- The income tax standard rate band has been increased by €1,500. The entry point to the 40% income tax rate now increases to €36,800 for single individuals and €45,800 for married couples (with one earner).
- The PAYE credit, personal tax credit and earned income credit will all increase by €50 to €1,700 from the tax year 2022 onwards.
- The ceiling of the 2% USC rate will be increased from €20,687 to €21,295 to ensure it remains the highest rate of USC paid by full-time minimum wage workers. The threshold for the highest rate of Employer PRSI will also increase by €12 to account for the increase to the minimum wage.
- The income tax deduction in respect of light and heat expenses incurred by employees working from home has been increased from 10% to 30%.
Covid SupportsOne key talking point for tax practitioners in advance of the budget was around the current position, which does not entitle a proprietary director a tax credit for PAYE withheld on their employment income where the company paying their wage is availing of debt warehousing. However, it was announced that debt warehousing is now being extended to income tax liabilities for those proprietary directors caught in this position to combat such situations. It was welcome news that there would be no cliff edge to the Employee Wage Subsidy Scheme (“EWSS”). The EWSS is to be extended to 30 April 2022 but will be changed gradually between now and then to phase it out. There will be no change to the scheme for October and November. For December, January and February, there will be two rates of €151.50 and €203, while for March and April 2022, there will be a flat rate subsidy of €100. From 1 January 2022, no new applicants can apply for the scheme. The hospitality and tourism sector will welcome the announcement that the 9% VAT has been extended to 31 August 2022 for their industry.
PropertyMuch of the noise from opposition benches arose during the announcement of measures on property and housing. There was no inclusion of any form of a vacant home tax which had been raised in some pre-budget discussions and commentary. Instead, a new Zoned Land Tax will be introduced, which will be calculated as 3% of the market value of certain land suitable for residential units. This tax will have a two-to-three-year lead-in time and will replace the vacant site levy once brought into force. The Help-to-Buy scheme has been extended to 31 December 2022 but will be reviewed during the year while relief for some specific pre-letting expenses incurred by landlords to be continued for a further three years to the end of 2024.
Indirect Taxes and Green MeasuresDespite the pressures of climate change and having the Green Party as a coalition member, Budget 2022 was not as green-focused as some commentators may have predicted. Some of the measures for a Greener economy are set out below:
- Carbon tax was increased by €7.50/tonne of CO2 from midnight for auto fuels and from 1 May 22 for other fuels.
- It was announced that the VRT rates will be increased from 1 January 2022, with a new rate table being brought into force.
- Tax relief was offered for income generated from selling self-generated electricity back to the grid.
- VRT relief on battery electric vehicles to be extended to the end of 2023.
- The Accelerated Capital Allowance Scheme for Energy Efficient Equipment has been extended for another three years to 31 December 2026. However, equipment operated by fossil fuels is no longer applicable for the scheme. Hydrogen-powered vehicles have now been included in the list of equipment that qualifies for the ACA scheme.
- Smokers see an extra 50cent on a packet of 20 cigarettes.
SummaryAs has become normal practice, much of the headline items had already been leaked in advance of the budget announcement. Despite the commitment to continue the EWSS until Spring, there may rightly be some disappointment among both entrepreneurs and SMEs that there is not a greater focus on assisting them with any further tax incentives. However, given the backdrop of Covid and Brexit, it is a difficult period to control the finances, as some of the figures highlighted in our introduction suggest. We would hope the Covid supports and measures introduced can allow businesses to emerge from this difficult period, and perhaps future budgets can provide some much-needed tax incentives to our domestic SMEs and entrepreneurs. If you require expert assistance on this matter, please contact our Tax Partner, Brendan Murphy on firstname.lastname@example.org or feel free to call on +353 (0) 87 9752896.
Brexit deal done; What next?
- The TCA establishes zero tariffs or quotas on trade between the UK and the EU, where goods comply with rules of origin requirements.
- Notwithstanding the tariff and quota free trade enshrined in the TCA, certain technical barriers to trade continue to apply and address issues related to technical regulation, conformity assessment, standardisation, accreditation, market surveillance and marketing and labelling.
- While Brexit ends the EU ease and simplicity of moving goods freely, the TCA adds administrative burdens and no duty or tariff taxes.
- The TCA includes well-established provisions on cross-border trade in services that will secure continued market access across a broad range of sectors, including professional and business services, financial services and transport services, and will support new and continued foreign direct investment.
