A summary of the key points from Budget 2019 are as follows:
* The entry point for the higher rate of income tax will be increased from €34,550 to €35,300 for a single person and from €43,550 to €44,300, from €43,550, for a married one income couple.
* The changes to the Universal Social Charge (USC) are as follows:
1. The 4.75% USC rate will be reduced to 4.5%.
2. The ceiling on the 2.0% rate will increase from €19,372 to €19,874. This will ensure that full time workers on the increased national minimum wage of €9.80 do not pay the upper rate of USC.
3. The entry point for the USC will remain unchanged at €13,000.
4. The revised rates and bands for the USC are as follows:
From €0 to €12,012 at 0.5%
From €12,013 to €19,874 at 2.0%
From €19,875 to €70,044 at 4.50%
From €70,045 to €100,000 at 8%
* The weekly threshold for the higher rate of employers’ PRSI will be increased from €376 to €386 per week.
* The Home Carers’ Tax Credit will be increased by €300 to €1,500.
* The Earned Income Tax Credit for Self Employed will be increased by €200 to €1,350.
* The restriction on the amount of mortgage interest that can be deducted by landlords will be fully removed. This was due to be phased out by 2021 but will now be effective from January 2019.
* The main Corporation Tax rate will be unchanged at 12.5%.
* A new anti-tax avoidance directive (ATAD) compliant exit tax regime will come into effect from midnight tonight. This exit tax will apply at 12.5% on any unrealised gains arising where a company migrates or transfers assets offshore.
* New Controlled Foreign Company (CFC) rules, in line with ATAD, will be introduced in the Finance Bill and will apply for accounting periods beginning on or after 1st January 2019. This measure is to prevent the diversion of profits to offshore entities in low or no tax jurisdictions.
* The three year tax relief for certain start-up companies will be extended until 2021.
* A new accelerated capital allowances scheme for gas propelled vehicles & refuelling equipment is to be introduced.
* The zero benefit in kind rate for electric vehicles isbeing extended for a period of three years, with a cap of €50,000 on the original market value of the vehicle.
* There will be a future growth loan scheme for SME’s and food/agricultural sectors which will provide up to €300m for business.
* The film corporation tax credit will be extended to 2024.
* Work will commence with the aim of regulating crowd funding.
* There will be changes to the Employment and Investment Incentive (EII) announced in the Finance Bill.
* KEEP, the Key Employee Engagement Progamme, came into effect last January to assist SME’s in their efforts to attract and retain key employees by providing for an advantageous tax treatment on share options. The following enhancements to it have been announced:
- The ceiling on the maximum annual market value of share options that may be granted is increased to 100% of salary;
- The three year limit is replaced with a lifetime limit; and
- The overall value of share options that may be awarded per employee is increased from €250,000 to €300,000.
Value Added Tax (VAT)
* The 9% Vat rate on tourism related activities is increased to 13.5% from 1st January 2019.
* The 9% Vat rate will be retained for newspaper publications and the Vat rate on digital and electronic publications will be reduced from 23% to 9%.
* The 9% Vat rate will be retained for sporting facilities.
* There are no other changes to VAT rates.
Capital Acquisitions Tax
* The lifetime Group A threshold (which applies to transfers from a Parent to a Child) will be increased from €310,000 to €320,000.
* The young trained farmer stamp duty relief will be extended for a further three years to 2021.
* No other changes to Stamp Duty.
* The price of 20 cigarettes will increase by 50 cents, with pro rata increase on other tobacco products.
* VRT relief for hybrid vehicles will be extended for one year until end of 2019.
* Introduction of a 1% surcharge on diesel vehicles will apply across all VRT bands from the 1st January 2019.
* Betting tax to be increased from 1% to 2% on amounts wagered in the state. Betting duty on commission earned by betting intermediaries or exchanges to be increased from 15% to 25%.
* No other change to Alcohol, Petrol, Diesel, Motor Tax or to Vehicle Registration Tax (VRT) rates.
* Existing Stock Relief measures extended for a further three years.
* Income Averaging will be extended to farms with off-farm trading income.
* The hourly minimum wage to be increased to €9.80.
* The State Pension will increase by €5 per week from the last week of March 2019.
* All weekly social welfare payments (including carers’ allowance, disability allowance, job benefit and job seekers allowance) will also increase by €5 per week from March 2019.
* The Christmas Bonus to all social welfare recipients will be 100% in 2018.
* There will be an increase of €25 in the weekly income threshold for GP visit cards.
* Prescription charges for all medical card holders over 70 will be reduced from €2.00 to €1.50 per item.
* The threshold for the Drug Payment Scheme will be reduced from €134 to €124.
* New Parental Leave scheme to be introduced in November 2019 to provide 2 extra week’s leave to every parent of a child in their first year, with the intention to increase to 7 weeks over time.
* Income thresholds for the affordable childcare scheme will increase in 2019. The base income threshold will be increased to €26,000 and the maximum income threshold increased to €60,000. The multiple child deduction will increase from €3,800 to €4,300.
* €2.3 billion allocated in funding for housing with 10,000 new social housing units to be built in 2019.
* An additional €121 million to enable 16,760 households to avail of the Housing Assistance Payment Scheme.
* The Minister recognised that Ireland is a small open economy that is disproportionately affected by changes in the international economy. A "Rainy Day Fund" of at least €1.5 billion will be established to further protect the economy and the national finances from economic shocks.
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