CPA Ireland is delighted to provide this summary of Budget 2017, prepared by BCK.
Further information available on the right-hand side menu.
The Finance Minister Michael Noonan delivered the first budget of the current coalition government on 11 October 2016. Against a back drop of falling unemployment and steady economic growth, the budget contained few surprises, with the Government adapting a ‘steady as she goes’ approach to its finances.
Income Tax/ USC
The principal features of the budget included the much anticipated marginal reductions in the USC aimed at offering some level of relief to the ‘squeezed middle’. The earned income credit for the self-employed and proprietary directors has been increased to €950 as the Minister continues with his stated aim of bringing it in to line with the €1,650 PAYE credit.
A new income tax rebate scheme has been introduced to provide first time buyers with tax refunds of up to €20,000 which can be used to fund the deposits on their new homes, the scheme is aimed at boosting the supply of new houses and therefore does not extend to second hand houses. In an attempt to boost supply in the rental sector the Minister has announced his intention to restore the 100% deduction for mortgage interest over 5 years, with the deduction being increased to 80% in 2017. Given that the cost of the 5% increase in 2017 is estimated to be just €8m, it is disappointing that government has felt it necessary to stagger the increase over such an extended period.
In order to make Ireland a more attractive location for high potential start-ups, the Minister has reduced the rate of tax on gains qualifying for Entrepreneurs Relief from 20% to 10%. The lifetime ceiling remains at €1m, but Minister Noonan stated that it is his intention to review this over the coming years, presumably with one eye on the UK’s equivalent which applies to disposals of up to £10m.
The non tax measures of the budget included a much welcomed new childcare scheme offering amounts of up to €8k per annum to low and middle income parents with children in fulltime childcare.
Overall this has been a budget which will leave the majority of people marginally better, and a small minority (including first time buyers, and some parents) significantly better off. While the budget can be seen as a step in the right direction, its offers very little in the way of payback for the ‘squeezed middle’.
Click on the menu on the right-hand side to view the various changes from Budget 2017 in more detail.