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| INCOME TAX |
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| In his Budget Statement on 1 December 2004,
the Minister for Finance announced a number of changes
to the personal tax system. |
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| Tax Credits |
| The table below outlines increases for
2005. |
| |
| Tax Credit
|
2004
€
|
2005
€
|
| Single Person
|
1,520
|
1,580
|
| Married person |
3,040 |
3,160 |
| Widowed person (without
dependant children) |
1,820 |
1,920 |
| One Parent Family Credit |
1,520 |
1,580 |
| PAYE Credit |
1,040 |
1,270 |
| Incapacitated Child Credit
Max |
500 |
1,000 |
| Blind Tax Credit Single
person
One Spouse Blind
Both Spouses Blind |
800
800
1,600
|
1,000 1,000
2,000
|
| Widowed Parent
Bereaved in 2004
2003
2002
2001
2000/2001
1999/2000 |
-
2,600
2,100
1,600
1,100
600
|
2,800
2,300
1,800
1,300
800
-
|
|
| |
| Changes to Standard Rated Reliefs
are as follows: |
| |
| Relief |
2004
€ Max
|
2005
€ Max
|
| Rent Tax Relief
Single aged under 55
Married/Widowed aged under 55
Single aged 55 & over
Married/Widowed aged
55 & over
|
1,270
2,540
2,540
5,080
|
1,500
3,000
3,000
6,000
|
| Tuition Fees |
3,175 |
5,000 |
|
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| Tax Rates and Tax Bands |
| There are no changes to the tax rates of
20% and 42%. The standard rate tax band has been widened.
The table below sets out the tax rates and bands. |
| |
| Personal
Circumstances
|
2004
€
|
2005
€
|
|
Single/Widowed without dependant children
|
28,000 @ 20%
Balance @ 42%
|
29,400 @
20%
Balance @ 42%
|
|
Single/Widowed qualifying for One Parent Family
Tax Credit
|
32,000 @ 20%
Balance @ 42%
|
33,400 @
20%
Balance @ 42%
|
|
Married Couple one spouse with Income
|
37,000 @ 20%
Balance @ 42%
|
38,400 @
20%
Balance @ 42%
|
|
Married Couple both spouses with Income
|
37,000 @ 20% with increase of 19,000 max. Balance
@ 42%
|
38,400 @
20% with increase of 20,400 max. Balance @ 42%
|
|
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| Exemption Limits |
| The exemption limits for persons aged 65
years and over have been increased as indicated in the
table below: |
| |
| Personal Circumstances |
2004
€ |
2005
€ |
| Single/Widowed 65 years of age &
over |
15,500 |
16,500 |
| Married Couple 65 years of age &
over |
31,000 |
33,000 |
|
| |
The limits for Single/Widowed persons aged
under 65 and Married couples aged under 65 remain unchanged
at €5,210 and €10,420 respectively.
Marginal Relief will continue to apply where income does
not greatly exceed the relevant exemption limit.
The above exemption limits are increased by €575 for each
of the first two dependent children and by €830 for the
third and subsequent children. |
| |
| Benefit-in-Kind |
| The current small benefit threshold has
been increased from €100 to €250 with effect from 1 January
2005. |
| |
| Taxation of Unemployment Benefit |
| The special tax exemption for Unemployment
Benefit for systematic short-time workers is being extended
to 31 December 2006. |
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| FARMING TAXATION |
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| Measures are being introduced to assist
changes taking place in the farming sector. These are: |
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| Stock Relief |
The following are being extended from 1
January 2005 for a further two years:
- Special incentive stock relief (100%) for certain
young trained farmers
- Existing general 25% stock relief.
