Budget 2017 is getting closer – 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
USC Reductions: There will be reductions in USC in Budget 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 .
Recent leaks suggest that a 0.5% cut to the two lower rates of USC could be made (meaning they would go down to 2.5pc and 0.5pc respectively).
But we will have to wait till Budget day to find out exactly what option is chosen.
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 would mean €550 less income tax in 2017 for the self employed.
DIRT – The Tax Strategy Group has suggested a drop in DIRT from 41% to 40% – but will the government listen?
Landlords : There has been talk of increasing the percentage of mortgage interest that can be claimed as ane expense by landlords. It is currently 75% – it will probably be increased to 80% in Budget 2017. This is supposed to help increase properties available for rent.
Farmers : Currently, farmers’ income is taxed on an average basis over five years. But there is talk that Budget 2017 will bring about changes that will allow farmers, during years when profits are down, to pay tax based on their actual income for that year.
Help to Buy – some type of grant or tax refund will be introduced in Budget 2017 to assist first time home buyers . The full 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)
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 is expected to be be raised from €280k to €500k over the next few years. (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 , probably not all in Budget 2017. We expect an increae to €320,000 this year.
Cigarettes : There will almost definitely 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 . This will be announced , but probably won’t begin for another year.
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- but FG might not agree to that much.
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 probably be announced . (Possibly not in place 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.
Help with Childcare Payments
A new means tested subsidy scheme for childcare will probably be announced in Budget 2017 – for possible implementation by September 2017.
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 announced 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 also 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 Sept 29th