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2018 t e g d Bu

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BUDGET OVERVIEW Middle-income earners and two-income families were the main, albeit modest, beneficiaries of Budget 2018 with a combination of USC cuts and a widening of the top income tax band likely to deliver an increase just under 1 % in average take-home pay.

In his first Budget, Minister for Finance Paschal Donohoe also announced a raft of measures to tackle the housing crisis, including a new State-run lending vehicle to get builders on to sites, a doubling of the proposed vacant site tax levy and a bigger capital allocation for social housing.

The biggest revenue-raising measure and the one that drew the ire of the building lobby was a trebling of stamp duty on commercial property transactions from 2% to 6%, which is expected to net the exchequer nearly €400 million a year.

As expected, Mr Donohoe’s tax measures centred on cuts to the USC, which benefitted anyone earning more than €13,000 a year, the income limit at which people are liable for the charge. He also increased the earned income credit for the self - employed by €200 to €1,150, falling well short of PAYE parity of €1,650.

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3 HEALTH

SOCIAL WELFARE

• €680 million in extra funding, bringing total funding to €15.3 billion for 2018.

• State pension, disability and jobseekers allowance will rise by €5 per week.

• Extra 1,800 frontline staff across acute, mental health, primary and disability sectors.

• Christmas Bonus - 85% of weekly payment will be paid out this year.

• €90 million for a new Access Plan to help patients get the most appropriate care.

• €25 cap on prescription charges for over 70s, reduced to €20.

• €55 million will go to the National Treatment Purchase Fund.

• Prescription charges for all medical card holders under 70 from €2.50 per item to €2 per item.

• The threshold for the Drugs Payment Scheme is dropping from €144 to €134.

• The home carer credit will rise by €100 to €1,200.

EDUCATION • €10 billion on education, 16% of total expenditure.

• 1,300 additional posts, pupil teacher ratio will drop at national school level to 26:1.

JUSTICE

• 1,000 additional SNAs can be recruited in time for September 2018.

• Additional allocation for Justice will be €63 million.

• €1.7 billion for special education needs.

• 500 civilians to be hired in 2018.

• 800 new Gardai to be hired and trained in 2018.

• National Training Fund levy up from 0.7% to 0.8% in 2018.

HOMEOWNERS RAINY DAY FUND • €1.5 billion fund established.

• Transferred from Ireland Strategic Investment Fund.

• Mortgage Interest Relief for people who bought 2004-2012 to be tapered 75% in 2018, 50% 2019, 25% 2020.

4 INCOME TAX, RATE BANDS & PRSI

THE SUGAR TAX

• No reduction in the higher rate of income tax of 40%.

• 30c per litre on drinks with over 8 grams of sugar per 100ml.

• Increase in the standard rate tax band of €750 to €34,550 for single individuals and €43,550 for married one income earners.

• 20c on drinks between 5 and 8 grams per 100ml.

• No change to PRSI.

ARTS & SPORTS INFRASTRUCTURE • €9 million extra allocated for public transport and roads up to €414 million to 2018.

USC • 2.5% rate falls to 2%, with ceiling for the new rate increasing from €18,772 to €19,372.

• 5% of USC falls to 4.75%.

• USC and PRSI will merge over time.

• The new increased national minimum wage of €9.55 per hour won’t pay upper rates of USC.

• €2.5 million for the Irish language and the Gaeltacht.

• €111 million capital is being provided for sport next year.

CLIMATE CHANGE • €36 million to expand energy efficiency programmes.

• €17 million to fund the rollout of renewable heat incentive and electric vehicles.

• 0% benefit in kind on company cars to incentivise the take up of electric cars.

• Relief from CGT and CAT of leased farmland for solar panels.

5 FARMING & RURAL

COMMERCIAL PROPERTY

• Increase in funding of €64 million for Agriculture, to a total of €1.5 billion in 2018.

• Stamp duty on commercial property sales is to increase from 2% to 6%.

• €25 million loan scheme for the agri-food sector dealing with Brexit.

• Vacant site levy increase from 3% to 7%.

• Stamp duty relief of 1% for inter-family farm transfers for another three years.

• €750 million made available from the ISIF to fund commercial investment in housing via a new vehicle, Home Building Finance Ireland.

• Rural Affairs budget increased to €19 million for Sustainable Rural Development.

