Minister for Finance, Michael Noonan will deliver his 5th and perhaps final budget on Tuesday the 13th of October 2015. With a general election looming, there has been talk of a ‘giveaway’ budget.
As the leaks start in advance of the day’s announcements, we take a look at what small businesses and the self-employed might prepare for:
Changes to Tax Bands
We are expecting the cut off point for USC to rise from the current €12,012 to something like €13,000. This will cut a number of low income earners out of the USC net.
There may also be cuts to PRSI and USC for higher earnings. The Government has promised to cut the 7% rate of USC in order to help reduce the marginal tax rate on all those earning less than €70,000 a year to below 50%.
New ‘self-employed’ tax relief
The government has signalled that it will finally address a discrepancy in the tax system that has long been a bug bear of the self-employed. As things stand, PAYE workers get a tax credit worth €1,650 but this has never been extended to the self-employed. That means that a PAYE worker on the same income as a self-employed person ultimately pays less tax. However this week, the Minister for Finance, Michael Noonan indicated he would be introducing a new ‘self-employed tax credit’. It is believed the credit will be worth up to €150 initially, rising over the next few years.
New Landlord relief
With rents increasing, there has been talk of a move to introduce tax reliefs to incentivise landlords to take on families who are living on social welfare payments. The government has also spoken about measures to encourage landlords to enter into longer term arrangements with their tenants. What form the financial relief will take has not been clarified however it may take the form of100% mortgage interest relief being offered to residential landlords. This is the situation with commercial landlords at the moment.
HRI scheme to be extended
It is expected the home renovation incentive scheme will be extended by another year to 31 December 2016. This relief allows homeowners and landlords claim tax relief by way of an Income Tax credit at 13.5% of expenditure on repair, renovation or improvement works carried out on a main home or rental property.
Changes to inheritance tax
It is hoped that increases will be made to the current Capital Acquisition tax thresholds to reflect the increase property market values. The tax free threshold rates have been reduced over the past number of years, the threshold between parent and child more than halved from €542,544 in 2009 to €225,000 in 2015.This decrease in thresholds and the increase in property values have made paying inheritance tax a real issue, especially for children inheriting the family y home.
We will be following Budget 2016 on the day and Our Twitter feed @TaxAssistIrl will include all of the latest information on the Budget and will be using #budget2015.