The main points:
Universal Social Charge(for more information see our blog)
- There are no exemptions from this charge apart from DIRT income and social welfare payments.
- Health Levy and Income Levy to be replaced by a new Universal Social Charge.
- The thresholds for 2011 are – 0% < €4,004 2% €4,004 to €10,036 4% €10,037 to €16,016 7% > €16,016
- Over 70’s will be liable for the charge but it will be capped at 4%.
Tax credits and tax bands
- Have been reduced by 10%.
- Age credits and exemptions are being abolished over 4 years.
- Personal tax credit reduced from €1,830 to €1,650.
PRSI Changes
- Abolition of the PRSI ceiling of €75,036.
- Class S (Self Employed) increased to 4%.
Maximum rate of tax for the self employed is 52%.
- Income tax 41%
- Universal Social Charge 7%
- PRSI (Class S) 4%
Abolition of reliefs
- Rent relief to be phased out by 2018 for existing claimants.
- Rental agreements entered into after 7th December 2010 will not qualify for relief.
- Patent Royalty Exemption abolished from the launch of the National Recovery Plan.
- Trade union subscriptions tax relief abolished.
- Employer Provided Childcare now liable to BIK.
- Termination of the scheme of accelerated capital allowances for farmers who incur capital expenditure on farm buildings in the control of farm pollution.
Service Charges
- Unchanged – 20% relief on expenditure capped at €400.
- Relief will be abolished for tax year 2012.
Phased abolition of section 23 reliefs
- Section 23 type relief will be restricted to income from the Section 23 property itself from 1st January 2011.
- Guillotine from 2014- All unclaimed reliefs will be lost.
- Capital allowances will be limited to the property which gave rise to them with no set off against any other income. This measure applies to passive investors only.
- Owner Occupier relief is not affected by these changes
Relevant Contracts Tax
- 35% rate will apply to those not registered for tax.
- 20% rate will apply to those with an established compliance record.
- Monthly repayments to be replaced with an offset system.
- E based reporting for principal contractors.
- New system to allow payment without RCT deduction.
- Details will be included in Finance Bill 2011.
Farmers- Stock Relief extended for another two years
- 25% stock relief for all farmers
- 100% for certain young trained farmers
Farm Pollution Control Relief
- Accelerated capital allowance for expenditure before 1 January 2011 will not be extended.
- Normal capital allowances will apply to expenditure incurred after 1 January 2011.
Vehicle Registration Tax
- Commercial vehicles flat rate of €50 will be increased to €200 from 1st May 2011.
Pension contributions (changes from 1st January 2011)
- Employee contributions will be subject to PRSI and the Universal Social Charge.
- Employer will have to pay PRSI on 50% of the employee pension contributions.
- Earnings limit for tax relief is reduced to €115,000.
Pensions lump sums
- Tax free lump sum will have a life time limit of €200,000 from 1st January 2011.
- The excess will be taxed at 20% and 41%.
- Tax free lump sums received from 7th December 2005 will be included in calculating the lifetime limit of €200,000.
Pension funds
- Standard Fund Threshold will be set at €2.3 million from 7th December 2010.
- Approved Retirement Funds imputed distributions will be increased to 5% from 31st December 2010.
Corporation Tax
- Corporation tax to remain at 12½%
- The tax exemption for start up Companies has been extended to 2011 but linked to the amount of employers PRSI paid in the accounting period
Capital Allowances
- The scheme for energy efficient equipment has been extended for a further 3 years to end of 2014.
Tax on Savings
- DIRT is being increased to 27% on deposits
- Exit tax is increased to 30% on life insurance policies and investment funds
Capital Acquisitions Tax
- The tax free thresholds are being reduced by 20% with effect from midnight 7th December 2010.
- Group A- €332,084 (children of the deceased)
- Group B – €33,208 (Brothers, Sisters, Nieces, Nephews Grandchildren and Parents)
- Group C – €16,604 (Applies to all others)
Capital Gains Tax
- No changes announced in budget
Vat
- No changes announced in budget
Stamp Duty(Residential)
- The various exemptions have been abolished including sites for children
- 1% will apply to all residential transfers up to a million euros
- 2% will apply to all residential transfers over a million euros
- This applies to all transactions from 8th December 2010.
Excise Duty increase
- Auto diesel – up by 2c a litre
- Petrol – up 4c a litre