Tax Cuts in 2018

In this year’s budget the Minister for Finance, Paschal Donohoe, has announced €1.2 billion in new spending and tax cuts, split on roughly a 2:1 basis in favour of spending. CPAS has reviewed the details of Budget 2018 to provide you with some of the relevant information relating to pensions and your personal finance.

Some of the other main items of interest are outlined as follows:

Pension reliefs

No changes announced in private pension tax reliefs or taxation of benefits. Income tax relief on pension contributions is still available at marginal rates and tax exemptions are still available on investment growth.

It is possible that other taxation and pension changes not announced in the Budget could be introduced in the Finance Bill, either at publication on 19th October 2017, or at the Committee Stage, scheduled for 7th to 9th November 2017.

State Pension

The earliest age at which the State Pension (Contributory) is payable is currently age 66.

All State Pensions to increase by €5 from the end of March 2018 – this will bring the full rate contributory pension to €243.30 per week (maximum State Pension €12,651.60 pa.)

The current specified income requirement is currently €12,700 per annum. This is the amount needed before an individual can invest in an Approved Retirement Fund (ARF).

Tax and USC

  • Standard rate income tax band increased by €750 for 2018 for all earners.
  • Earned income tax credit for the self-employed and proprietary directors increased by €200 to €1,150 for 2018.
  • The 2.5% Universal Social Charge (USC) rate is being reduced to 2% with the ceiling for the new rate increased from €18,772 to €19,372.
  • The 5% rate of USC is being lowered to 4.75%.
  • The lower USC bands and tax rates will take effect from 1st January 2018.

DIRT

DIRT rate reduced to 37% in 2018 but no change announced in the exit tax rate of 41%.

CAT Thresholds

No change in CAT thresholds.

Corporation Tax

There is no change to the Corporation Tax rate of 12.5% for trading income and 25% for non-trading income.

Stamp Duty

Stamp Duty on the purchase of commercial (i.e. non-residential) property is increased from 2% to 6% with effect from midnight 10th October 2017.

Finally an interesting one and a sign of things to come perhaps…

Benefit in Kind (BIK)

A zero percent BIK rate is being introduced for electric vehicles for a period of one year. Electricity used in the workplace for charging vehicles will also be exempt from BIK.

We will keep you posted on any relevant changes made in the upcoming Finance Bill.

Here to help your navigate your way to financial security

The Milestone Advisory team are qualified financial services consultants. We specialise in helping professionals in the construction sector and related industries. Our team will work with you to review your finances, explaining your options in clear English.
No jargon – just the facts.

For further information please contact Susan O’Mara via email or phone: (01) 406 8020. Milestone Advisory DAC t/a Milestone Advisory is regulated by the Central Bank of Ireland.