Budget 2017 is not as far off as you might think – it will be announced on 11th October 2016 . Since the new “Partnership” Government was formed we have had a better idea of some of the changes that might be announced in Budget 2017.
Budget 2017 Possible Changes
Income Tax increase for high earners: Both the FF and FG manifestos proposed to remove the PAYE tax credit of €1650 for those earning over €100k . FF also planned to reduce it for those earning over €70k. Removal of this tax credit would result in employees paying €1650 a year more in income tax (€137.50 a month). This removal is probably to stop high earners benefitting too much from any USC reductions. Someone earning €100k would be paying about €29k tax a year – so an extra €1650 wouldn’t be a big difference.
Reduced Income Tax for Self Employed : The new program for government states that the “Earned Income Tax Credit will be raised from €550 to €1,650 for the self-employed by 2018.” So we can expect an increase to about €1100 in Budget 2017. This will mean €550 less income tax in 2017 for the self employed.
DIRT – The Tax Strategt Group has suggested a drop in DIRT from 41% to 40%
Help to Buy – some type of grant or tax refund will be introduced in Budget 2017 for first time home buyers . The details are not known yet. It might be in the form of a VAT refund or it could be a top up on savings for a mortgage deposit by as much as 25 per cent, up to a maximum of €5,000 per person. (Bank of Ireland are already doing something similar for their customers – see here for details)
USC Reductions: There will be reductions in USC in 2017 . The FF manifesto said they would abolish USC for earnings under €80,000 but charge 8% USC on income over that.
FG originally planned to reduce the main rate from 5.5% to 4.5% in 2017 followed by a gradual phasing out of USC by 2021.
The program for government just states that ” Reductions will be
introduced on a fair basis with an emphasis on low and middle income earners..”
The Dept of Finance has recommended increasing the entry threshold for USC from €13,000 to €14,000 . But we will have to wait till October and Budget 2017 to find out exactly what option is chosen.
The Home Carer Tax Credit will be increased . FF promised to increase it from €1,000 to €2,000. FG said they would increase it to 1,650, while also increasing from €7,200 to €10,500 the income exemption. The Dept of Finance has suggested it should be increased to just €1100 .We will know the final figure in Budget 2017.
Capital Acquisitions Tax
The threshold on Band A will be raised from €280k to €500k (this band includes all gifts and inheritances from parents to their children). This will mean that no inheritance tax will be due on inheritances passed to children that are worth less than €500k. This increase might be phased in over 2 or 3 Budgets , maybe not all in Budget 2017.
Cigarettes : There will be higher excise duties on cigarettes. How much ? No one knows yet.
A new Sugar Tax – This was in the Fianna Fail manifesto – they planned a tax on sugar in sweetened drinks that would add an average six cent to a can .
Welfare and Pensions :
We expect increases in Budget 2017 to the following : Disability Benefit , Disability Allowance, Carer’s Benefit and Allowance, and Blind Person’s Pension. We also expect the Christmas bonus to be paid in 2016 – (at least a 50% bonus but maybe more)
Increase to the State Pension and the Living Alone Allowance above the rate of inflation are also expected in Budget 2017 . Fianna Fail are saying they want €5 a week increase.
There will also be an annual cap on the Drugs Payment Scheme and reduced prescription charges for medical card holders.
The entitlement to a medical card will be extended to all children in receipt of the Domiciliary Care Allowance . Approximately 10,000 children will benefit from this initiative.
A new “Working Family Payment” will be introduced. (Possibly not until 2018). The FG manifesto stated that this would be a payment to ensure parents working over 15 hrs week get €11.75 per hour min.
An increase in third level fees and the introduction of a student loan scheme has been a possibility for a few years – and we think Budget 2017 might see some changes in that area.
School Transport – There is an ongoing review of the School Transport scheme and the charges and concessions. We expect any changes to be announced in Budget 2017.
The Low Pay Commission has recommended an increase in the national minimum wage of 10 cents per hour. ( New rate of €9.25 per hour. ) If this is accepted by government it will probably be announced as part of Budget 2017
We will keep watching out for all the Budget 2017 news and forecasts and will keep this page updated with any expected changes.
Last Update August 17th