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Budget 2018 – The Main Points for Businesses to Digest

 

A broadly positive, if cautious, budget 2018 has been announced with no major surprises from Paschal Donohoe today in his budget speech.
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 entry point for higher rate for earners increased by €750 per person from 2018 increased to €34,550.
•  Higher rate of USC reduced by 0.25% to 4.75%.
•  Lower rate of USC reduced by 0.5% to 2% and ceiling increased to €19,372.
•  New initiative introduced – ‘KEEP’ Key Employment Engagement Programme for small and medium enterprises in their efforts to attract and retain key employees.

Corporation Taxes
•  No change in Corporation tax rate – remains at 12.5%.
Stamp Duty
•  Stamp duty on commercial property to rise from 2%-6% from midnight tonight.
•  Stamp duty increase can be clawed back on development land affected by the increase to 6%.
•  Consanguinity stamp duty relief at 1% for inter family farm transfers, to remain for a further 3 years.

Property Market
•  New fund of €750 million – Ireland Strategic Investment Fund available for commercial investment in housing finance.
•  Stamp duty on commercial property to rise from 2%-6% from midnight tonight.
•  Reduction in the 7 year period owners must retain qualifying assets therefore assets acquired in 2012/13 can be disposed of as of today. Reduced from the 2019 timeframe.
•  Mortgage interest relief to be tapered out by 2020 ( for people with loans taken out in a period 2004-2012) This will be at 75% the rate in 2018, 50% in 2019 and 25% in 2020.
•  Vacant site levy to be increased 3% in 2018, 7% in 2019.

Small & Medium Sized Businesses
•  No change – remains at 9% VAT for tourism and hospitality.
•  Export loan scheme for small / medium size enterprises.

Charities
•  Charities VAT compensation scheme to be introduced in 2019 in respect of expenditure incurred in 2018.

Farming & Agri Sector
•  Consanguinity stamp duty relief at 1% for inter family farm transfers, to remain for a further 3 years.
•  €25 million loan scheme to support Agri-food sector impacted by Brexit.
•  Exemption of young trained farmers from stamp duty on agricultural land transactions to continue.
•  Leasing of agricultural land for solar panels to be classified as qualifying agricultural activity for the purposes of specific CAT and CGT reliefs.

Personal
•  Cigarettes to increase by 50 cents on a pack of 20.
•  New sugar tax to be implemented – Sugar sweetened drinks to be taxed. A rate of 30 cent per litre on drinks between 5g-8g of sugar per 100ml taking effect in April 2018.
•  VAT rate on sunbeds increased to 23%.
•  No rises in alcohol, petrol, motor tax or VRT.
•  Mortgage interest relief to be tapered out by 2020 ( for people with loans taken out in a period 2004-2012) This will be at 75% the rate in 2018, 50% in 2019 and 25% in 2020.

Other
•  All social welfare payments will increase by €5 with the increased payments kicking in at the end of March 2018.
•  85% bonus payment to social welfare recipients this Christmas.
•  Drugs payment scheme threshold reduced to €134.
•  Prescription charges are to be reduced for everyone with a medical card under the age of 70 from €2.50 to €2.00 per item and the monthly cap for prescription charges decreased from €25 to €20.
•  State pension to increase by €5 in 2018.
•  The 5% rate of universal social charge will drop by 0.25% and the 2.5% rate will drop by half a percentage point.
•  1,300 teaching posts with ratio 26:1 Primary school levels.
•  Resources to allow for the recruitment of and additional 800 Gardaí in 2018.

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