Budget 2012 - Tax Measures at a Glance
Although income taxes were left untouched in Budget 2012 many new indirect taxes were implemented affecting every sector of society. There are several new tax measures small businesses and the self employed need to be aware of:
Major Tax Changes
VAT rate increase
VAT is being increased to 23% in 2012. The new rate will apply to about half of all goods and services, and will mean that Ireland will have one of the highest VAT rate in the Eurozone. The VAT increase is likely to hit the retail industry hardest.
Universal Social Charge
The level at which you start paying the Universal Social charge has gone up from €4,004 to €10,036.
In the case of a sole trader with a profit of €9,000, up until now a 2% USC would have been charged. After 2011 this will no longer be charged meaning a saving of €180.
Mortgage interest relief
In some unexpected good news, mortgage holders who took their first mortgage out between 2004-2008 will now receive 30% interest relief. For first time buyers in 2012 the rate of relief is 25% whilst for non first time buyers the rate will be 15%.
In the case of a married couple with a mortgage of €500,000 on an interest rate of 3% who bought in 2007. This extra relief is worth up to €750 extra a year to them.
Higher DIRT rate
In a move to encourage spending versus saving DIRT tax on savings will be increased from 25% to 30%
Changes to CAT and CGT
This budget has increase the Capital Gains and Capital Acquisition tax rate from 25% to 30%. This increased rate will affect people who want to sell their businesses or perhaps a property they have inherited.
Betting tax
The betting tax has now been extended to cover offshore, online and phone betting.
Other taxes
25 cents has been added to a pack of cigarettes, the carbon tax goes up from €15 to €20 per tonne.
