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Budget 2015 : Water Charges and more Leaks

Posted on October 14, 2014

As usual  – there have been a few leaks from the government about what is going to be in the 2015 Budget today. (They only seem to be leaking good news.)
Here is a summary of what “might” be in the Budget today

Tax Relief on Water Charges.
Remember when you could get tax relief on bin charges but then it was abolished ? … well now it looks like there will be a similar tax  relief on water charges. This will mean that people paying income tax will be able to reduce their tax bill by 20% of their water charges . (Max relief of €100 a year).  Based on the often quoted average water charge of €238 – that tax relief would be worth just €48 a year on average to income tax payers. Obviously – bigger users of water with bigger bills will be able to claim more. To get the maximum €100 tax relief – your water bill would need to be €500 a year or more.  (Easily possible – see some estimated metered charges here)

Other water charge related Budget leaks include a €100 a year payment to long term unemployed people and possibly also to people who get the fuel allowance. (This is in addittion to the already announced €100 for people on the Household Benefit Package). People will only be able to get the €100 once.

Income Tax : It looks like the Budget will also include a  cut in the higher rate of income tax to 40% from  41%.    This would reduce the overall tax paid by higher earners by about €234 million a year. Revenue Commissioners estimate that, a reduction of that rate would affect approximately 392,000 (only 18%) income earners. That would be an average of  €597 a year per person affected.

Also  –  the threshold at which people enter the higher rate of tax  is expected to be increased to €33,800 from €32,800 . (So reducing the amount of tax paid at 40%) . (This is estimated to be worth about €160 million overall to the people affected.)

USC :  It look like there will be some adjustment of the  USC bands so that people pay less USC.   An increase in the lowest band to €12000 from €10036 would be worth about  €52 million a year. It would mean people with income under €12000 a year would pay no USC at all.
It would also  reduce the total USC bill for people with income over €12000 by about €40 a year.
A €2000 increase in the lower USC band would mean overall reductions in USC payments of  €104 million a year.
It also looks like a new top band of USC will be created for incomes over €70,000 – and it will be 8%.

The only people who may not be better off because of tax /usc changes will be many of those on jobseekers and also students. They will have water charges to pay but no corresponding increase in income. Most pensioners will get the €100 a year water support payment – which will help.

Child Benefit :  Another leak that child benefit is to increase by €5 per child per month (bringing it to €135)

Categories: Budget 2015, Income Tax, Irish Water, Universal Social Charge, USC, Water Charges, Water Support Payment

Tags: leaks

« Self Assessment Tax Return Deadlines 2014
Budget 2015 – USC Changes »

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