The Finance Bill - Main Points

Business Expansion Scheme

The Budget cut the amount a company can raise under the BES from £1 million to £250,000. The transition arrangements, applying to projects which have already started, have been changed. Projects that had been certified prior to December 3rd, 1997, by a development agency will be able to raise the amount for which they were certified. The deadline for the issue of shares to investors is being extended to September 30th, 1998.

Up to £500,000 can be raised under the seed capital scheme provided no more than £250,000 is raised under the BES.

Capital Gains Tax

The exemption limit for capital gains tax has been restored from the £500 level announced on Budget day to £1,000 per individual taxpayer, but is not transferable between spouses.

Value Added Tax

The VAT rate on magazines and certain other printed material such as journals, brochures and leaflets, has been cut from 21 per to to 12.5 per cent from May 1st, 1998. Diaries will continue to be taxed at 21 per cent.

DIRT/Credit Unions

DIRT tax has been introduced on Credit Union deposits at a rate of 20 per cent. The low rate allows for the fact that a credit union cannot accept more than £20,000 in deposits. DIRT will not apply to dividends paid on shareholdings, but the Bill provides for the reporting of individual dividend payments to the Revenue, where the dividend exceeds £500.

Self-Assessment preliminary tax

From November 1999, self-employed taxpayers will have to file their tax returns two months earlier, at the end of November. However, they receive an extension on the payment of their preliminary tax, which will now also be paid on November 30th.

Capital allowances

The transitional provisions restricting the availability of capital allowances in certain cases have also been changed. These are designed to allow a number of projects in the pipeline to proceed.

Fishing industry

Accelerated capital allowances have been introduced for the whitefish fleet. An accelerated capital allowances of 50 per cent in year one, available against all income, will apply on spending incurred over a three-year period on vessels approved by BIM.

The euro

New tax measures are introduced to deal with introduction of the euro. These involve technical adjustments to the corporation tax and capital gains tax code.

VAT refunds

The time limit within which a VAT refund can be claimed has been cut from 10 years to six years. This applies in respect of claims for VAT taxable periods from May 1st, 1998, onwards.

Revenue Commissioners

The rate of interest charged by the Revenue Commissioners on overdue or underpaid tax is being reduced from 1.25 per cent per month (15 per cent on an annual basis), to 1 per cent per month (12 per cent per annum). The rate of interest on overpaid tax is being cut from 0.6 per cent per month to 0.5 per cent per month, or 6 per cent per annum.

Income tax

The Bill also proposes to enact all the main tax changes announced in the Budget last December including: the reduction in the income tax rates from 48 per cent and 26 per cent to 46 per cent and 24 per cent; the widening of the standard income tax band; and the increase in income tax exemption limits and personal tax allowances.

Cross-Border workers

A number of further measures are being worked on for inclusion in the Bill at committee stage. These include: an income tax relief for cross-Border workers; tax allowance for seafarers; a scheme of relief for rural renewal; and a provision of the tax regime to apply to the new urban renewal scheme, to be introduced next April.