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6 Ways Budget 2018 Will Affect SME’s

6 Ways Budget 2018 Will Affect SMEs

Posted By: AIB Business
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Budget 2018

10 October 2017 saw the unveiling of the second Budget of the 32nd Dáil.  Delivering his first Budget, Minister Donohoe said the Budget “achieves sustainable and affordable tax reform, delivers improvements in services and ensures increased investment in our national infrastructure”. Thomas Sheerin, Tax Director at KPMG in Ireland, outlines some of the elements affecting SMEs.

1. Income Tax, Earned Income Tax Credit for Self-employed and USC Changes

The point at which an individual attracts the higher 40% income tax rate has increased by €750.  Therefore, for a single person the first €34,550 of income will be taxable at the 20% rate.  The first €43,550 will be taxable at the 20% rate in the case of a married person (one earner).

The Minister announced an increase of €200 in the Earned Income Tax Credit to €1,150 for 2018.  This credit is available to self-employed individuals who cannot benefit from the PAYE tax credit of €1,650 that is available to employees.

The entry point for the USC remains at €13,000.  However, the 2.5% rate is to reduce to 2% and the ceiling for this new rate is increased from €18,772 to €19,273.  This change ensures that full-time workers on the minimum wage do not pay the upper USC rates.  The 5% USC rate is also to reduce to 4.75% thereby reducing the top marginal rate of tax on income up to €70,044 to 48.75%.

2. Share-based remuneration

Following a public consultation and review of share-based remuneration that took place last year, a new incentive called Key Employee Engagement Programme (KEEP) is being introduced.  KEEP is to facilitate the use of share-based remuneration by unquoted SME companies to attract and retain key employees.  Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax on the disposal of the shares.  At present, such gains on the exercise of options are subject to income tax, USC and PRSI.  This incentive will be available for qualifying share options granted after 1 January 2018.

3. Retailers and Tourism

The Minister confirmed that the reduced 9% VAT rate for tourism and related activities will continue to apply.

The old reliable excise duty on tobacco is to increase by 50 cents on a pack of 20 cigarettes with a pro-rata increase on other tobacco products.

4. Construction and Property

The rate of stamp duty on commercial property transactions is to increase from 2% to 6% with effect from midnight tonight.  However, a stamp duty refund scheme will be introduced for commercial land purchased for the development of housing, provided the relevant development commences within 30 months of the land purchase – further details to follow in the Finance Bill.

Funds of €750 million are to be made available to a new vehicle, Home Building Finance Ireland for commercial investment in housing finance.  This vehicle will increase the availability of debt on market terms to commercially viable residential development projects whose land owners want to build homes.

The holding period to qualify for the exemption from Capital Gains Tax for certain land and buildings will be reduced from 7 years to 4 years.  The exemption is available on the disposal of certain land and buildings that were acquired between 7 December 2011 and 31 December 2014.  Further details to follow in the Finance Bill which should be examined clearly.

The Minister announced an increase from 3% to 7% in the vacant site levy that applies to the second and subsequent years.  An owner of a vacant site on the register who does not develop the land in 2018 will pay the 3% levy in 2018 and the increased 7% levy from 1 January 2019.

Finance Act 2016 introduced the Help to Buy scheme for first time buyers of new houses that take out a mortgage of at least 80% of the purchase price.  No changes to this scheme were announced in the Budget.

Mortgage interest relief was due to cease on 31 December 2017.  This relief is available in respect of qualifying loans provided to owner occupiers between 2004 and 2012 to purchase, repair, develop or improve their home.  The relief has been extended to 2020, but in a tapered manner.  As a result, 75% of the existing relief will be available in 2018, reduced to 50% in 2019 and 25% in 2020.

Generally, a landlord is not entitled to offset pre-letting expenses against rental income arising from a first letting.  A deduction of up to €5,000 per property in relation to pre-letting expenses is to be introduced.  The deduction will be available for owners of residential property that has been vacant for 12 months or more.  A clawback will arise if the property is withdrawn from the rental market within four years.

