We have not covered all the points below but took what we see as important from the budget announcements yesterday. Remember we are paying a lot of taxes and pension contributions are a great way to reduce your tax bills!
We welcome confirmation of the increase in the Group A Threshold for Capital Acquisition Tax from €280,000 to €310,000 and that the Groups B & C have also been raised to €32,500 and €16,250 respectively. Remember we offer Trust structures here with the Insurance Companies that can allow you "gift €3000 per adult" to a child that DOES NOT FORM PART OF THE CAT THRESHOLD above. We have clients here who make a €6,000 payment yearly for each of their children under trust. That money will grow for the next number of years and will cover the deposit for their first home (maybe even buy their first house) definitly put them through college etc. Yet the kids can still inherit assets without affecting the €310,000 current CAT threshold. A great way to pass across wealth to the next generation in a tax efficient way.
We note there was a reduction in DIRT of 2% for 2017 which is to be an ongoing reduction until 2020. There was no specific mention to Exit Tax, so we need to wait for the Finance Bill to see if the DIRT reduction is to be applied equally to Exit Tax on Life Assurance Policies and Investment Funds.
Unfortunately the Minister did not remove the 1% Insurance Levy.
Social Welfare Pensions
The Minister for Public Expenditure and Reform, Paschal Donohoe, announced a €5 per week increase in all social welfare pension payments. The weekly rate of State Pension (Contributory) will increase from €233.30 per week to €238.30 per week from March 2017.
Employer Corporation Tax - rate to remain at 12.5%.
Earnings Cap - amount to remain at €115,000 on pensions.
Retirement Lump Sum - up to €200,000 remains tax-free and amounts from €200,000 to €500,000 will be taxed at 20% on pensions remains the same.
Income Tax Rate
No increase in the standard rate bands or change to the income tax rates.
Earned Income Tax Credit
A €550 per year tax credit was introduced in 2016 for the self employed and Proprietary Directors (where applicable). This has been increased to €950 for 2017