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budget_2013Budget 2013

This year’s budget was announced on Wednesday 5th December 2012, against a backdrop of unprecedented deficit challenges in Ireland and around the world.

So, what were the major talking points of Budget 2013? How will Budget 2013 impact you or your business?

  • Michael Noonan, the minister for Finance, says the focus of this Budget will be on small and medium sized enterprises. This will include reforming the new company corporation tax exemption.
  • Doubling of initial spend qualifying for R&D credit from €100,000 to €200,000.
  • Rebate of excise duties on diesel from 1 July 2013 for hauliers.
  • Business Taxation – Relief from CGT for disposals of farm land for restructuring from January 2013 to December 2015. Conditions apply.
  • VAT rate for tourist industry to remain at 9% for 2013.
  • Property – Mortgage interest relief to end on 31st December 2013 as planned.  Exemption from local property taxes for new and newly acquired homes acquired before 31st December 2016. Relief will also apply to first time buyers and residents in unfinished estates during the period.
  • Income Tax – The foreign earnings deduction for work related travel to certain countries will be extended to more countries outside of the BRICS.
  • Income Tax – Extension of stock relief for 3 years to 2015 and definition of farm partnerships is widened.
  • Income Tax – Income tax relief on pensions to continue at marginal rate.
  • Pensions – Threshold for pension funds to remain at €2,300,000.
  • Income Tax – Standard rate of USC will apply to pension income from 1 January 2014 and AVCs of up to 30% of pension value can be withdrawn but will be taxed at marginal rate of Income Tax.
  • Redundancy – Top slicing relief on ex-gratia payments and retirement lump sums will no longer be available on amounts over €200,000 with effect from 1 January 2013.
  • PRSI extended to cover “other income” such as dividends, rental income, interest income on deposits and savings for self-employed from 1 January 2013 and for all other persons from 1 January 2014.
  • NPPR charge to cease from 1 January 2014.
  • Income Tax rates, bands and credits to remain unchanged. Therefore your take home pay should be the same.
  • Property tax to be introduced from 1 July 2013 – Property owners will be responsible for paying and valuing the tax. Valuation guidance will be issued by the Revenue.
  • From 1 July 2013 income tax will apply to maternity benefit payments i.e. you will now have to pay when you received a maternity benefit from the social welfare. However no USC will be applicable to maternity benefit payments.
  • No increase on excise duty for Petrol or Diesel.
  • Gift/Inheritance tax (‘CAT’) – 10% decrease in CAT thresholds.
  • Disposal of Assets (‘CGT’) and CAT rates to increase by 3% to 33% (was 30%) from midnight tonight.
  • Corporation Tax rate to maintain at 12.5%.
  • Alcohol and cigarettes – excise duty increases from midnight tonight:  Beer and cider increase of 10c per pint; Sprits 10c increase per measure; Wine €1 increase per 75cl bottle; Cigarettes increase of 10c per pack of 20.
  • Effective from midnight tonight, DIRT will increase from 30% to 33%.
  • From 1 January 2013 – VRT for all motor tax bands will increase.
  • Extra funds to be allocated to the Department of Jobs Enterprise and Innovation to support job growth and export companies.
  • The minimum level of annual PRSI contribution by self-employed individuals will increase from €253 to €500.
  • Child benefit payments to be reduced by €10 per month.
  • Jobseekers benefit to be reduced by 3 months. Also a reduction in electricity and telephone allowances is introduced.
  • Prescription charge to increase from 0.50 cents to €1.50 and Drug payments prescription scheme threshold increased from €132.00 to €144.00.
  • Medical card – Individuals over 70 years of age with an income of €600 – €700 per week and couples with an income of €1,200 – €1,400 per week will have their medical card replaced with a GP only card.
  • Current system of un-vouched expenses for members of the Oireachtas is to be abolished and a reduction of 10% in party leader’s allowance is introduced.
  • No reduction to primary social welfare rates.
  • Increase from 12.5% to13.5% in the specified interest rate used in calculating the taxable benefit from preferential loans. The specified rate for home loans will be decreased from 5% to 4%.
  • Farmers – The farmers flat rate will be reduced from 5.2% to 4.8% with effect from 1 January 2013.
  • The Household Charge will cease to have effect from 1 January 2013.
  • Non-Principal Private Residence (NPPR) is to cease from 1 January 2014, while the Household Charge will also cease effective from 1 January 2013. Both of these have been replaced with the new Property tax.
  • Tax relief on charitable donations available at a blended rate of 31% for 2013 previously was at the higher rate.  There is an annual donation limit of €1m per individual and the charitable donations scheme will be removed from the high earners’ restriction.

 

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