Last year’s Budget saw an increase to 80% for the deduction of interest incurred by landlords on qualifying loans when computing the rental income subject to income tax.  At that time, it was announced that the deductible amount would increase by 5% each year until a 100% deduction for interest is restored.  Therefore, the deduction for 2018 will be equal to 85% of the interest incurred.

5. Food and Farming

For the purposes of agricultural relief for Capital Acquisitions Tax and retirement relief for Capital Gains Tax, agricultural land used for solar farms will continue to be classified as agricultural land.  This measure is designed to increase diversification.  However, the amount of the farmland that can be used by the solar farm will be restricted to 50% of the total farm acreage.

To facilitate intergenerational shift in farm ownership and management, consanguinity stamp duty relief at a rate of 1% for inter-family farm transfers is to be maintained for a further three years.  The exemption for young trained farmers from stamp duty on agricultural land transactions also continues.

The Minister for Agriculture, Food and the Marine is to bring forward a package of Brexit response measures.  These include a Brexit Loan Scheme for SMEs.  This scheme will see €300 million available at a competitive rate to SMEs, including food businesses given their unique exposure to the UK market to assist with their working capital needs.

6. Other

On 1 April 2018, a tax on sugar-sweetened drinks will be introduced subject to State Aid approval.  The tax will be levied at 30 cent per litre on relevant drinks containing more than 8 grams of sugar per 100 millilitres and 20 cent per litre on drinks where the sugar content is between 5 grams and 8 grams per 100 millilitres.

No changes were announced to the Capital Acquisitions Tax thresholds.

 

For further coverage of Budget 2018, visit http://business.aib.ie/blog/2017/10/6-ways-budget-2018-will-affect-smes

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Personal Tax Credit Chart 2016/2017

Personal Tax Credits

The following chart gives details of the main personal tax credits for the tax years 2016 and 2017.

Tax credits for the years 2016 and 2017
Personal Circumstances 2016 2017
Single Person €1,650 €1,650
Married Person or Civil Partner €3,300 €3,300
Widowed Person or Surviving Civil Partner – qualifying for Single Person Child Carer Credit €1,650 €1,650
Widowed Person or Surviving Civil Partner without qualifying child(ren) €2,190 €2,190
Widowed Person or Surviving Civil Partner in year of bereavement €3,300 €3,300
Single Person Child Carer Credit €1,650 €1,650
Widowed Parent Tax Credit (with qualifying child) – Bereaved in 2016 €3,600
Widowed Parent Tax Credit (with qualifying child) – Bereaved in 2015 €3,600 €3,150
Widowed Parent Tax Credit (with qualifying child) – Bereaved in 2014 €3,150 €2,700
Widowed Parent Tax Credit (with qualifying child) – Bereaved in 2013 €2,700 €2,250
Widowed Parent Tax Credit (with qualifying child) – Bereaved in 2012 €2,250 €1,800
Widowed Parent Tax Credit (with qualifying child) – Bereaved in 2011 €1,800
Home Carer Tax Credit (max.) €1,000 €1,100
Employee Tax Credit (max.) €1,650 €1,650
Earned Income Tax Credit (max.) €550 €950
Age Tax Credit if Single, Widowed or Surviving Civil Partner €245 €245
Age Tax Credit if Married or in a Civil Partnership €490 €490
Incapacitated Child Tax Credit €3,300 €3,300
Dependent Relative Tax Credit ( – See Note 1) €70 €70
Blind Person’s Tax Credit – Single Person* €1,650* €1,650*
Blind Person’s Tax Credit – One Spouse or Civil Partner Blind* €1,650* €1,650*
Blind Person’s Tax Credit – Both Spouses or Civil Partners Blind* €3,300* €3,300*
Incapacitated Individual – Relief for employing a carer** €75,000**max €75,000**max

 

 

 

* Relief in respect of the cost of maintaining a guide dog (max €825) is claimed under the heading of Health Expenses.

 

** Relief for Employing a Carer is allowable at the individual’s highest rate of tax, which is 20 per cent or 40 per cent.

