Budget 2015: main points

Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin have presented Budget 2015 in the Dáil.

Here are the main points:

Water charges relief

- Income tax relief on water charges at standard rate up to a maximum of €500 per household per year. The water charges relief will be worth up to €100 per household per year when claimed the following year.

Income tax reform

- 0.6 per cent pension levy to end in 2014; Additional 0.15 per cent levy to expire at end of 2015

- USC entry level to be upped from €10,000 to just above €12,000, with the upper ceiling for the first band to be increased from €16,000 to just above the level of the minimum wage

- Reductions in 2 per cent USC band to 1.5 per cent, and the 4 per cent USC band to 3.5 per cent

- 41 per cent income tax rate reduced to 40 per cent.

- Income tax standard rate band to be increased by €1,000 to €33,800

- New USC rate of 8 per cent for those earning over €70,000, and 11 per cent for self-employed people earning more than €100,000

- Medical card holders and over-70s earning less than €60,000 liable to a maximum USC of 3.5 per cent

Funding tax changes

- Packet of 20 cigarettes to increase by 40 cent, with 25g packet of rolling tobacco to increase by 25 cent

- Taxes on alcohol, petrol and diesel to remain the same

- Vehicle registration tax and motor tax to remain the same

Expenditure

-- Government is committed to bringing deficit under 3% of GDP by 2015.

- Gross current expenditure for 2015 will be just over €50bn, up €429m on 2014

- An increase of €210 million in capital spending for 2015, to over €3.5 billion.

- €1.6 billion will be made available to provide approximately 300,000 work and training places

- €19.4 billion allocated to Social Protection for 2015; no cuts to social welfare programme.

- New Water Subsidy worth €100 per annum for all recipients of Household Benefits Package

- Health budget to hit €13.1bn in 2015; including €25m for delayed hospital discharges

- Education allocated €8.3bn, budget allows for the hiring of 1,700 new staff, including 920 teacher. €530m capital expenditure will see €530m allocated to school building

- Justice will be allocated €2.2bn which will allow for recruitment of more gardaí

- Children and Youth Affairs will be allocated €975 million

- Spend on agriculture will rise next year to over €1bn

- Ireland has secured €1.2 billion in EU Structural Funds for the period 2014-2020.

- Next year the Government will provide €476m is being for international aid

- Arts and Heritage allocated €212m for Arts, Heritage and the Gaeltacht in 2015

- Department of Defence budget set at €885m

- No further cuts in Public Service staff numbers

Farming and agri-food sector

- No milk quotas from 2015

- Income tax exempt thresholds to be increased by 50 per cent, with new threshold for leases of 15 years and over

- Range of income averaging for farmers to be extended from three to five years

- CAT relief for agricultural property to be targeted to ensure it is used by active farmers

- CGT retirement relief to be broadened

- Stamp duty relief to be extended for non-residential land transfers between certain close relatives, and stamp duty on agricultural leases in excess of five years to be removed

- Additional €6 million per year for three years to fund horse and greyhound racing

- €5 million in additional capital to Horse Racing Ireland for 2015 for investment in race courses

- Annual excise relief production ceiling for microbreweries to be increased from 20,000 to 30,000 hectolitres

Business and enterprise

- Amount of finance that can be raised by a company under the Employment and Investment Incentive to be increased to €5 million a year up to a lifetime maximum of €15 million (nursing homes, medium-sized enterprises in non-assisted areas, and internationally traded financial services that are certified by Enterprise Ireland, will now qualify)

- Required holding period for shares to be increased from 3 to 4 years

- Countries eligible for foreign earnings deduction widened, and number of days employees must be abroad reduced to 40

Corporation tax reform

- “The 12.5% tax rate never has been and never will be up for discussion. The 12.5% tax rate is settled policy. It will not change.”

- Three year corporation tax relief for start-up companies to be extended

- Accelerated capital allowances scheme for energy efficient equipment to be extended for a further three years.

- “Double Irish” loophole to be abolished from Jan 1st 2015 for new companies. All new companies registered in Ireland will also have to be tax resident. For existing companies there will be a transition period until end of 2020.

Tourism

- Reduced 9 per cent rate of VAT for tourism industry to be extended.

Pension Levy

- 0.6 per cent pension levy to end in 2014; Additional 0.15 per cent levy to expire at end of 2015

Housing

- Home renovation incentive introduced last year will be extended to rental properties whose landlords are liable for income tax. Renovation scheme to apply to work done by end of 2015.

- Capital gains tax relief to be removed.

- 80 per cent windfall tax on rezoned development land to be abolished and be replaced with 33 per cent capital gains tax

- Refund of DIRT for first-time buyers until end of 2017, up to 20 per cent of the purchase price.