Finance Bill - What You Need To Know

Minister for Finance Michael Noonan published the Finance Bill on the 21st of February. For the most part the bill simply gives effect to the measures announced in December's Budget. However there are some new initiatives – several of which may be of benefit to small business owners.

VAT Changes

As announced in the budget, the Bill confirms that the “cash receipts” threshold has increased from €lm to €1.25m.  This basically enables you to only pay over VAT to the Revenue once you have been paid, easing casflow. The increased threshold will take effect from 1st May 2013.  

R&D 

As outlined in the Budget, the Finance Bill increases the amount of qualifying R&D spend excluded from the incremental basis from €100k to €200k.

If you are looking to hire very specialised staff from abroad there is some good news for you. The bill introduces a Special Assignee Relief Programme or SARP. The scheme gives an exemption from income tax of 30% of salary between €75,000 and €500,000 for employees assigned for between one and five years.

Property

In a bid to stimulate the construction industry and to encourage regeneration of inner city area the Bill introduces, by way of a pilot scheme, a relief in relation to expenses on the conversion or refurbishment of Georgian residential properties. For now these reliefs are only available in Limerick City and Waterford City, but the exact detail of the qualifying areas has yet to be

announced. The scheme is for owner occupiers only. If the property is sold at any time, there is no claw back of the relief claimed but the relief may not be claimed by a subsequent purchaser.

Staying with property and in particular for those individuals who deal in land, there are new rules being introduced to restrict the offset of land losses against other income. This measure will put pressure on persons struggling with debt repayment as it limits the ability to use losses arising from the crisis.

Definition of bread changing for VAT purposes 

The definition of bread is to be changed for VAT purposes to take account of the development of bread products for health, ethnic and other reasons.

Bread is currently zero-rated, and the new measure will bring bagels, baps, blaas, naan breads and pita bread into this category.

Other bakery products with excessively high levels of sugar and fat, such as croissants, brioche and danishes will remain outside the definition of bread and will be liable to VAT at either the 13.5% or 23% rate.

Mortgage interest relief

The Bill also gives effect to other Budget day announcements, including an increase in mortgage interest relief to 30% for first-time buyers who bought homes from 2004 to 2008.

Revenue powers

Revenue is also to be given more powers when investigating serious tax offences.

Date published 25 Feb 2013

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.