THE MAIN MEASURES
At first glance, the fact that there are no increases in general income tax or capital tax rates will be seen as evidence of a “soft” Budget, at least compared to prior years.
However, it is estimated that at least 50% of private medical insurance customers will be affected by the proposed capping of tax relief, to a ceiling of €500 per child and €1,000 per adult insured. In addition, the one parent family tax credit that was previously available to almost all single parents will in future only be available to the “principal carer”, a move that is likely to be a source of contention in cases of dual custody of children in many separation cases.
Self-employed business people including many partners of legal and accounting firms will be disappointed with the proposed elimination of tax relief on interest on loans taken out to invest in a partnership, although it should be noted that this will be on a phased basis over a number of years in relation to pre-existing loans.
On a more positive note there are welcome measures aimed at promoting entrepreneurial spirit, especially in the SME sector, including:
- A removal of the 30% tax relief under the EII scheme from the scope of the high earners restriction on the use of certain tax reliefs over and above specified income limits. It is hoped that this will further encourage investment in SME activities by allowing unrestricted tax relief at the 30% relief on amounts invested in qualifying business activities up to €150,000 per annum.
- An exemption from income tax, up to a maximum of €40,000 per annum for two years for individuals who set up a new unincorporated business and who were previously on the live register for 15 months.
- A new capital gains tax relief applicable on the sale of assets used in new productive activities in cases where the assets were initially acquired in the period 1 January 2014 to 31 December 2018, and were held for three years prior to sale. The taxpayer must previously have made a disposal of assets and the relief will be the lower of:
- i. The capital gains tax already paid on the previous sale, OR
- ii. 50% of the tax due on the sale of the new assets
- An extension of the general capital gains tax relief applicable to individuals and companies on gains on the sale of property. As a result of the Budget, property acquired any time before 31 December 2014 and held for at least 7 years will now qualify for exemption. The land can be located anywhere in the European Economic Area.