Looking Ahead to Budget 2018
Budget 2018 is due to be announced on Tuesday, October 10 by the new Finance Minister Paschal Donohoe.
Here’s what we know so far:
Budget 2018 not expected to be a generous budget, but it is expected to concentrate on low and middle income earners, with the aim of reducing their tax burden.
An educated guess: Here are a few predictions for Budget 2018.
There may be a reworking or amalgamating of the USC and pay-related social insurance (PRSI), leading to more people paying PRSI but, on the other hand, less paying USC. This amalgamation could also lead to an extension to the existing dental, optical and paternity leave benefits. The current reduced rate of USC for people aged over 70 years of age may be extended past its current end date of 2017.
The 20% rate band may be increased, pulling more income into the lower rate band, and reducing the amount taxed at 40%. Alternatively, the 20% income tax rate itself could be reduced by a percentage to 19%. The Earned Income Tax Credit is expected to be increased to bring the credit available for self-employed people and company directors more in line with the credit given to PAYE workers. On the other hand, the PAYE Tax Credit could be increased for lower paid workers, but abolished for those earning above a certain threshold.
It is possible that the current restriction to 75% to the amount allowed as an expense for loan interest could be increased to 85%, with the aim of allowing full deductibility for landlords within the next three or four years. A decision on whether Local Property Tax is a deductible expense would also be welcome.
Pensions & Benefits
Small increases of approximately €5 per week are expected.
Mortgage Interest Relief
It’s expected this will be extended beyond the previously stated 2017 end date.
Tax on Investment & Savings Income
It is probable that DIRT (tax on savings) will be cut to 37%, with an aim to hit 33% by 2020.
No changes expected to the current 12.5% rate.
Local Property Tax
Property prices have dramatically increased since this tax was introduced in 2013, but the tax itself has not changed since then. An increase or a new approach in how this is levied is believed to be afoot.
The Government has given a commitment to increasing the Parent to Child CAT threshold, and it is believed that an extension to €350,000 may take place in this budget. The Small Gift Exemption, currently allowing a tax free gift of €3,000 per annum, may be altered, with some predicting an increase to a possible €3,750 and others a reduction to €2,500.
If you have any tax queries, contact one of our Tax Managers today!
Jane Jackson, Dundalk Office
+353 42 933 9955
Mairead Rooney, Balbriggan Office
+353 1 849 1633