Minister for Finance, Michael Noonan, T.D. and Minister for Public Expenditure & Reform, Paschal Donohoe, T.D. yesterday delivered their Budget speeches and the headline changes are as follows;
Pensions – Changes
The main announcement for Pensions related to increase to the Social Welfare Pensions, as follows:
Social Welfare Pensions
The Minister for Public Expenditure and Reform, Paschal Donohoe, announced a €5 per week increase in all social welfare pension payments.
This means that the weekly rate of State Pension (Contributory) – Personal Rate will increase from €233.30 per week to €238.30 per week from March 2017.
Other Pension Changes
We wait for the Finance Bill 2016 to see if there will be a “fine-tuning” of any monetary amounts/limits, rather than any wholesale changes to the structure and benefit options.
Pensions – No Changes
In summary, there were no changes to the following:
Tax Relief – Employer Pension Contributions – Corporation Tax relief will continue to be available on employer pension contributions – subject to the overall maximum pension limit.
Tax Relief – Employee Pension Contributions – This will continue at the marginal rate of tax but subject to the Age Related Contribution Limits and Earnings Cap, if applicable (and overall Revenue Maximum Approvable Benefit limits).
Employer Corporation Tax – rate to remain at 12.5%.
Earnings Cap – amount to remain at €115,000.
Retirement Lump Sum – up to €200,000 remains tax-free and amounts from €200,000 to €500,000 will be taxed at 20%.
- Cuts to three lowest rates of Universal Social Charge –
- 1% rate cut to 0.5%;
- 3% rate cut to 2.5%;
- 5.5% rate cut to 5%
- 2.5% USC rate ceiling increased from €18,668 to €18,772
First Time Buyers
- The Government are to introduce a ‘Help-to-Buy’ scheme for the residential sector, which will provide first-time buyers with a rebate of income tax paid over the previous four tax years of up to 5% of the purchase price of a new home up to a value of €400,000
- Pro-rata rates will apply to houses priced in excess of €400,000 and up to €600,000 but there will be no tax rebate on houses priced in excess of €600,000.The maximum tax rebate available to first-time buyers of new homes will be €20,000.
- €5 increase in all weekly social welfare payments in line with State pension
- Payment announced of an 85% Christmas bonus for Social Welfare recipients in 2016.
- €1.2bn in funding for housing, with 47,000 new social housing units by 2021
- 2,400 additional teaching posts announced, of which 900 will be resource teachers
- 800 new gardaí to be recruited in 2017, with more civilian staff to be hired too to free up desk-bound officers
- €100 increase in Home Carers’ Credit to €1,100
- Medical card for all children who receive domiciliary care allowance
- Additional €15m to NTPF to reduce hospital waiting lists
- €25 cap on prescription charges for over 70s reduced to €20 from 1 March 2017
- Excise duty on pack of 20 cigarettes to go up by 50 cents
- Provision of €290m for pay increases agreed under the Lansdowne Road Agreement
- Creation of a Public Service Pay Commission to report on unwinding of FEMPI legislation
- 9% VAT rate for tourism and hospitality industry will be retained
- Start Your Own Business scheme to be extended for a further two years
- Low cost, highly flexible loan fund for farmers announced
- €1,270 income tax credit for fishermen
- Home renovation scheme extended for two years to end of 2018
- Rent-a-Room income ceiling up by €2,000 to €14,000
- DIRT will be reduced by 2% each year to 2020 (41% to 33%)
- Mortgage Interest Relief will be extended beyond December 2017 to 2020
- Earned Income Tax Credit for self-employed increased by €400 to €950
- New relief from carbon tax for solid fuels announced
- Intention to introduce tax on sugar-sweetened drinks in April 2018 after public consultation
- Additional €105m to enable 15,000 more households to avail of the Housing Assistance Payment Scheme
- €28m increase in allocation for emergency accommodation to €100m
- New Single Affordable Childcare Scheme from September 2017 – means-tested subsidies, based on parental income, for children between six months and 15 years and universal subsidies for all children aged six months to three years
- €15m to help progress National Broadband Plan
- €319m to be spent on regional and local roads throughout the country
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