- Rates have been overhauled with effect from 1 January 2016 with incomes of €13,000 or less exempt and earnings of €0 to €12,012 subject to USC at 1%, €12,013 to €18,668 at 3%, €18,669 to €70,044 at 5.5% and €70,044 to €100,000 at 8%. PAYE income in excess of €100,000 continues to be subject to USC at 8% and self-employed income in excess of €100,000 continues to be subject to USC at 11%.
- A new credit has been introduced for self-employed taxpayers earning trading or professional income. The Earned Income Credit is in the amount of €550 and is available for those who are ineligible for the PAYE tax credit.
- The Home Carer Tax Credit has been increased from €810 to €1,000 and the home carer’s income threshold increased from €5,080 to €7,200.
- A tapered PRSI tax credit has been introduced for employees of €12 per week.
- The ceiling for the higher rate of employers PRSI of 10.75% is to be increased to €376 per week.
CGT Entrepreneur Relief
- A reduced rate of CGT of 20% (as opposed to 33%) will be introduced for entrepreneurs and the self-employed with effect from 1 January 2016. The reduced CGT rate will apply to the disposal in whole or part of a trade or business up to a maximum limit of €1 million of net chargeable gains. The relief will be available to the individual owners of a trade or business (owners / founders of private unquoted companies, sole traders and farmers) concerning the disposal of all or part of that trade or business which they have owned for the last 3 years.
- Full details of this measure will be published in Finance Bill 2015.
Capital Acquisitions Tax (CAT)
- The Group A tax-free threshold (in respect of gifts / inheritances received by a child from their parent) will be increased from €225,000 to €280,000 with effect from 14 October 2015.
- The maximum amount of qualifying expenditure under this relief will be increased to €70 million. This is subject to EU State Aid approval.
Employment and Investment Incentive Scheme (Ell)
- The amendments announced in last year’s Budget have received EU State Aid Approval and will take effect from 14 October 2015. Ell is now being amended to raise company limits, increase the holding period for shares by 1 year and include certain medium-sized companies. In addition, hotels, guesthouses and self-catering accommodation will remain eligible for Ell for a further 3 years and operation and management of nursing homes will be included for 3 years.
- General stock relief, stock relief for young trained famers, stock relief for registered farm partnerships and stamp duty relief for young trained farmers will all be extended for a further 3 years until 31 December 2018.
- A new farm succession transfer proposal has been announced. This will take the form of a farm partnership between family members where a profit sharing agreement which allows for the transfer of the farm to the younger farmer at the end of a period no longer than 10 years. An income tax credit of up to €5,000 per annum will be available for 5 years for the partners split in accordance with the profit sharing agreement. This measure is subject to EU State Aid approval.
- The pension levy currently at a rate of 0.15% will be abolished with effect from 1 January 2016.
High Earners’ Restriction
- Profits or gains arising from the occupation of woodlands are being removed from the high earners’ restriction.
To contact our Tax Partners for further information, please click here