Note 1

In the case of the Dependent Relative tax credit, if the relative’s income exceeds the relevant limit of €14,060 in 2016 or €14,504 in 2017 no tax credit is due.

http://www.revenue.ie/en/tax/it/leaflets/it1.html#section26

 

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Important Notice for PAYE Customers: Enhancement of our PAYE Services in myAccount

Important Notice for PAYE Customers: Enhancement of our PAYE Services in myAccount

**This Notice is also available on the Revenue website in the News section**
Revenue is further enhancing our online services for PAYE customers to make it quicker, easier and more convenient for you to manage your tax.
You can now access the various PAYE services including PAYE Anytime, Form 12 and the ‘Jobs and Pensions’ service from the new PAYE Services card in myAccount.
PAYE Services allows you to quickly and easily claim tax credits, declare income, claim refunds, submit a tax return and tell us about a new job or private pension and you will have access to these services from all smart devices like mobile phone, tablet etc.
To claim credits, declare income or divide your tax credits and rate bands for 2017, you should go to the ‘Manage your tax 2017’ link on the new PAYE Services card.
If you want to claim credits or refunds for previous years, click on ‘Review your tax 2013-2016 (Form 12)’. If you are unable to access the Form 12 you should continue to use PAYE Anytime.
During 2017, we will be replacing our PAYE Anytime service and we will update you again when that happens.

RevApp
Revenue recently launched a new mobile application called RevApp and it is available to download free from the Apple, Google or Windows Store. This app will help you manage your tax affairs on the go.

RevApp provides you with quick and easy mobile access to myAccount, MyEnquiries, Calculators and Tools and Receipts Tracker.

Receipts Tracker

Receipts Tracker is a new service that allows you to record and manage receipts for your expenses including health expenses. It also provides the option for you to upload your receipts information and images to Revenue storage. If the image of the receipt is clear, readable and complete, you do not have to keep the original receipt.
Further information on myAccount, RevApp and the Receipts Tracker can be found on our website.

Kathleen Redmond
Planning Division
Revenue Commissioners

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Revenue Key Dates for February 2017

February 2017

Return and payment dates for the month of February
Date Type of return and the period of the payment cover for each tax type
14 PAYE/PRSI/USC/LPT: P30 monthly return and payment for January 2017
14 DWT: Return and payment of DWT for January 2017
14 PSWT: F30 monthly return and payment for January 2017
15 PSWT: F35 annual return for year ended 31 December 2016
15 PAYE/PRSI/USC/LPT: Make available P60 2016, to each employee
15 PAYE/PRSI/USC/LPT: Due date submission of Form P35 for year ended 31 December 2016
19 VAT: Monthly VAT 3 return and payment (if due) for the period January together with a Return of Trading Details where the accounting period ends in January
19 VAT: Annual VAT 3 return and payment (if due) for the period February – January together with a Return of Trading Details where the accounting period ends in January
*1-23 Corporation Tax: PT for APs ending between 1-31 March 2017
*1-23 Corporation Tax: Returns for APs ending between 1-31 May 2016
*1-23 Corporation Tax: Pay Balance due on APs ending between 1-31 May 2016
23 RCT: RCT monthly return and payment (if due) for January 2017
23 Income Tax: Due date submission of SARP Employer Return for year ended 31 December 2016
1-29 Corporation Tax: Returns of Third Party Information for APs ending between 1-31 May 2016

* Where the return and payments are not received electronically, the return and payments filing date is 1-21 of the relevant month.

http://www.revenue.ie/en/practitioner/calendar.html

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Important Notice to Employers & Pension Providers from Revenue

Irish Tax and Customs

IMPORTANT NOTICE TO EMPLOYERS & PENSION PROVIDERS

Taxation of Paternity Benefit

Statutory paternity leave of 2 weeks together with a new Paternity Benefit has been introduced in respect of births and adoptions on or after 1 September 2016.