FAMILIES & CHILDREN

• CGT relief reduced from 7 to 4 years.

EXCISE & VAT • 9% VAT rate for the tourism sector to remain.

• An additional €20 million allocation will support a range of childcare measures.

• Family income supplement threshold rising by 10% for families with three children.

• Tusla’s budget will rise by €40 million to €754 million supporting the introduction of mandatory reporting under Children First Act. • Extended free pre-school programme to be extended from September 2018, to give two year service.

• A packet of 20 cigarettes will increase by 50 cents.

• There are no changes to alcohol excises.

• There are no changes to motor tax, petrol, diesel or VAT. • VAT on sunbed services to be increased from 13% to 23%.

6 SMES & SELF EMPLOYED • Earned Income Tax Credit increased by €200 to €1,150 per annum • Capital Gains Tax reduced to 10% when selling a company, limited to €1 million • Brexit loan scheme of up to €300 million, at competitive rates, including food businesses • €871 million total budget for Enterprise, to allow 40 more staff to be recruited • Keep Employee Engagement Programme targeting key workers with tax breaks on share options.

SOCIAL HOUSING • €1.83 billion for housing.

• 3,800 new social homes will be built next year.

• Housing assistance payment will rise by €149 million.

• €116 million for homeless and emergency accomodation services.

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TAX CREDITS FOR YEAR 2018

PERSONAL

INCOME TAX RATES 2018

2018 2017

SINGLE PERSON

MARRIED PERSON

€

€

2018

2018 (two incomes)

Single

1,650

1,650

20% of 1st €34,550

20% of first €69,100*

Married

3,300

3,300

40% Balance

40% balance

Widowed Person

2,190

2,100

Single Child Carer

1,650

1,650

Home Carer Credit

1,200

1,100

Earned Income Credit

1,150

950

PAYE

1,650

1,650

WIDOWED PARENT BEREAVEMENT

2018 2017

In Year of Assessment

3,600

3,600

Incapacitated Child

3,300

3,300

Dependent Relative

70

70

BLIND PERSON

2018 2017

Single/Married

1,650

1,650

Both Blind

3,300

3,300

AGE CREDIT

2018 2017

Single/Widowed

245

245

Married

490

490

*Transferable between spouse up to a max of €43,550 for any one spouse

Single Parents

(One Income)

20% of 1st €38,550

20% of 1st €43,550

40% Balance

40% Balance

INCOME EXEMPTION LIMITS SINGLE/WIDOWED 65 years or over

MARRIED COUPLES 65 years or over

2018 2017 €

€

18,000

18,000

2018 2017 €

€

36,000

36,000

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UNIVERSAL SOCIAL CHARGE EMPLOYEE & SELF-EMPLOYED

2018

2017

0% on total earnings <€13,000 per annum

0% if earnings <€13,000 per annum

0.5% on €0 to €12,012 per annum

0.5% on €0 to €12,012 per annum

2% on €12,013 to €19,372 per annum

2.5% on €12,013 to €18,772 per annum

4.75% on €19,373 to €70,044

5% on income between €18,773 to €70,044

8% on €70,045 to €100,000

8% on income between €70,045 to €100,000

PAYE INCOME - 8% on excess over €100.000

PAYE INCOME - 8% on excess over €100.000

SELF EMPLOYED INCOME 11% on excess over €100,000

SELF EMPLOYED INCOME - 11% on excess over €100,000

PRSI EMPLOYER

2018

2017

Contribution for Class A

PRSI

PRSI

10.05%

10.05%

TRAINING LEVY

0.80%

0.70%

10.85% on all income

10.75% on all income

TOTAL

EMPLOYEE SELF EMPLOYED/ DIRECTORS CONTRIBUTION PRSI

2018

2017

*4% on all income

*4% on all income

2018

2017

**4% on all income

**4% on all income

* Not applicable if earnings less than €18,300 p.a. (€352 p.w.) **4.00% subject to a minimum payment of €500

Please note that this Budget Briefing is merely a general guide and should not be used as a substitute for professional financial advice.

Decision making should be based on sound professional advice, taking into account your individual circumstances. While we have made every effort to ensure the accuracy of this Budget Briefing, we do not take any responsibility or liability for any omissions or errors, losses or injuries cause.