Budget 2015 Predictions

Minister for Finance, Michael Noonan, will deliver Budget 2015 on October 14^th. As the economic outlook improves, the tone around this budget is different; with less talk of severe cuts and even the potential for some tax giveaways. Here we take a look at what might impact small businesses and the self employed.

 

Changes in Income tax

The Government has stated on a few occasions that they wish to address low to middle income earners paying tax at the top rate of 52%. Currently, the entry point to the higher rate of PAYE tax is €32,800, it is highly likely that Government will raise this amount to both put money back into the pockets of middle income earners and to encourage spending. Some experts are predicting it will go up to €34,800 and that this could impact almost half of all taxpayers in a positive way.

As well as changing the tax bands, another potential area where changes might be made is in the actual rates with many calling for a reduction in the higher rate of tax from 41% to 40%.IBEC and other organisations have proposed this change to make Irelands higher personal tax rate more competitive compared to our trading partners internationally.

 

Introduction of new tax credit

Labour are pushing for the introduction of a new tax credit specifically aimed at middle income earners, as a way of reducing their effective tax rates and putting more money back in their pockets. This would be very difficult to administer in practice.

 

USC & PRSI – to remain unchanged

Despite many calls to the contrary, It’s expected that USC rate will remain unchanged as any changes to the top rates will only affect high income earners. PRSI is also expected to remain at 4%.

 

Excise on Wine

There have been significant increases in excise duty on wine over the last number of years, with as much as 54% in excise duty on a bottle of wine now being passed on to the Government. The National Off Licence Association predict that almost 60% of independent off licenses may close in 2015 if there is another increase. With that it mind it is expected that Government may reduce the increase brought in Budget 2014 to help stimulate this sector of the Economy.

 

CGT exemption to be Abolished

Minister Noonan has said he won’t renew the capital gains tax (CGT) relief on properties that have been held for more than seven years in Budget 2015. This is due to the increased activity in the property market and in the Ministers own words “At the moment there's an absolute wall of money wanting to invest in Ireland” .

 

Pension Levy

IBEC has called on the government to eliminate the levy on Private pension schemes. This is essentially a tax on private workers savings’ as any levy will be passed on by the pension provider to individuals, in pension management fees.

The Government’s accumulated private pension levy proceeds are set to exceed €2 billion, with collection this September.  It remains to be seen if this levy, which was meant to be temporary when first enacted, will be eliminated in Budget 2015.

 

Property Tax Freeze

Properties are due to be re-valued for the property tax in 2017 – but there has been mention of  delaying this until 2019 – resulting in a freeze to rates . (Local councils will still be able to adjust rates up or down by 15%).

 

Employers PRSI

Chambers of Commerce across the country have called for a lower rate of PRSI for employers. At the moment the standard rate of employer PRSI is 10.75%, any reduction in this would, they say, improve job creation prospects.

 

Seed Capital Scheme

The seed capital scheme is a valuable tax rebate to Individuals starting a new business venture. However a lot of self-employed people are denied access to the scheme under current rules. The Institute of tax say have called for the government to look at this scheme to help “cash-poor” businesses.

Date published 1 Oct 2014

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.