises companies to invest in energy efficient equipment, is being extended to the end of 2017.

DIRT

A new relief from DIRT will apply on savings used by first time house buyers towards the deposit on their first home.

The Dept of Finance Summary of 2015 Budget Measures is here.


Is Your Company’s R&D Tax Credit Claim In Order?

August 12, 2013

Revenue are examining claims for Research & Development (R&D) Tax Credit, as audits reveal that some companies have overclaimed tax credits and refunds.

This is according to a Revenue statement quoted in Carl O’Brien’s article in today’s Irish Times.

Revenue probe R&D Research & Development Tax Credit Claims

The R&D Tax Credit Scheme allows companies a 25% tax credit for the cost of carrying out qualifying R&D activities.

This is in addition to the normal 12.5% writeoff against income for Corporation Tax purposes, and means that companies can recoup 37.5% of such costs against their tax liabilities.

For example a company spends €100,000 (eg wage costs) on a qualifying R&D activity.

They claim this expenditure as a deduction in their accounts and Corporation Tax return. This yields a 12.5% tax saving, worth €12,500.

They can also claim a further 25% credit if the cost relates to a “qualifying R&D activity”. This yields a further 25% tax saving, worth €25,000.

The total tax saving is €37,000, on spending of €100,000.

It is easy to see that the scheme can be very lucrative. Over 1,200 companies have availed of it to date, and in 2010 they claimed approx. €224 million in tax reliefs. However it is not a free lunch and there are detailed terms and conditions.

Revenue are now concerned that some firms have breached these terms by overclaiming R&D credits, and they are now beefing up their audit programme in response.

The Irish Times claim that audits of 32 companies have uncovered 26 cases where a total of €6 million was overclaimed. However the majority of cases are said to have involved “accounting errors” and in only one case was a tax credits claim ruled fully out of order.

If you own or work in an R&D claimant company, the lessons are clear:

  • You must ensure that each claim refers to a properly qualifying research and development activity.
  • Where a cost refers only partly to an R&D activity (eg staff hired to carry on R&D and other work) it is important to correctly apportion the R&D and other elements. If anything, it pays to be conservative in apportioning R&D and non-R&D costs.
  • All R&D spending must be clearly documented as such and you must keep detailed records of all R&D activity.
  • Don’t forget that the scheme only covers incremental expenditure over the total of such spending in the 2003 base year, and is also subject to further limits based on historic Corporation Tax payments and payroll costs.
  • Remember that grant-aided expenditure is wholly excluded from the R&D credit scheme.

For more, see:

  • The Revenue Commissioners Guidelines for the Research & Development Tax Credit.
  • The Revenue.ie webpage for the R&D Credit.
  • Today’s Irish Times article.

If you have any queries or concerns on the R&D Tax Credit, you should seek quality professional advice.


OECD Director Threatens Irish Corporation Tax Reliefs

June 19, 2013

The head of tax at the OECD has today told Ireland that it must charge Corporation Tax at the full 12.5% rate, if we wish to retain our current Corporation Tax regime

The comments by Pascal Saint-Amans, a former French Ministry of Finance official, were made at a conference in Dublin and reported by RTE News.

Ireland must charge full corporation tax rate - OECD - RTE- 19-6-13

It’s worth bearing in mind that any move to enforce an effective Corporation Tax rate of 12.5% here would mean the abolition of

  • Capital Allowances
  • Research & Development Tax Credits
  • Group Relief

These reliefs are very important to both indigenous firms and multinationals based here, particularly in productive sectors that require large capital investment.

It would be a disaster for these firms if our government was to acquiesce in their removal.

Oddly enough, as a Frenchman, M. Saint Amans will be acutely aware that:

Maybe he should clean up his own backyard first.

 


Govt Jobs Initiative – The tax measures

May 10, 2011

Finance Minister Michael Noonan has today unveiled the Government’s much-heralded ‘Jobs Budget’, including the following tax measures:

Pension Levy

A levy of 0.6% is to be applied on the capital value of pension assets held within the State.

PRSI

Employers PRSI on lower-paid employees is to be halved. This will apply until the end of 2013 for employees earning less than €356 per week (not the figure of €365 per week as announced by the Minister in the Dáil today).

Employers PRSI will no longer apply to share-based remuneration.

Michael Noonan Government Jobs Initiative

9% VAT

A cut in the lower rate of VAT to 9% on so-called ‘tourism-related’ goods and services. This will apply from 1 July 2011 until the end of 2013.  The VAT cut will apply to

  • restaurant and catering services
  • hotel and holiday accommodation,
  • theatre, cinema, museum, fairground and other entertainment tickets
  • hairdressing
  • newspapers and magazines.

Air Travel Tax

The Air Travel Tax of €3 per passenger is to be abolished, but not with immediate effect. Its abolition is to be conditional on the major Irish airlines opening new tourist routes into Ireland.

R&D Tax Credit

The Minister intends to introduce a technical change to the Research & Development tax credit legislation, in order to allow companies more flexibility in how they account for the credit. This is intended to make the credit more attractive for qualifying companies.

Corporation Tax

Unsurprisingly, the Minister confirmed that ‘our 12.5% rate of corporation tax is here to stay’

The Department of Finance have just published full details of the Jobs Initiative on their website.