At 1pm tomorrow, Minister Paschal Donohue will make his debut Budget speech. The budget will outline a package of tax cuts and spending increases of between €900m and €1bn; split 2:1 in favour of spending.
The Minister has spoken previously about how, while Ireland’s economy has recovered, our society has not. This, we feel, will result in a number of changes in key areas in an attempt to redress this balance.
Last year, both the marginal rate of Income Tax and USC rates were reduced for those earning below €70,000. It is likely that this trend will continue with a potential increase in the standard rate band, the rate at which people enter the marginal rate of Income tax @ 40%. There may also be some further reductions in USC.
The earned income credit for self-employed individuals may also be increased to bring it in line with the employee tax credit.
We are also hopeful that that Budget 2018 will continue to improve CGT Entrepreneur relief by increasing the lifetime limit and bringing it more in line with the more generous UK equivalent. We expect that a new share based remuneration scheme for small and medium sized enterprises (SME’s) will be introduced in Budget 2018 as flagged last year.
Regarding capital taxes generally (capital gains tax and gift/inheritance tax), rates have remained unchanged for the last number of years so some reduction/re-basing of assets would be welcome. With property valuations increasing, it is rumoured the Tax free Class A Threshold will also be increased towards a promised target of €500k.
As the housing crisis continues, there is pressure on the government to continue to support the construction sector. It is likely that both the Help to buy scheme for first time buyers and the Homes Renovation Incentive will be extended for another year. In order to balance the budget, the Minister will have to introduce some income raising measures; based upon the rumours these include an increase in commercial stamp Duty rates, a sugar tax and higher carbon taxes.
As the international tax landscape continues to evolve and change, it is important that Budget 2018 continues to support Foreign Direct Investment. Following the publication of the Coffey Report on Ireland’s Corporate Tax code it is expected that the Minister will announce a consultation process in relation to a range of important International tax policy issues.
Join us Wednesday morning for our Budget briefing in the Sheraton, Athlone when our tax team will address the effects that Budget 2018 will have on you personally and on your business.
Please register here to attend the Budget Briefing.