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!
· 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%
· 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
· 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
· 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 Tax – increased to 30%. Effective from 1 January 2011
DIRT – increased 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%
· 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