Budget 2011 – Summary

Good evening – a quick summary of the budget is below. We will no doubt be writing more about this subject in the coming days and weeks!

Income Tax

· Tax Credits reduced by 10%

· Reduction of tax bands by 10%

· A step towards a universal social contribution paid by all workers

Ø by abolishing income levy and health levy and replacing it with a universal charge, on an increasing scale up to a maximum of 7%, for income above €16,016

Ø abolition of the ceiling for employee PRSI contributions. PRSI rate for self-employed, higher earning public servants and certain office holders to be increased (4%)

· Rent Relief Tax Credit to be phased out over 8 years (same timeline as Mortgage interest relief)

· Trade Union Subscription Tax Credit abolished

· Tax exemption from BIK for Employer Provided Childcare abolished

· Tax relief for new shares bought by employees abolished

· Restriction of the tax free element of ex-gratia termination payments to €200,000, so that payments above this amount will be subject to tax at the marginal rate. Effective from 1 January 2011

· PRSI and health levy changes to certain Share schemes

· Decrease of €8 per week in Maternity and Adoptive Benefits


· Removal of relief from PRSI and health levies on pension contributions from 2011 onwards.

· Retirement lump sums above €200,000 will be subject to tax, effective from 1 January 2011. Any tax free retirement lump sum taken on or after 7 December 2005 must be taken into consideration in calculating the amount subject to tax and the rate.

· Maximum allowable tax relieved pensionable earnings will be reduced to €115,000 for 2011

· Maximum allowable pension fund on retirement for tax purposes is (SFT) is €2.3m from 7 December 2010

· The AMRF option is being retained but the set-aside requirement will now be the lesser of 10 times the maximum rate of State Pension, about €120,000 (or the remainder of the pension fund after taking the tax free lump-sum) as compared with €63,500 at present. The specified or guaranteed income limit of €12,700 per annum is being increased to 1.5 times the maximum rate of State Pension bringing the ‘specified income’ limit close to €18,000 per annum.

· Deemed distribution rate on Approved Retirement Funds increased from 3% to 5%

Stamp Duty

· New rate of 1% on all sales of residential properties up to a value of €1m (2% above €1m)

· All reliefs and exemptions on residential properties are being abolished – subject to a transitional period

Indirect Taxes

· Increase in excise duty of

Ø 4 cents per litre of petrol

Ø 2 cents per litre of diesel

· Review of excise duty on alcohol in 2011

· Car scrappage scheme extended until 30 June 2011

Business Taxation

· No change to the 12.5% corporation tax rate.

· Extension to the 3 year corporation tax exemption for start up companies commencing a new trade in 2011

· Employer relief for PRSI on employee contributions to occupational pensions will be reduced by 50%

Life Assurance Exit Taxincreased to 30%. Effective from 1 January 2011

DIRTincreased to 27% (30% on longer term deposits). Effective from 1 January 2011

CAT tax free thresholds on gifts and inheritance s is being reduced by 20%

Other Measures

· Air travel tax revised to €3 on a temporary basis to 1 March 2011

Social Welfare Payments

  • A cut of €10 a month in child benefit for the first and second child and a cut of €20 for subsequent children.
  • No reduction in State Pension payments


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