Broadly Positive Reaction to Budget 2015 with Cautious Optimism the Soundboards 

A broadly positive, if cautious, budget 2015 has been announced with no major surprises from Michael Noonan today in his budget speech. PAYE earner will benefit from reduced tax rates and increased bands, support schemes to SME’s have been extended and increased, the “Double Irish” taxation loophole is to be closed, new schemes for the farming and agricultural sector have been announced, water charge relief has been introduced, the pension levy is to be scrapped, back to work schemes have been increased and smokers will be paying more for the privilege as widely anticipated. Below are the main points arising from today’s budget. A comprehensive breakdown of what it means for you and your business will follow along with an analysis of what it all means to the business sector.

Income Taxes

• The Higher Rate of Tax reduced from 41% to 40%

• The Tax Band has been increased from €32,800 to €33,800

• Income above €70k still paying the 52% nominal tax rate

• Universal Social Charges:

  • Entry level raised to €12,000

  • 2% rate reduced to 1.5%

  • 4% rate reduced to 3.5%

Corporation Taxes

• No change to the 12.5% rate and no changes foreseen in the medium term

• The “Double Irish” tax loophole is  being abolished. New rules introduced to state that all companies resident in Ireland for business purposes must be tax registered in Ireland.

Small & Medium Sized Businesses

• The Home Renovation Incentive Scheme has been renewed and extended to include rental properties

• Strategic Banking Corporation to provide funds to the small business sector launching by the end of the month

• The Employment & Incentive Investment Scheme has been extended with the scheme further extended to include nursing homes and certified international traded financial service firms

• The Jobs Plus Scheme has been extended and the number of positions available under the scheme doubled to 6,000

• 3 year corporate tax relief for start-ups extended

Farming & Agri Sector

• No milk quotas from 2015

• Income tax exempt thresholds to be increased by 50 per cent, with new threshold for leases of 15 years and over

• Range of income averaging for farmers to be extended from three to five years

• CAT relief for agricultural property to be targeted to ensure it is used by active farmers

• CGT retirement relief to be broadened

• Stamp duty relief to be extended for non-residential land transfers between certain close relatives, and stamp duty on agricultural leases in excess of five years to be removed

Personal Taxation Schemes

• The pension levy of .6% until the end to the year with the 15% level being scrapped by the end of 2015

• Tax relief on water charges worth up to €100 announced

• DIRT refund for first time buyers on their savings to assist with a deposit on their  home

• Cigarettes to increase by 40 cents from midnight

• Child benefit up by €5 per child

• No rises in alcohol, petrol, motor tax or VRT

Other Schemes

• €1.6bn to be made available for the support of 300,000 work and training places next year

• HRI horse and greyhound prize funded topped up by €6m

• 9% VAT for tourism and hospitality extended

• 25% bonus payment to social welfare recipients this Christmas

• Back to work family dividend to be introduced

• Recruitment into the civil service to resume in 2015

• Capital Gain Tax relief on property to be scrapped

Conclusions and What It Means for Your Business!

Budget 2015 can be summed up by – A little bit of something for everyone but not a huge amount for anyone! The only real surprise was the lack of surprises. There have been a range of measures of measures introduced to ensure that everyone gets something back from tax reliefs for 2015. In relation to personal tax the reduced rates on the higher rate is welcomed along with an increase in the tax band. USC rates for some tax players have also been reduced which is a positive development. Water charges relief will help take the sting out of the unpopular tax but being a relief not a discount PAYE workers will need to make a tax return to claim, many for the first time. This asks the question “will the relief actually be claimed by the majority”.

For small business many schemes have been extended including the home renovation scheme, the EIIS scheme and the start up relief for entrepreneurs. Corporation tax relief for the first 3 years of a new business has also been extended to encourage new businesses. Plenty also for the Agri Business sector to mull over with a number of schemes being introduced to make it easier for farmers to develop and make an income from their businesses. The  “Double Irish” will be no more with foreign companies registered in Ireland also required to be tax resident in Ireland as well. This measure had been anticipated and adds stability for the future in the area of foreign direct investment.

Some of the other announcements of note are is the abolition of the pension levy which will be pashed out by the end of 2015, an increase in 40c on the price of cigarettes, the introduction of a “Knowledge Development Box” to compete with the UK on intellectual property initiatives, further advancements in the R&D tax credit relief scheme and an increase in the artist exemption threshold will be a help to musicians and artists in the country. Removing some of the tax burdens from the majority may be the best way to sum up Budget 2015 with some stimulus measures included to get business activity moving in a positive direction into next year.

Contact Avid Partners to see how Budget 2015 will effect your business.  Call Avid Partners on 01 4286900 or email us at advice@avidpartners.ie.

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