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The Budget Summary 2011

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The Budget Summary 2011

“The First Step back to Economic Health”

The following are the details of the Budget for 2011 as delivered by the Minister for Finance Brian Lenihan on 7^th of December 2010.

Taxation Credits

Tax Credit	2010 €	2011 €
Single Person	1,830	1,650
Married Person	3,660	3,300
Paye Tax Credit	1,830	1,650
Widowed Person (without dependent children)	2,430	2,190
Incapacitated Child Tax Credit	3,660	3,300
Blind Tax Credit Single Person Married – One Spouse Blind Marries – Both Spouses Blind	1,830 1,830 3,660	1,650 1,650 3,300
Widowed Parent Bereaved in 2010 2009 2008 2007 2006 2005	- 4,000 3,500 3,000 2,500 2,000	3,600 3,150 2,700 2,250 1,800 -
Age Tax Credit Single/Widowed Married	325 650	245 490
Dependent Relative	80	70
Home Carer	900	810
One Parent Tax Credit	1,830	1,650

Marginal Rate Relief

Relief (Allowed at the taxpayers top rate of tax)	2010 € Max	2011 € Max
Employing a Carer	50,000	No Change

Trade Union Subscriptions

Relief regarding trade union subscriptions paid is being abolished for 2011 and subsequent years.

Service Charges

Relief regarding service charges remains Unchanged. A maximum relief of € 400 tax relief is being granted (at the 20% rate) in 2011 for service charges paid in the year 2010. Please not that this relief is being abolished for the tax year 2012 and subsequent years.

Tax Credits and Taxation Bands

The taxation rates remain unchanged at 20% (standard rate) and 41% (higher rate)

The table below shows all relevant tax rates and bands

Personal Circumstances	2010€	2011€
Single/Widowed Without dependent children	36,400@20% Balance @ 41%	32,800@20% Balance@41%
Single/Widowed Qualifying for One Parent Tax Credit	40,400@20% Balance @ 41%	36,800@20% Balance @41%
Married Couple One spouse with income	45,400@20% Balance @41%	41,800@20% Balance@41%
Married Couple Both spouses with Income	45,400@20% With increase of 27,400 Max. Balance @ 41%	41,800 @20% with increase of 23,800 max Balance @41%

Exemption Limits

The exemption limits for person’s ages 65 years and over have been changed as follows:

Personal Circumstances	2010€	2011€
Single/Widowed 65 years of age & over	20,000	18,000
Married Couple 65 years of age& over	40,000	36,000

Tax Relief at Source – Mortgage Interest Relief

The measures introduced in Budget 2010 remain unchanged:

Qualifying loans taken out before 1 July 2011 will continue to get relief for 7 years. Transitional measures will be provided for qualifying loans taken out between 1 July 2011 and the end of 2013.

Those whose entitlements to relief would, in the absence of this change, expire on 2010 or after, will continue to qualify for relief at the applicable rate up until the end of 2017.

The relief will be abolished completely by the end of 2017

Income Taxation

Universal Social Charge

The Universal Social Charge which comes into effect from 1^st January 2011, is a tax payable on gross income including notional pay, after any relief for certain capital allowances but before pension contributions.

The rates and thresholds of the Universal Social Charge are as follows:

Individuals under 70 years of age

Universal Social Charge
	Rate
Income up to € 10,036	2%
Income from € 10,037 to € 16,016	4%
Income above € 16,016	7%

Individuals over 70 years of age

Universal Social Charge
	Rate
Income up to € 10,036	2%
Income above€ 10,036	4%

Pensions

Employee PRSI on Pension Contributions

From 1^st January 2011, employee contributions to occupational pension schemes and other pension schemes will no longer be exempt from employee PRSI. Such contributions will also be subject to the new Universal Social Charge

Employer PRSI on pension Contributions

Employer contributions to occupational pension schemes and other pension arrangements are exempt from employer PRSI which would otherwise apply to a rate of 10.75%. The extent of this relief will be reduced by 50% from January 1^st 2010.

Contribution Limit

The annual earnings limit which (along with age related percentage limits) determine maximum tax relievable contributions for pension purposes in being reduced from € 150,000 to € 115,000 for 2011.

Retirement Lump Sums

With effect from 1^st January 2011, the overall life time limit on the amount of tax free retirement lump sums that as an individual can draw down from pension arrangements is being reduced to € 200,000.

Relevant Contracts Tax (RCT)

As announced in the Budget, The Revenue are streamlining and modernising the RCT System. The new system will involve replacement of the current RCT rate of 35% with a two rate withholding system. This system will involve

Ø A 20% rate for subcontractors registered for taxation with an established compliance record.

Ø A 35% rate for subcontractors who do not qualify for the above rate (Not registered for taxation).

Ø The abolition of the monthly repayment system and it will be replaced with an offset system.

Ø A move to an e-based system for RCT principals which will enhance efficiencies with the system.

There has been no amendment to Value Added Tax or Capital Gains Tax.

Vehicle Registration Taxation

The scrappage scheme is being extended to 30 June 2011. The maximum relief due shall be reduced from € 1,500 to € 1,250. As before the relief is on a sliding scale depending on the age of the vehicle in accordance with the following table:

Age of Vehicle	Maximum amount to be remitted €
New Vehicle	1,500
Less than 2 years old	1,350
2 years or over but less than 3 years	1,200

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