Money Guide Ireland

Final details of the December 9th Budget are due to be worked out at a meeting of the Cabinet today. One possible item under discussion is likely to be a new income levy on those earning more than €150,000 .
Minister for Finance Brian Lenihan has said that no new taxes will be introduced  – but maybe a tax can be disguised as a levy. It is likely to be done by as an increase in the income levy rate by  1%  or 2% for that category.
“Senior Fianna Fáil sources”  said that, in order to avoid charges of unfairness towards lower-income groups, “the Government has to show that those on high incomes will be asked to give a bit more”.

The new Income levy rates from May 1st 2009 are as follows: (As per April Budget)

• 2% on income up to €75,036
• 4% on income from €75,037 to €174,980
• 6% on income above €174,980

If your income is  180000 – you do not pay 6% on all your income – you will pay 6% on the portion over €174980 , 2% on the first €75036,  and 4% on the next  €99943.

If your income is greater than the minimum threshold of €15,028 per year or €289 per week, you pay the levy on the full amount of your income.
(If you are aged 65 or over the minimum threshold is €20,000 per year for a single person and €40,000 per year for a couple).

If you are a PAYE worker – your employer will calculate the income levy at each payslip – on a week by week or month by month basis. If your income varies from week to week you could pay the income levy in certain weeks/months  even if your total annual income is under the threshold. In this kind of situation your employer should make an adjustment at the end of the year and refund all income levy deducted from your wages.

If you have not worked with the same employer continuously throughout the year Revenue will deal with any refund of income levy due at the end of the year.

Example 2

From 1 May 2009 the income levy is calculated on a weekly threshold of 2% for income up to €1443,  4% on income from €1443 to €4810, and 6% on anything over €4810.
If you get a payment for one week in excess of €3,365 you will pay the income levy at the 3% on the balance.

If your yearly income means you are liable at a lower rate, you will have overpaid the income levy. In this situation your employer should make an adjustment at the end of the year (week 52) and make the appropriate refund. If you have not worked with the same employer continuously throughout the year Revenue will deal with any refund of income levy due at the end of the year.

The Health Levy in Ireland is really just another name for income tax that is deducted from earnings. It is supposed to be used by Department of Health and Children to fund health services in Ireland.  The recent April 2009 mini Budget doubled the rate of this Levy. (So will we see a massive improvement in Health Services? – or are we all just being fooled ?)

The following people do not pay the health levy:

• People earning less than €500 gross per week
• People who have a medical card
• People getting One-Parent Family Payment, Deserted Wife’s Benefit/Allowance, the Widow’s/Widower’s Contributory Pension and the Widow’s/Widower’s Non-Contributory Pension.

If you have paid the health levy and think you should not have, you should contact your local tax office to find out how to get this money back.

The health levy was previously paid at the rate of 2% on all earnings up to €100,100 and 2.5% on earnings over €100,100.

From 1 May 2009, the health levy will be paid at the rate of:

• 4% on all earnings up to €75,036
• 5% on earnings over €75,036.

So someone earning 40k a year would have paid  800 euro a year – will now pay 1600 euro a year (133 euro a month) . People paying private health insurance as well must be thinking why are they paying twice.

Another mini  budget was announced here in Ireland on Tuesday April 7th.
These are some of the main changes introduced.

Income Levy Increases from May 1st 2009

The income levy rates will be doubled to 2% on incomes over  €15,028
4% on income in excess of €75,036 and 6% on income in excess of €174,980

Health Levy Increased – from 1 May

The health levy rates will double to 4% and 5% on incomes over €75,036.

PRSI  Changes – from 1 May

The PRSI ceiling will be increased from €52,000 to €75,036.

Deposit Interest Retention Tax
DIRT is going up to 25% from 23% at   from midnight on 7 April 2009 tonight

Capital gains tax s being increased from 22% to 25% in respect of disposals made from midnight on 7 April 2009.

Tobacco -  Duty on a packet of 20 cigarettes will be increased by 25 cent (including VAT) with a pro-rata increase on other tobacco products, with effect from midnight on 7 April 2009.

Diesel The  tax on auto-diesel will be increased by 5 cent per litre (including VAT) with effect from midnight on 7 April 2009.

Social Welfare

The personal rate of Jobseeker’s Allowance and basic Supplementary Allowance will be reduced for new claimants under 20 years of age to €100 per week from the first week of May 2009. Full Details Here

The  Christmas bonus payment for all Social Welfare payments is being removed in 2009.

Early Childcare

Early Childcare Supplement monthly payment to be halved to €41.50 per child with effect from 1st May 2009 and abolished at end-2009
Mortgage Interest Relief

Mortgage interest relief for private residences will only be available for the first 7 years of the mortgage. Anyone who has been receiving interest relief for the past 7 years will no longer be eligible after 1 May 2009. However interest relief will be allowed on a pro-rata basis for the first 4 months of 2009. This means a maximum relief amount for 2009 of €1,000 for single people /€2,000 for married couples for people who have over 7 years on their mortgage (1 May 2009).

Some good news for Irish residents yesterday was that Amazon are now going to deliver electronics , video games, cameras and most of their products to Ireland. For the past 5 years they have only delivered books, cds and DVds to Ireland – but now we can take advantage of their low prices. ( And the VAT comes back to Ireland) So if you want bargains on camcorders , dvd players, cameras, ipods, xbox 360 , Nintendo WII – don’t bother with the hassle of driving over the border – just go online and see what you can get here at Amazon.

The new income levy came into effect in Ireland on 1 January 2009 and is payable on gross income.

The rate of the levy is 1% on income up to €100,100 pa; 2% on income between €100,101 and €250,120 pa; 3% on income in excess of €250,120 pa.

You will pay the income levy unless:

• Your income is less than €18,304 a year
• You are aged over 65 and your annual income is less than €20,000 for a single individual or €40,000 for a married couple You have a medical card

Certain income is exempt from the income levy:

• all social welfare payments, including social welfare payments received from abroad
• payments that are made in lieu of social welfare payments such as Community Employment Schemes or Back to Education Allowance
• income subjected to DIRT

Employers are responsible for deducting the income levy from their employees’ salaries.
Self-employed individuals will make a payment of income levy along with their preliminary tax payment, and any balance will be collected when the final assessment issues.

The latest Budget on April 7th 2009 increased this Income Levy - see here for details