The Budget 2015 – an accountant runs through the key points

With the Budget of 2015 having been delivered, Tracey Glacken, of Glacken Accountants and a Sage Business Expert, discusses the announcements and how they affect businesses in Ireland.

The Budget 2015, as delivered by Ministers Noonan and Howlin, signalled the end of austerity and the start of a positive approach towards the future. Changes to Income Tax and Universal Social Charge rates and the extension of the standard rate of tax cut off points will help give workers additional cash during the year.

Those in the social welfare net and farmers were also assisted today. The business community will also be pleased to see that the corporation tax rate of 12.5% is seemingly not up for discussion either now or in the future:

(1)   Income Tax

The 41% rate of tax has been reduced to 40% and the standard rate tax band has increased by €1000 per annum. For example a single person earning €35,000 per annum will pay the 40% rate of tax at €33,800 from 2015 onwards.

Universal Social Charge (USC) rates were also reduced. The point of entry to USC has been increased from €10,036 to just over €12,000. The rates were reduced from 2% to 1.5% and 4% to 3.5%. Those earning over €70,000 will be subject to an 8% rate. Self employed persons with income greater than €100,000 will be subject to an 11% rate. Medical card holders will continue to be exempt from the 7% rate of USC.

(2)   Business

The corporation tax rate will remain at 12.5% and the special rate of 9% for VAT will also remain. Minister Noonan has also extended the 3 year exemption from corporation tax for start ups.

The accelerated capital allowances scheme for energy efficient equipment has also been extended.

In order to abolish the ‘Double Irish’ scheme which is in place at the moment all new companies registered in Ireland from 2015 must also be tax resident. A phasing out scheme will take place for those companies already based here and will operate until 2020.

The Enterprise & Investment Incentive Scheme was visited and funds allowed to be raised under this scheme have been increased to €5 annually. Hotels, nursing homes, self catering accommodation and guest houses are to be included in this scheme. The holding period for shares has also been increased from 3 to 4 years.

Minister Noonan also announced that the seed capital scheme would be re-launched shortly.

In order to support businesses abroad the Foreign Earnings Deduction has been improved to include countries such as Mexico, Chile and others in the scheme, Employees will now only have to be abroad for 40 days in the year to qualify and travel time can be considered for this.

(3)   Farming

The farming community saw many changes to their current policies. Some of these include:

  • Targeting Capital Acquisitions relief for agricultural property to ensure it is used by active farmers.
  • Broadening Capital Gains Tax retirement relief so that, for example, individual can now lease out their land for up to 25 years prior to disposal and still be eligible for CGT retirement relief.
  • Extending stamp duty relief for non–residential land transfers between certain close relatives.
  • Removing stamp duty on agricultural leases in excess of 5 years.
  • Increasing the range for income averaging from 3 years to 5 years. Also allowing income averaging on farm income to be available to farmers who derive income from another trade or profession, if this is due to on-farm diversification.
  • Farmers VAT rate being increased from 5% to 5.2%.

(4)   Families & Social Reform

The Government has pledged €2.2 billion to social housing investment over the next 3 years.

The Jobs Plus Scheme will be extended to support 6000 employees under new reforms. The Back to Work Dividend will allow parents returning to work to claim the Qualified Child increase of €29.80 per week for 12 months at 100% and 50% in Year 2.

Child Benefit is to increase by €5 per child in 2015 and if resources allow in 2016 it will increase by another €5.

The Living Alone allowance is to be increased to €9 per week.

Those on a Household Benefits package will receive a €100 subsidy towards their water rates.

Health services are to receive €13.1 billion in 2015 to assist with medical or GP cards for the very young or elderly and to support the disabled and elderly.

There will be an increase in the number of teachers and special needs assistants in schools and the recruitment of Civil Servants will resume.

(5)   Other Reforms

There were no changes to petrol, diesel, VRT, motor tax or alcohol.

The price of 20 cigarettes will increase by 40c.

There will be a tax credit for tax payers at 20% of amount paid for water charges up to a maximum amount of €500 per annum. Therefore, the maximum tax credit per annum will be €100.

The 0.6% pension levy will cease at the end of 2014 and the 0.15% levy will cease at the end of 2015.

The Home Renovation Scheme has been extended to include landlords liable to Income Tax. The Home Renovation Incentive was introduced in last year’s Budget and provided for tax relief for certain expenditure on home renovations carried out by home owners in the period from 25 October 2013 to 31 December 2015.  This relief has been extended to landlords who carry out work on their rental properties from 15 October 2014 to 31 December 2015.

First time buyers will be refunded DIRT they pay on savings used towards the purchase of their home at any time in the two year period ending on the date of purchase of the property.  The refund will only apply where the property is purchased in the period from 14 October to 31 December 2017 and will be limited to DIRT deducted from savings of up to 20% of the purchase price of the property.

So for a change it was not all ‘take take’ but we saw a handback today, be it small, which can only hopefully improve as the years go on. A detailed budget guide can be obtained from http://www.budget.gov.ie/Budgets/2015/2015.aspx

Tracey Glacken

Owner at Glacken Accountants

Tracey Glacken is owner at Glacken Accountants. Glacken Accountants work with SME’s in the areas of audit, financial statements preparation, personal and company taxation, company secretarial and business planning.

Tracey is a member of the Institute of Certified Public Accountants in Ireland and has worked for over 13 years in practice. Tracey has advised clients in many different sectors from small start-up business to medium sized companies and has extensive experience in statutory audit, financial and management reporting. See www.glackenaccountants.com for more information.

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