Paternity Benefit (including any increases for adults and child dependants), payable by the Department of Social Protection (DSP) is liable to tax. USC and PRSI will not apply.

As part of the on-going exchange of information arrangements between the DSP and Revenue, Revenue will receive details of the benefit payments which will be updated onto Revenue’s records.

Individuals who pay their tax through the PAYE system will, where possible, automatically have their annual tax credits and rate bands reduced by the amount of the Paternity Benefit payment.

Employers/pension providers will be advised of the adjusted tax credits and cut-off points on employer tax credit certificates (P2Cs).

As Paternity Benefit is being taxed by reducing employees’ tax credits and cut-off points on P2Cs, employers/pension providers are not to include figures for this payment on forms P45, P60 or P35L.

All queries relating to the payments should be directed to the DSP.

For further information follow the link to our Links Page where you can connect with Revenue and The Department of Social Protection.

http://www.revenue.ie/revsearch/search?q=paternity&btnSearch=Find

https://www.welfare.ie/en/Pages/Paternity-Benefit.aspx

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August Key Dates for Revenue

Return and payment dates for the month of August
Date Type of return and the period of the payment cover for each tax type
14 PAYE/PRSI/USC/LPT:
P30 monthly return and payment for July 2016
14 DWT: Return and payment of DWT for July 2016
14 PSWT: F30 monthly return and payment for July 2016
19 VAT: Monthly VAT 3 return and payment (if due) for the period July together with a Return of Trading Details where the accounting period ends in July
19 VAT: Annual VAT 3 return and payment (if due) for the period August – July together with a Return of Trading Details where the accounting period ends in July
*1-23 Corporation Tax: PT for APs ending between 1-30 September 2016
*1-23 Corporation Tax: Returns for APs ending between 1-30 November 2015
*1-23 Corporation Tax: Pay balance due on APs ending between 1-30 November 2015
23 RCT: RCT monthly return and payment (if due) for July 2016
1-31 Corporation Tax: Returns of Third Party Information for APs ending between 1-30 November 2015

* Where the return and payments are not received electronically, the return and payments filing date is 1-21 of the relevant month.

Note: Extended date for certain taxes for customers who both file and pay electronically (via ROS)

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Revenue Key Dates July 2016

July 2016 Revenue Key Dates

Return and payment dates for the month of July
Date Type of return and the period of the payment cover for each tax type
14 PAYE/PRSI/USC/LPT:
P30 monthly return and payment for June 2016
P30 quarterly return and payment for April – June 2016
14 DWT: Return and payment of DWT for June 2016
14 PSWT: F30 monthly return and payment for June 2016
19 VAT: Monthly VAT 3 return and payment (if due) for the period June together with a Return of Trading Details where the accounting period ends in June
19 VAT: Bi-Monthly VAT 3 return and payment (if due) for period May – June 2016 together with the Return of Trading Details where the accounting period ends between the 1st May and the 30th June
19 VAT: Bi-Annual VAT 3 return and payment (if due) for period January – June 2016 together with the Return of Trading Details where the accounting period ends between the 1st January and the 30th June
19 VAT: Annual VAT 3 return and payment (if due) for the period July – June together with a Return of Trading Details where the accounting period ends in June
20 VAT: MOSS VAT return and payment (if due) for the period April – June 2016
*1-23 Corporation Tax: PT for APs ending between 1-31 August 2016
*1-23 Corporation Tax: Returns for APs ending between 1-31 October 2015
*1-23 Corporation Tax: Pay balance due on APs ending between 1-31 October 2015
23 RCT: RCT monthly return and payment (if due) for June 2016
23 RCT: RCT quarterly return and payment (if due) for period April – June 2016
1-31 Corporation Tax: Returns of Third Party Information for APs ending between 1-31 October 2015

* Where the return and payments are not received electronically, the return and payments filing date is 1-21 of the relevant month.

Note: Extended date for certain taxes for customers who both file and pay electronically (via ROS)

Dates taken from Revenue http://www.revenue.ie/en/practitioner/calendar.html#section7

Revenue Key Dates

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