Budget 2015 & Finance Bill Update
TheFinanceBill2014toimplementtheBudgetof14thOctober2014hasbeenpublished.ThisUpdate
summarisestheknownchangesfor2015,asat24thOctober2014.
Income Tax 2015
TaxRates
StandardRateBand
Single
Standardrate
band
Balance
TaxRate Married
20%
Standardrate
band
40%
Balance
Single/widowed/surviving
civilpartnerwithout
dependantchildren
Oneparentfamily
Married/civilpartners,
oneearner
Married/civilpartners,
twoearners
Band
€33,800
€37,800
€42,800
€42,800
+
increase max
€24,800*
*Theincreaseisthelowerof€24,800andtheincomeof
the spouse/civil partner with the lower income. The
increase is not transferable between spouse/civil
partners.
USC 2015
Total
income
subjecttoUSC
Thefirst€12,012
Thenext€5,564
Thenext€52,468
Balance
USCrate
1.5%
3.5%
7%
8%
However:
x
individualswhosetotalincomesubjecttoUSCfortheyearislessthan€12,012areexempt
fromUSC;
x
thefollowingpay3.5%onallincomeover€12,012:
x
o
individualsoverage70whosetotalincomesubjecttoUSCfortheyearis€60,000or
less.
o
individualsunderage70whoholdafullmedicalcardandwhosetotalincomesubject
toUSCfortheyearis€60,000orless.
a3%additionalUSCrate(i.e.ontopofthestandard8%rate)appliestononPAYEincomein
excessof€100,000.
DIRT & Exit Tax
x
Nochangefor2015inthe41%DIRTandexittaxrates.
x
ADIRTrefundschemehasbeenintroducedforthosewhobuytheirfirsthomebetween14th
October2014and31stDecember2017.
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Budget 2015 & Finance Bill Update
SuchindividualscanreclaimanyDIRTdeductedfromdepositsduringthelast48monthperiod
endingonthedateofpurchaseoftheirfirsthome.
Thereisalimitonthetotaldepositswhichcanqualifyforthisof20%ofthepurchasepriceof
theproperty,butitwouldseemthatinthecaseofjointpurchaserseachhasaseparate20%
purchasepricelimitontheamountofdepositswhichcanqualifyforthisrefund.
ARFs, AMRFs, & vested PRSAs 2015
x
Theimputeddistribution rateof5%applyingtoARFsandvestedPRSAswillbereducedin
2015to4%forthoseunderage71throughoutthewholeyearandwhohavetotalARFsand
vestedPRSAsoflessthan€2m.
Thereforetheimputeddistributionratesapplyingin2015willbe:
Agethroughout2015
<61
61to70
71andover
TotalARF&vestedPRSA
fundsis€2morless
Nil
4%
5%
TotalARF&vestedPRSA
fundsgreaterthn€2m
Nil
6%
6%
ExistingARFandvestedPRSAholdersunderage71whoaredrawingdownat5%pacaneither
keepthisrateofdrawdownordropdowntothenewlowerminimumof4%pa.
x
AMRFholderswillbeablein2015andbeyondtowithdrawupto4%paofthevalueoftheir
AMRFat1stFebruaryinthatyear;anywithdrawalwillbesubjecttoPAYE.AMRFholdersare
notobligedtomakeawithdrawal;theywillhaveanoptionorchoicetomakeawithdrawal
upto4%pa,max.
Example
AoifehasanAMRFvaluedat€68,000on1stFebruary2015.Shecanwithdrawupto€2,720in
totalfromherAMRFin2015,subjecttoPAYE.
Shedoesn’thavetomakethiswithdrawalfromherAMRFifshedoesn’twantto.It’sanoption
forher.
AMRFclientswithsignificantaccumulatedgainsintheirAMRFwhomaywanttoaccesssuch
gains in the short run may consider withdrawing such gains (subject to PAYE) before 31st
December2014becauseafterthatdatethemaximumtheycanwithdrawis4%paofthevalue
oftheirAMRF,whichcouldbealotlessthantheircurrentaccumulatedgains.
Chargeable Excess Tax 2015
x
Thechargeableexcesstaxrateisbeingamendedfromitscurrentfixed41%ratetothehigher
rateofincometaxfor2015andonwards.
Thismeansareductionto40%in2015andiftheGovernmentreduce,astheyhaveindicated,
thehigherrateofincometaxin2016to39%,thechargeableexcesstaxratewillalsoreduce
to39%in2016.
x
Whereanindividual,whohashadaPensionAdjustmentOrdermadeovertheirretirement
benefits,takeshisorherbenefitsandachargeableexcesstaxliabilityarises,thetaxliability
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24thOctober2014
Budget 2015 & Finance Bill Update
willnowbesharedbetweentheindividualandthebeneficiaryofthePAO(usuallyhisorher
exspouse),inthesameproportionasthePAOsplitsthebenefits.
Uptonow,thefullchargeableexcesstaxliabilityrestedwiththeindividualandthebeneficiary
ofthePAOhadnochargeableexcesstaxliability,eventhoughthebeneficiaryofthePAOhas
ashareoftheretirementbenefits.
Employment & Investment Incentive (EII) Scheme
ThiswasformerlytheBESscheme.
Twochangestothisschemefor2015:
x
Themaximuminvestorholdperiodtoretainthebenefitofthetaxreliefsisbeingincreased
from3yearsto4years.
x
Themaximumtaxreliefisbeingreducedinlinewiththehigherrateofincometax,i.e.:
o
30%atthetimeofinvestment,and
o
10%after3years,ifthecompanymeetscertainconditionsinrelationtoemployment
growth,etc.
Capital Gains Tax and Capital Acquisitions Tax
x
Nochangeintaxratesorthresholdsfor2015.
x
Agriculturalrelief(whichreducesthevalueby90%forCATpurposesofcertainagricultural
assets)isbeingrestrictedto‘active’farmersorwholeaseagriculturalpropertyonalongterm
basistoactivefarmers.
State Savings Revenue reporting
x
Currently life assurance companies and banks have to make automatic returns of investor
paymentstotheRevenueeachyear.
x
UptonowthisreportingrequirementdidnotapplytotheNTMA/PostOfficeinrespectof
investors in State Savings products such as Savings Bonds, Savings Certificates, Post Office
savingsaccounts,PrizeBonds,etc.TheRevenuereportingrequirementisnowbeingextended
toallStateSavingsproducts.
Preparedby:TechnicalGuidanceLtd.
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24thOctober2014