| This Budget Summary only contains
details of the relevant tax changes, for details
of Social Welfare, Public Pension Reform and Decentralisation
go to our 'Minister's
Documents' section |
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| PERSONAL
TAXATION |
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| Tax, Credit
& Band Changes |
| Personal credits
increased by €50 single/€100 married to
€1,630 single/€3,260 married. |
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| Employee (PAYE)
tax credit increased by €220 to €1,490
per annum. |
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| Standard Rate
Bands increased to:
* €32,000 Single
* €41,000 Married One Income
* €64,000 Married Two Incomes, and
* €36,000 Lone Parent/Widowed Parent |
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| Age exemption
limits (single/married) increased from €16,500/€33,000
to €17,000/ €34,000. |
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| (For full tax
details see Tax
Tables Page) |
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| PRSI Changes |
| As from 1 January
2006, the employee PRSI contribution ceiling will
increase from €44,180 to €46,600. Also
the employee weekly threshold for liability to PRSI
will increase from €287 to €300. |
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| Employment
of a Carer |
| A tax allowance
can be claimed at an individual’s marginal
tax rate for the cost of employing a person to care
for a family member who is incapacitated. The ceiling
on the amount that can be claimed under this relief
is being increased from €30,000 to €50,000
per annum. |
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| Childminding
Relief |
| A new childminding
relief is being introduced. Where an individual
minds up to three children in the minder’s
own home, no tax will be payable on the childminding
earnings received, provided the amount is less than
€10,000 per annum. |
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| Donation
of heritage property |
| A new tax relief
is being introduced for the donation of heritage
property to the proposed Heritage Trust which is
to be established shortly. The scheme will provide
for up to 100% of the total market value of the
heritage properties donated to the Trust to be offset
against the tax liabilities of the donor. |
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| Rent Relief |
For those
aged under 55, the maximum level of rent paid
for private rented accommodation, on which tax
relief at the standard rate can be claimed, increased
by €150 single/€300 married and widowed
to €1,650/€3,300 per annum.
For those aged 55 and over the respective amounts
are being increased to €3,300/€6,600. |
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| COMPANY/BUSINESS
TAXATION |
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| Quarterly
Filing for PAYE Forms P30 |
| From 1 April
2006 employers whose annual PAYE and PRSI payments
do not exceed €30,000 will be able to return
their PAYE and PRSI on a quarterly basis, rather
than monthly as at present. The first quarterly
return will be due on 14 July 2006. |
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| Section
247 Relief |
| Measures will
be introduced to restrict the use of the interest
relief provisions of Section 247 of the TCA 1997
in the context of transactions between related companies,
where the principal purpose of the transactions
is apparently to generate, in an artificial manner,
interest charges qualifying for relief under Section
247. |
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| Capital
Allowances (and Expenses) for Business Cars |
| The car value
threshold for business cars is being increased from
€22,000 to €23,000. The new threshold
will apply to capital allowances and leasing charges
for new and second-hand cars used in the course
of a trade, profession or employment. |
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| Leasing
Income Relief |
| The Finance Bill
2006 will contain measures to alleviate certain
restrictions on the offset by companies of losses
arising from capital allowances on the leasing of
long-life plant or machinery. While this will be
of benefit to business, it is not intended to remove
the overall restrictions on the use of capital allowances,
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| PENSIONS |
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| Tax relief for pensions |
| The maximum allowable pension fund
on retirement for tax purposes will be €5 million
or, if higher, the value of the fund on 7 December
2005. |
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| Tax exemption
for pension lump sums |
| Where existing
lower limits do not apply, the maximum tax free
lump sum for drawdowns made on or after 7 December
2005 will be €1.25 million, being 25% of the
new maximum fund amount of €5 million. The
balance of a lump sum greater than this amount will
be taxed at the marginal rate as income. |
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| Approved
Retirement Funds (ARFs) |
| An annual 3%
imputed distribution will apply to the value of
assets in an ARF at 31 December each year and will
be taxable. This will be phased in over three years
from 2007, at 1% in 2007, 2% in 2008 and 3% from
2009 onwards. Any actual distributions from the
ARF during the year will be deducted from the imputed
distribution for that year and any net amount will
be taxed at the individual’s marginal income
tax rate. The charge will apply to ARFs created
on or after 6 April 2000. This imputed distribution
will not apply in the case of Approved Minimum Retirement
Funds. |
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| STAMP
DUTY |
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| Companies Capital Duty (CCD) |
| The Finance Bill 2006 will provide
for the abolition of companies capital duty. This
0.5% duty that is charged on the issuing of share
capital is being abolished for transactions effected
on or after 7 December 2005. |
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| TAX
INCENTIVES SCHEMES |
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| Termination
of Certain Tax Reliefs |
The following
property-based tax incentive schemes are to be
discontinued: the Urban Renewal Scheme, Rural
Renewal Scheme, Town Renewal Scheme, and the special
reliefs for hotels, holiday cottages, student
accommodation, multi-storey car parks, third-level
educational buildings, sports injury clinics,
developments associated with park-and-ride facilities,
and the general rental refurbishment scheme.
