We have summarised the main points that we believe are most relevant below.
Minister Noonan says the focus of this Budget will be on small and medium sized enterprises. This will include reforming the new company corporation tax exemption.
He also announced a 10 point tax reform focused on the SME sector which includes:
- Increase in the close company de-minimis threshold
- Cash receipts basis threshold to be increased from €1,000,000 to €1,250,000
- 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
- Increase in funds available for credit support for small businesses from €100m to €400m
- Extension of stock relief for 3 years to 2015 for farming sector
- Relief from CGT for disposals of farm land for restructuring from January 2013 to December 2015
- Subject to EU State Aid approval.
- VAT rate for tourist industry to remain at 9% for 2013
- Scope of PRSI extended to cover "other income" such as rental income, dividends, interest income on deposits and savings for self employed from 1 January 2013 and for all other persons from 1 January 2014.
- The minimum level of annual PRSI contribution by self employed individuals will increase from €253 to €500.
- The weekly PRSI allowance will be removed for employees.
Bands and Rates
Income tax rates, bands and credits to remain unchanged.
Pension Contribution Relief
- The government wishes to continue to encourage individuals to invest in pension schemes.
- Generous pension arrangements funded by the taxpayers will no longer be funded at the expense of the tax payer.
- Tax relief will only be permitted for pension contributions up to a level that provides income of up to €60,000 per annum. This will take effect from 1 January 2014.
- Tax relief on pension contributions will continue at the marginal rate of income tax.
- The pension levy will not be renewed after 2014.
Income tax relief on pensions to continue at marginal rate
Top Slicing Relief
Top slicing relief on ex-gratia payments and retirement lump sums no longer available on amounts over €200,000 with effect from 1 January 2013.
The foreign earnings deduction for work related travel to certain countries will be extended to countries beyond the BRICS.
Tax deduction on charitable donations available at 31% blended rate of income tax for 2013.
From 1 July 2013 income tax will apply to maternity benefit payments but no USC applicable to maternity benefit payments.
DIRT increase from 30% to 33%
Income Tax - Reduced USC Rate for over 70's
The reduced rate of USC for those over 70 years of age with an income in excess of €60,000 will be discountinued from 1 January 2013 and the standard rates of USC will apply.
AVCs of up to 30% of pension value can be withdrawn but will be taxed at marginal rate of Income Tax.
Definition of farm partnerships widened.
Corporation Tax Rate
Commitment to maintain the 12.5% rate of corporation tax.
CAT & CGT - Tax Rates
10% decrease in CAT thresholds. CAT and CGT rates to increase by 3% (to 33%) from midnight tonight.
Aviation Sector Funding
New funding sources and incentives to be introduced for aviation sector.
Real Estate Investment Trusts (REITs) to be introduced.
Property tax on residential properties to be introduced from 1 July 2013. The main features of the tax will be as follows:
- The Revenue Commissioners will collect the Property Tax.
- Tax imposed on market value as assessed by the owner. The initial valuation will be valid up to and including 2016.
- Valuation guidance will be issued by the Revenue Commissioners.
- Property tax will be levied at 0.018% for the first €1,000,000 and 0.025% thereafter.
- Properties with a value of more than €100,000 and less than €1,000,000 will be assessed at the mid-point of valuation bands of €50,000 width.
- Properties valued in excess of €1,000,000 will be liable at 0.018% on the first €1,000,000 with no banding applied.
- Rates to remain unchanged for lifetime of government.
- Using an example of a property in the €150,000 - €200,000 threshold the half year charge in 2013 will be €157.
NPPR & Household Charge
- NPPR charge to cease from 1 January 2014
- The household charge will cease to have effect from 1 January 2013
Mortgate Interest Relief
Mortgate interest relief to end on 31 December, 2012 as planned. Exemption from local property taxes for new and newly acquired or previously unoccupied homes acquired before 31 December 2016. Relief will also apply to first time buyers and residnets in unfinished estates during this period.
Property Tax Voluntary Deferral
Voluntary deferral will be available for property tax for low income earners. Interest will be charged on deferred amounts at a low rate.
Excise duty increases for alcohol and cigarettes from midnight tonight=:
- Beer and cider increase of 10c per pint
- Sprits 10c increase per measure
- Wine €1 increase per 75cl bottle
- There will be a pro rata increase on other products
- Cigarettes increase of 10c per pack of 20
- Extension of carbon tax to solid fuels
- Rate of €10 per tonne to be applied from 1 May 2013. This will increase to €20 per tonne from 1 May 2014
VRT & Motor Tax
VRT and motor tax across all categories will increase from 1 January 2013. A dual registration period will be introduced in order to incentivise a year round market.
Petrol & Diesel
No increase on excise duty for Petrol or Diesel.
AIB to contact 1500 homeowners per month in respect of management of mortgage position.
Social Welfare Rates
No reduction to primary social welfare rates.
Child benefit payments to be reduced by €10 per month
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.