For the first time since April 2009, the marginal rate of tax falls below 50%, being 49.5% for all individuals earning less than €70,044. This has been achieved by reducing the rates of USC as noted below.
Universal Social Charge (“USC”)
The entry point for USC has been increased with the effect that incomes of €13,000 or less are exempt from USC. For amounts in excess of €12,012, the rates are set out below:
| ||For Employees ||Self Employed Individuals |
|€0 to €12,012 ||1% ||1% |
|€12,013 to €18,668 ||3% ||3% |
|€18,669 to €70,044 ||5.5% ||5.5% |
|€70,045 to €100,000 ||8% ||8% |
|Balance ||8% ||11% |
The higher rates of USC, which were introduced in Budget 2015 minimise the benefit of the USC rates reduction for individuals with incomes in excess of €70,044.
Home Carer Tax Credit
The Home Carer Tax Credit has been increased by €190 to €1,000. The income threshold of the home carer has also been increased to €7,200 (previously €5,080).
Earned Income Tax Credit
A new tax credit of €550 has been introduced for self-employed individuals and proprietary directors who have earned income. This is to recognise the fact that such individuals are not entitled to the PAYE tax credit.
Employer PRSI change
Currently an employer pays PRSI at 8.5% in respect of an employee earning €356 or less per week. This threshold has been increased on €376 per week. On amounts exceeding €376 per week, the rate remains 10.75%.
As expected, the Minister has confirmed the current pension levy of .15% will end in 2015.
Employment Incentive Investment Scheme
The changes announced last year are being commenced with effect from 14 October 2015. The changes have been awaiting EU approval up to now. The changes included an increase in the amount that a company could raise annually to €5 million with a lifetime cap of €15 million. A further change is that the scheme has been amended to include expansion works on existing nursing homes.
Profits/ Gains from Woodlands
Currently, the profits/ gains from woodlands are subject to the High Earners’ Restriction. The Minister has announced that such profits are being removed from the High Earners’ Restriction.
Home Renovation Incentive
The HRI has been extended to 31 December 2016.
Capital Allowances for Aviation Sector
Subject to EU approval, the Finance Act 2013 introduced capital allowances for the construction of aircraft hangers used for the maintenance, repair or overhaul of aircraft. The section is being commenced with effect from 14 October 2015 with some amendments in order to ensure compliance with EU State aid rules.