Transitional arrangements will apply as follows:
full relief will be available for qualifying expenditure
up to end-December 2006; 75% of the normal relief
will apply for qualifying expenditure in the period
January to end-December 2007; 50% of the normal
relief will apply for qualifying expenditure in
the period January to end-July 2008; and no relief
under the schemes will apply for expenditure after
that date. |
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| Park-and-Ride
Facilities and the Living-Over-the-Shop Scheme |
| Both the relief
for investment in park-and-ride facilities and the
Living-Over-the-Shop scheme are closed to new projects
since end-December 2004. These schemes will be reintroduced
in a more focused way; but the relief for commercial
and residential developments associated with park-and-ride
facilities will not be reintroduced. |
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| Childcare
Facilities, Private Hospitals and Private Nursing |
| The tax reliefs
for investment in childcare facilities, private
hospitals and private nursing homes are to be continued,
subject to the consideration of additional investment
options. Detailed provisions will be set out in
the 2006 Finance Bill. |
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| Exemption
of Stallion and Greyhound Stud Fees |
| The exemption
from tax of stallion and greyhound stud fees will
end as of 31 July 2008, which is the same termination
date as that for various property tax incentives.
In the meantime new taxation arrangements will be
introduced for the stallion and greyhound stud industries
and these will be subject to discussions in due
course with the EU Commission. |
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| RESTRICTION
OF RELIEFS |
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| Restriction
on the use of Tax Reliefs |
The new measure
is being introduced with effect from 1 January
2007 and will limit the use of tax breaks by those
with high incomes. It is based on restricting
the amount of specified reliefs which a person
can use to reduce their tax bill in any one year
to 50% of the person’s income.
Where this figure of “Gross Income”
is greater than a high income threshold of €250,000
then the aggregate deduction for
specified reliefs will be restricted to 50% of
the recomputed gross income, subject to a taper
relief for income between €250,000
and €500,000. Thus, a person with a “Gross
Income” of €400,000 will be subject
to tax in the normal manner on the excess over
€250,000. |
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| FARMING
TAXATION |
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| EU Single Farm Payment Entitlement
and CAT Agricultural Relief |
| The EU Single Farm Payment Entitlement
will be recognised as a qualifying agricultural
asset for the purposes of the Capital Acquisitions
Tax Agricultural Relief qualification test in relation
to gifts or inheritances. This measure will be included
in the Finance Bill 2006 |
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| EU Single Farm Payment Entitlement
and CGT Tax Retirement Relief |
| The EU Single Farm Payment Entitlement
will qualify as an asset for the purpose of Capital
Gains Tax Retirement Relief provided the farmer
in question fulfils the 10 year rule in relation
to ownership and usage of the land which will be
disposed of at the same time as that Entitlement.
This measure will be included in the Finance Bill
2006. |
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| Farm Pollution Control Relief |
| The annual cap on the amount that
can be claimed under the flexible writing down arrangement
for the special tax relief scheme for expenditure
on farm pollution control measures is to be increased
to the lesser of €50,000 or 50 per cent of
qualifying expenditure with effect from 1 January
2006. |
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| Leased Land Exemption |
| The exemption for income derived
from certain leases of farmland is being increased
from 1 January 2006 from €7,500 to €12,000
per annum for leases of between five and seven years
and from €10,000 to €15,000 per annum
for leases of seven or more years. |
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| EXCISES |
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| Reduction
in Betting Duty |
| The Betting Duty
rate of 2% will be reduced to 1% with effect from
1 July 2006 with the duty to be borne by the industry.
This will be provided for in the Finance Bill. The
potential for widening the tax base on which this
1% will apply will be examined. |
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| Excise Relief
for Biofuels |
| In order to achieve
an initial target of 2% of the fuel market to be
taken up by biofuels by 2008, a five-year scheme
of targeted excise relief will commence in 2006. |
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| Reduction
in Excise Duty for Home Heating Oils |
| The Excise Duty
on Kerosene used for heating is being reduced from
€31.74 to €16.00 per 1,000 litres with
effect from midnight on 7 December 2005. The Excise
Duty on Liquid Petroleum Gas used for heating is
being reduced from €20.86 to €10.00 per
1,000 litres from the same date. These rates will
be reduced to zero in Budget 2007. |
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| VALUE
ADDED TAX (VAT) |
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| VAT Registration
Thresholds |
| The VAT registration
thresholds for small businesses are being increased
from €25,500 to €27,500 in the case of
services and from €51,000 to €55,000 in
the case of goods. |
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