|
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| Farm Pollution Control |
| The writing down period for capital allowances
is being reduced from 7 to 3 years. For expenditure incurred
during the 4 year period commencing 1 January 2005, there
will be an option to claim relief at the rate of 331/3%
p.a. over 3 years. The current alternative arrangement
of the lesser of €31,750 or 50% of expenditure in
any one year will still be available. |
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| Averaging of Certain FEOGA payments |
| Provision will be made to enable farmers
who are not already using income averaging to average
certain FEOGA payments, in three equal instalments, over
the years 2005, 2006 and 2007. |
| |
| Farmers VAT |
| Farmers flat rate for 2005 is being increased
from 4.4% to 4.8%. |
| |
| Farmers Stamp Duty |
| See under Stamp Duty, overleaf regarding
a new stamp duty relief for the exchange of farm land. |
| |
| TAX INCENTIVE SCHEMES |
| The termination date for the various schemes
laid down in Finance Act 2004 will remain unchanged. |
| |
| VAT |
| Other than the changes for Farmers VAT
detailed above, there are no changes to VAT rates. |
| |
| CAPITAL GAINS TAX |
| The Minister announced no changes in the
Budget in relation to the Capital Gains Tax. |
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| CORPORATION TAX |
| The Minister announced no changes in the
Budget in relation to Corporation Tax. |
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| STAMP DUTY |
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| First Time Buyers |
| The stamp duty rates payable by first time
buyers, who are owner occupiers of second hand residential
property up to €635,000, have been reduced. The revised
stamp duty rates, which will apply to instruments executed
on or after 2 December 2004, are set out below. |
| |
| Aggregate Consideration |
Existing first
time buyer Rate |
New first time
buyer rate |
| Up to €127,000 |
Exempt |
Exempt |
| €127,001 – €190,500 |
Exempt |
Exempt |
| €190,501 – €254,000 |
3% |
Exempt |
| €254,001 – €317,500 |
3.75% |
Exempt |
| €317,501 – €381,000 |
4.5% |
3% |
| €381,001 – €635,000 |
7.5% |
6% |
| Over €635,000 |
9% |
9% |
|
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| Financial Cards |
| Relief is to be introduced to provide an
exemption from a second or subsequent charge to Stamp
Duty arising from the switching of financial cards such
as credit cards, charge cards, ATM cards and Laser cards.
Full details of the exemption will be published in the
Finance Bill 2005. |
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| Exchange of Farm land |
A new relief from Stamp Duty is to be introduced
for exchanges of farm land between two farmers for the
purposes of consolidating each farmer’s holding.
Under the relief, the stamp duty charge will be based
on an amount equal to the difference in the values of
the lands exchanged, which must be payable in cash.
The once off relief will apply for a two-year period and
full details of the relief, including the qualifying conditions,
will be published in the Finance Bill 2005. |
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| Companies Capital Duty |
The rate at which Companies Capital Duty
is charged is being reduced from 1% to 0.5%, for transactions
effected on or after 2 December 2004.
The main transactions which are liable to Companies Capital
Duty are the formation of limited companies and the allotment
of shares by such companies. |
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| VEHICLE REGISTRATION
TAX |
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| Hybrid Vehicles |
| The 50% refund of Vehicle Registration
Tax on the purchase of ‘hybrid’ vehicles is
extended to 31 December 2006. |
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| EXCISE DUTY |
| Apart from that listed below there are
no changes to the main excise rates. |
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| Relief for Microbreweries |
| From 1 January 2005 50% of the standard
rate of Alcohol Products Tax will apply to beers produced
by microbreweries, that is those who produce less than
20,000 hectolitres annually. |
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| Sulphur Free Petrol |
| Details of an excise differential on sulphur
free petrol will be announced in the Finance Bill 2005. |
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| PRSI & HEALTH
CONTRIBUTIONS |
| From 1 January 2005 the contribution ceiling
for employees’ PRSI is increased from €42,160
to €44,180.
The reduced employers’ PRSI rate of 8.5% for
class AO employees remains unchanged. |
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| Class A (Normal rate at which contributions
are made) |
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| Income (€) |
Employer |
Employee |
| Up to 44,180 |
10.75% |
6% (includes 2% Health Contribution) |
| Over 44,180 |
10.75% |
2% (Health Contribution) |
|
| |
Employees earning €287 p.w. or less,
will be exempt from PRSI and those earning €400 p.w.
or less, will be exempt from the Health Contribution of
2%.
For employees earning in excess of €287p.w. the first
€127p.w. will continue to be free of PRSI. The weekly
rate of €26 for employees on a modified PRSI rate
also remains unchanged. |
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| Class S (Self-Employed) |
| Income (€) |
Rate |
| All Income |
5% (includes 2% Health Contribution) |
|
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| Self-Employed persons are exempt from the
Health Contribution of 2% where the annual income €20,800
or less. Minimum annual PRSI contribution is €253. |
