Budget 2014 - 15th October 2013

>The budget summary for 2014 was announced today by Minister Michael Noonan. TD.

Although income tax rates and standard bands have remained the same, items such as a €150m banking levyand a new 41% higher single rate for DIRT on savings formed part of the measures adopted to collect the €2.5bn worth of spending cuts and tax increases announced.

Below are some of the main points to note in relation to the various tax heads, as a result of budget 2014.

Budget Summary 2014 as announced on 15^th October 2013

Income Tax

• Tax relief on private health insurance premiums will be limited to €1,000 for each adult insured and €500 for each child. This change applies to policies which are renewed or entered into on or after 16 October 2013. A child for the purposes of this provision includes a student over 18 years and under 23 years who is in full-time education. Relief will continue to be granted at 20%.

• Top Slicing Relief, a reduction of tax due on lump sum payments when leaving employment, will no longer be available from 1 January 2014 in respect of all ex-gratia lump sum payments.

• The One-Parent Family Tax Credit will be replaced with a new Single Person Child Carer Tax Credit from 1 January 2014. The new credit will be to the same value but will be available only to the principal carer of the child.

• A new Home Renovation Incentive scheme of tax relief has been introduced for a period of two years. The scheme will provide tax relief for home renovation work.

• To encourage those who wish to start their own business, an exemption from income tax up to a maximum of €40,000 per annum will be provided for a period of two years. To qualify, individuals will set up a qualifying, un-incorporated business, having been unemployed for a period of at least 15 months prior to establishing the business.

Capital Gains Tax

The relief from Capital Gains Tax (CGT) (in respect of the first 7 years of ownership) for properties purchased between 7 December 2011 and 31 December 2013 will be extended by one year to include properties bought to the end of 2014. Property purchased in this period when held for seven years, the gains accrued in that period will not attract CGT.

VAT

• The 9% reduced VAT rate, which was introduced in 2011 as part of the Government Jobs Initiative for tourism-related services, was due to revert to 13.5% on 31 December 2013. The 9% VAT rate is being retained.

• The annual VAT cash receipts basis threshold for small to medium businesses will be increased from €1.25 million to €2 million with effect from 1 May 2014.

Other Duties & Taxes

• The rate of Deposit Interest Retention Tax (DIRT), together with the rates of exit tax that apply to life assurance policies and investment funds, will now be 41% whether payments are made annually or more frequently The increased rates will apply to payments, including deemed payments, made on or after 1 January 2014.

• The 0.6% stamp duty levy on pension fund assets is to increase to 0.75% for the year 2014. The levy will be reduced to 0.15% for 2015.