Budget 2010 Summary

  TAXATION

 High Earners Restriction

• The High earners relief has been amended to ensure that such high earners will now pay a minimum rate of Income Tax at 30% where as it was previously at 20%
• The entry level threshold for the restriction will now occur at adjusted income levels of €125k and the full restriction will apply at €400k (Previously 250k and 500k respectively)

 Mortgage Interest Relief

• Qualifying loans taken out before 1 July 2011 will continue to get relief for 7 years. Transitional measures will apply to loans taken out between 1 July 2011 and end 2013.
• Those, whose entitlement to relief would, in the absence of this change, expire in 2010 or after, will continue to qualify for relief at the applicable rate up until end 2017.
• Abolition of the relief entirely by end 2017.

  Corporation Tax

• Extension of the existing scheme providing a three-year exemption from tax on the income and gains of certain new start-up companies to include companies who commence trading in 2010.
• Tax bill must be 40k or under. Does not apply to professional service companies.
• 12.5% Corporation Tax rate will remain.
• Enhanced incentives for R&D and intellectual property to be considered for inclusion in the upcoming Finance Bill

 Non-Residents

• A New 200k levy per annum is being introduced on Irish domiciles/nationals whose worldwide income exceeds €1m and whose Irish located Capital exceeds €5m
• It is unclear how it is proposed to identify persons liable to the charge, or how it will be collected and whether this levy will be reduced by any Irish income tax liability otherwise arising.

 Relief from Income Levy for Certain Farm Expenditure

• Will be allowed regarding compliance with the requirements of the EU Nitrates Directive.

Following reductions to excise duty will apply from 9 December

• Beer and Cider by 12 cent, Spirits by 14 cent per half glass, Wine by 60 cent per 75cl bottle. All VAT inclusive

 

Vehicle Registration Tax (VRT) Car Scrappage Scheme

• Introduced for 2010. VRT relief of up to €1,500 will be provided where a car of 10 years or older is scrapped and a CO2 friendly car is purchased

Capital Allowances

• Accelerated Capital Allowance scheme for energy efficient equipment will now include refrigeration systems and catering equipment

Carbon Tax

• Will apply to petrol and auto-diesel with effect from midnight, 9 December 2009;
• Will apply to Kerosene, Marked Gas Oil, Liquid Petroleum Gas (LPG), Fuel Oil and Natural Gas from 1 May 2010
• The application of the tax to coal and commercial peat is subject to a Commencement Order.
• Exemption from the tax will apply only to participants in the EU Emissions Trading Scheme (ETS) in respect of fuels so covered. 
• Accounting and payment of the carbon tax in respect of transport fuels is required to be made by the 15th day of the following month.
• A vouched fuel allowance scheme will be developed to offset the increase for low income families
• Increases per litre Petrol 4.2 cents Auto-diesel 4.9 cents 4.4% Kerosene 4.314c

Marked Gas Oil 4.687 LPG 2.797c Fuel Oil 5.215 Natural Gas 4.786 Peat Briquettes 39c per bale Coal €1.79 per 40kg

Reduction in standard VAT rate from 21.5 per cent to 21 per cent.

• From 1 January 2010. — If on cash receipts basis and bill before 1 January 2010 apply 21.5%

Pension Lump Sums

• The Minister flagged that he will consider limiting tax free pension lump sums on retirement to €200,000. A consolidated 33% rate of tax relief will require further consideration. More precise details on these pension related amendments are expected to be published shortly.

Property Tax

• A new property tax is to be introduced but at a yet to be determined date. For this tax, the Government will need to ascertain the registration of ownership and valuation of land in the State. The proceeds of this tax will be used to fund Local Authorities.

Health Expenses Relief

• Health expenses relief is granted at the standard rate for expenses incurred from 1 January 2009 barring nursing home expenses, which will be relieved at the marginal rate in 2010.

Nama Property tax

• An 80% windfall tax on land which has been rezoned from 30^th October 2009 has been introduced commencing in 2010
• Upon disposal the uplift due to rezoning from non development to development use will be subject to Income Tax at 80% with no loss relief.
• This will apply to trades only and it appears that it will not apply to construction operations one off sales of sites and land, which was purchased by way of CPO.

Employers Job incentive scheme

• If an employer employers a person who qualifies for the Back to Work Allowances for the first time, upon production of tax clearance cert the employer will be exempt from employers PRSI for the first 2 years of that employment.
• If the employees leaves the exemption is over for both employer and employee.

Future Measures 

• A new universal social insurance contribution will replace PRSI/Health & Income Levies
• Income Tax will apply on more progressive basis.
• Water charges are to be introduced based on consumption above a free allowance. Each household will require the installation of a water meter
• Revenue will tackle the shadow economy
• The curtailment/removal of further reliefs will be examined in the Finance Bill
• A credit review system is to be established for the SME sector offering an independent review of refusals for bank credit by banks participating in NAMA.

Public Service Salary reductions at various Pay levels from 1 January 2010:-

• 5% on the first €30,000 – 7.5% on the next €40,000 -10% on the next €55,000

 Pensions – new pensions regime

• Pensions based on career average earnings and not final salary.
• The minimum retirement date will move to 66 years.

 SOCIAL WELFARE

 Jobseekers Allowance

• Reduced to €100 per week for new applicants aged 20-21 and €150 per week for new applicants aged 22 to 24.
• The personal rate of Jobseeker’s Allowance and basic Supplementary Welfare Allowance will be reduced to €150 per week where job offers or activation measures have been refused
•  These rate reductions will not apply to claimants with dependant children.
• General reduction for all social welfare benefits bar state pension.

Child Benefit

• Reduced by €16 per month from January 2010 bringing the lower rate to €150 per month and the higher rate to €187 per month.  Families on social welfare will receive an increase in the qualified child allowance.

 Treatment Benefit

• In 2010, the entitlements under the Treatment Benefit Scheme will be limited to the Medical and Surgical appliances scheme and the free examination elements of the Dental and Optical Benefit schemes

 

These notes are based on the budget speech and not on draft legislation, which will not be available until the Finance Bill is published. No responsibility is accepted for any action which any individual or business may take or not take based on their reading of this fact sheet. Professional advice should be taken before any action is taken.

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