Budget 2018: Looking to the future
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.
• €680 million in extra funding, bringing total funding to €15.3 billion for 2018
• Extra 1,800 frontline staff across acute, mental health, primary and disability sectors
• €90 million for a new Access Plan to help patients get the most appropriate care
• €55 million will go to the National Treatment Purchase Fund
• State pension, disability and jobseekers allowance will rise by €5 per week
• Christmas Bonus – 85% of weekly payment will be paid out this year
• €25 cap on prescription charges for over 70s, reduced to €20
• 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
• €10 billion on education, 16% of total expenditure
• 1,300 additional posts, pupil-teacher ratio will drop at national school level to 26:1
• 1,000 additional SNAs can be recruited in time for September 2018
• €1.7 billion for special education needs
• National Training Fund levy up from 0.7% to 0.8% in 2018
• Additional allocation for Justice will be €63 million
• 800 new Gardai to be hired and trained in 2018
• 500 civilians to be hired in 2018
• €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
• No reduction in the higher rate of income tax of 40%
• Increase in the standard rate tax band of €750 to €34,550 for single individuals and €43,550 for married one income earners
• No change to PRSI
• 30c per litre on drinks with over 8 grams of sugar per 100ml
• 20c on drinks between 5 and 8 grams per 100ml
• €9 million extra allocated for public transport and roads up to €414 million to 2018
• €2.5 million for the Irish language and the Gaeltacht
• €111 million capital is being provided for sport next year
• 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
• €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
• Increase in funding of €64 million for Agriculture, to a total of €1.5 billion in 2018
• €25 million loan scheme for the agri-food sector dealing with Brexit
• Stamp duty relief of 1% for inter-family farm transfers for another three years
• Rural Affairs budget increased to €19 million for Sustainable Rural Development
• Stamp duty on commercial property sales is to increase from 2% to 6%
• Vacant site levy increase from 3% to 7%
• CGT relief reduced from 7 to 4 years
• €750 million made available from the ISIF to fund commercial investment in housing via a new vehicle, Home Building Finance Ireland
• 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
• 9% VAT rate for the tourism sector to remain
• 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%
• 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
• €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 accommodation services
TAX CREDITS FOR YEAR 2018
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