- In relation to financial services, although the TCA provides for “continued market access” the details have been left for later. The EU and the UK are yet to discuss “specific equivalence determinations” which will eventually be codified in a Memorandum of Understanding.
- The UK and the EU have agreed a framework for the recognition of professional qualifications which is based on the EU’s recent free trade agreements.
- The effect of Brexit and the TCA on cross-border trade in services differs from sector-to-sector. For example, UK resident financial services firms previously possessed “passporting rights” which allowed them to sell financial services into the EU. The TCA has not granted equivalent rights meaning that on 1 January 2021 UK resident financial firms will (as expected) lose their right to sell financial services in the EU.
- One of the key issues of concern of the EU was ensuring that the UK could not grant subsidies (tax or otherwise) to UK businesses which would effectively allow them to undercut similar businesses in the EU.
- The EU and UK are free to determine their own rules relating to the granting of subsidies but are bound by broad principles which must inform the contents of the rules which must ensure that the granting of a subsidy does not have detrimental effects on the trade between the EU and UK.
- The EU and UK shall each establish independent bodies which will design and oversee these rules and which are subject to the review of their respective domestic courts.
- The EU and UK have agreed on a reciprocal dispute resolution mechanism (an accelerated arbitration procedure) where a party is of the opinion that a subsidy is causing, or is at risk of causing, significant harm to its industries.
- Whilst part of the EU, the UK was bound by EU laws related to state aid and government subsidies and was subject to oversight by the European Court of Justice (EUCJ), a sore point for the UK public. Brexit effectively removes the applicability of these laws and jurisdiction of the EUCJ.
- There is also a ‘most-favoured nation’ clause, which ensures that, if either the UK or the EU gives more-favourable terms to another country in future, those terms will automatically extend to the UK/EU deal.
- However, these provisions are subject to a long list of exceptions, which vary from one member state to another.
- Residence rights in existing cases in the UK and EU will continue to be respected as long as the residence situation remains unchanged. New residency applications after the transition period will likely be subject to the same procedures as for third countries.
- Existing (frontier) workers will have the right not to be discriminated against on grounds of nationality as regards employment, remuneration and other conditions of work and employment. In addition, they will have the right to take up and pursue activities and assistance by employment offices in the same way as offered to own nationals as well as rights to tax, social advantages, housing benefits and access to education for their children.
- Prior to Brexit, UK citizens (like all other EU citizens) were granted unrestricted rights to live and work in the EU, and vice versa. Post Brexit, closer consideration will be required for non-EU workers and transfers, however the UK / Ireland Common Travel Area provisions allow for continuation of citizens of each of those countries to live, work and retire to each other’s jurisdiction.
RN Podcast: 2020 – The Year that was, and 2021 potential for business growth
10 Main Highlights of Budget 2018
1. Personal Taxes
- Standard Rate Cut-Off Increase of €750, meaning a single individual can now earn up €34,550 at the standard 20% tax rate, and a married couple (with one salary) can earn up to €43,500 at the 20% rate. Giving taxpayers an annual tax saving of €150.
- Earned Income Tax Credit was increased to €1,150 from €950 in 2016, further reducing the disparity between the self-employed/business owners and the employed.
- Home Carer Tax Credit (which applies to married couples or civil partners where one spouse or civil partner works in the home caring for a dependent person) increasing from €1,100 to €1,200 for 2018. Home carer’s income threshold to remain unchanged at €7,200.
2. Universal Social Charge (USC)
- No change to the entry point of €13,000.
- USC Rates were reduced as follows:
Pre Budget 2018
Post Budget 2018
|First €12,012||0.5%||First €12,012||0.5%|
|€12,012 to €18,772||2.5%||€12,013 to €19,372||2%|
|€18,773 to €70,044||5%||€19,372 to €70,044||4.75%|
|€70,045 to €100,000||8%||€70,045 to €100,000||8%|
|Surcharge on non PAYE income over €100,000||11%||Surcharge on non PAYE income over €100,000||11%|
3. Stamp Duty
- Probably the most contentious measure introduced was the three-fold increase in Stamp Duty on commercial property from 2% - 6% with effect from midnight on the 10th October 2017.
- However, the reduced rate of 1% stamp duty will continue to apply on certain inter-family transfers of farm land for a further 3 years.
4. Key Employee Engagement Programme “KEEP”
- An incentive is being introduced to facilitate the use of share-based remuneration by small and medium-sized enterprises (SMEs) to attract key employees.
- Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax (33%) on disposal of the shares, in place of the current liability to income tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on exercise (approximately 52%).
- This incentive will be available for qualifying share options granted between 1 January 2018 and 31 December 2023.
5. Pre-Letting Expenses.
- A new, time-limited tax deduction for pre-letting expenses is being introduced to encourage owners of vacant residential property to bring such property into the rental market for a minimum period of 4 years.
- The property must have been vacant for at least 12 months to qualify.
- A cap on allowable expenses of €5,000 per property will apply.
- This relief will be available for qualifying expenses incurred up to the end of 2021.
- It will be subject to claw back if the property is withdrawn from the rental market within 4 years.
6. Lease land for Solar Panels
- The Minister made the welcome announcement for landowners, that the leasing or agricultural land for the use of solar panels will qualify as agricultural activity for the purposes of Agricultural relief (CAT) and Retirement Relief (CGT).
- The total area of land used for solar panels cannot exceed 50% of the total holding.
7. Capital Gains Tax – 4 Year Exemption
- Finance Act 2012 brought into force the 7 year CGT exemption for land and purchased between 1st January 2012 and 31st December 2014.
- To qualify for the relief, the purchaser had to retain the land or building for at least 7 years.
- This holding period is now being reduced to 4 years.
8. Sugar Tax
- A tax on sugar sweetened drinks is to be introduced in 1st April 2018.
- The tax will apply to sugar sweetened drinks with a sugar content between 5 grams and 8 grams per 100ml at a rate of 20c per litre.
- A second rate will apply for drinks with a sugar content of 8 grams or above at 30c per litre.
9. Corporation Tax & VAT
- The Corporation Tax rate of 12.5% will be maintained.
- 9% VAT rate for the Tourism Sector is to be retained.
10. Benefit in Kind on Electric Vehicles
- A 0% benefit-in-kind (BIK) rate is being introduced for electric vehicles for a period of 1 year.
- This will allow for a comprehensive review of benefit in kind on vehicles which will inform decisions for the next Budget.
- Electricity used in the workplace for charging vehicles will also be exempt from benefit-in-kind.
SummaryOverall, the 2018 Budget appeared to be a largely underwhelming and has been criticised as a budget that tried to please everyone and ended up pleasing no-one. That being said there are potential tax savings for both individuals and businesses, with effective tax planning. If you’d like to know more on how Budget 2018 can work for you and your business, please do not hesitate to contact one of our tax experts, they’ll be happy to help!
Six Important Questions You Need To Ask About Apple Pay
Apple Pay is ‘the next big thing’ for speed and convenience when making purchases. The service launched in Ireland last month, and Roberts Nathan has put together this quick guide!
1) What the heck is Apple Pay?!
Apple Pay is the natural progression from contactless payments with credit or debit cards, but can be used for larger payments because of additional layers of security. It can also be used to pay for purchases made online. In a nutshell, a phone becomes a clone of its owner’s card, using advanced features and a fingerprint scanner to ensure that they’re even more secure.
2) Sounds pretty nifty. How do I start using it?
If your business already uses contactless payment terminals (the ‘next gen’ of chip-and-PIN payment terminals), then you’re probably already good to go. We advise contacting your vendor to make sure, but the majority of contactless-payment terminals won’t need replacement or adjustment to work with Apple Pay or its Android equivalent, Android Pay.
3) Is this a way for Apple to make money out of me?
No. Apple can’t charge you for providing Apple Pay facilities for their customers. It’s a selling point for their phones, and they make their money by including it in the premium prices they charge for iPhone 6 and upwards. The latest iPads are also capable of making payments like this.
4) This sounds like a lot of hassle. Will I have to do this?
Not at all, but it won’t be long until phone-based payments are so widespread that anyone who’s not on the Apple Pay or Android Pay train will inevitably be left behind. The technology is optional right now, but in two years it will be commonplace to pay using a phone. Cards will still exist, but customers making use of them will become a thing of the past. The decision is yours.
5) How will I process my returns?
There will be no difference to you whether your customers pay with Apple Pay or a card. However, if your card terminals aren’t capable of contactless payment, it’ll be in your own interests to ask your vendor about an upgrade. A broadband internet connection is highly recommended.
6) My business uses a rewards programme. Can this be used with Apple Pay?
More than likely, though you ought to check with your vendor and/or bank. At present, only Ulster Bank, KBC and Boon (an online payment company) customers can use Apple Pay, but it will roll out to all Irish banks over the course of the next year or so. In most cases, rewards can be applied in exactly the same way as they are now.
We hope this has given you a quick insight into the world ahead. You can contact Apple directly to find out more.