The budget for the fiscal year 2011 was delivered by Minister of Finance Michael Noonan on December 11^th 2011.

 

The following are details of the budget statement:

 

 

 

 

The measures announced in Budget 2011 are unchanged. The relief is being abolished for the tax year 2012 and subsequent years. In 2011, a maximum of € 400 tax relief was granted (at the rate of 20%) for service charges aid in the year 2010.

 

 

The measures announced in Budget 2011 are unchanged. Relief for rent credit will be withdrawn on a phased basis over 7 years by reducing the amount of rent that can be relived at the standard rate of income tax as indicated in the following table:

 

 

Claimants who were not renting at 7 December 2010 and who subsequently enter into a rental agreement will not be able to claim relief.

 

The tax rate remains unchanged at 20% (standard rate) and 41% (higher rate).

 

The table below sets out the tax rates and bands:

 

 

 

There is no change to the exemption limits for persons aged 65 and over:

 

 

Marginal Relief will continue to apply where income does not greatly exceed the relevant exemption limit.

 

The above exemption limits are increased by € 575 for each of the first two dependent children and by € 830 for the third and subsequent children.

 

Health expenses relief is granted at the standard rate for expenses incurred from 1 January 2011 with the exception of nursing home expenses, which continue to be relieved at the marginal rate.

Interest paid on qualifying home loans taken out on or after 1^st January 2004 and on or before 31^st December 2012 will (subject to the exception below) qualify for tax relief up to the end of 2017 at the following general rates:

 

 

The tax relief on interest paid on qualifying home loans is:

 

Ø      25% for year 1 and 2

Ø      22.5% for years 3, 4 and 5

Ø      20% for years 6 and 7

 

The upper thresholds in respect of the amount of interest paid qualifying for tax relief are € 20,000 for individuals who are married, in a civil partnership or widowed and € 10,000 for individuals, who are unmarried and not in a civil partnership. After year 7 the rates and thresholds for reliefs are as for non-first time buyers.

 

 

The tax relief on interest paid on qualifying home loans is 15%. The upper thresholds in respect of the amount of interest paid qualifying for tax relief are € 6,000 for individuals who are married, in a civil partnership or widowed and 3,000 for individuals who are unmarried and not in a civil partnership.

 

However, notwithstanding the rates of tax relief mentioned above, for individuals who purchased their first principal private residence on or after 1 January 2004 on or before 31^st December 2008, the rate of tax relief on the interest paid on the loan to purchase that property will for the tax years 2012 to 2017 be 30%.

 

 

The taxation in respect to illness benefit currently applicable will be abolished with effect from 1^st January 2012.

 

 

The rate of retention tax that applies to deposit interest, together with the rates of exit taxation that applies to life assurance policies and investment funds, are being increased by 3% points in each case and will now be 30% for payments made annually or more frequently and 33% for payments made less frequently than annually. The increased rates will apply to payments including deemed payments, made on or after 1^st January 2012.

 

 

The Universal Social Charge (USC), which came into effect on 1^st January 2011, will be deducted on a cumulative basis with effect from 1^st January 2012.

 

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

 

 

The surcharge of 3% on individuals who have income from self employment that exceeds € 100,000 in a year, regardless of age remains unchanged.

The annual imputed distribution which applies to the value of assets in an Approved Retirement Fund (ARF) at 31^st December each year is being increased from 5% to 6% in respect of ARFs with asset values in excess if € 2 million (or where an individual owns more then one ARF, where the aggregate value of the assets in those ARFs exceeds € 2 million). The increase will apply of asset valuers in affected ARFs at 31 December 2012 and future years.

 

The transfer of ARF assets on the death of an ARF owner to a child of the owner aged over 21 is subject to a final liability tax equal to the standard rate of income tax in force at the time of the making of such a distribution (currently 20%). It is proposed to apply a higher final liability tax rate of 30% to such transfers and details of this will be published in the Finance Bill.

 

 

The current relief of 50% of employer PRSI for employee contributions to occupational pension schemes and other pension arrangements in being removed from 1^st January 2012.

 

 

These measures will apply to the various property based tax relief schemes in the following manner:

 

 

A Surcharge will be introduced from 1^st January 2012 on individuals with gross incomes over € 100,000. The surcharge will apply at a rate of 5% on the amount of income sheltered by property reliefs given in the given year.

 

This surcharge (essentially a higher rate of USC) will apply to all investors regardless of whether they invested in Section 23 or accelerated Capital Allowance Scheme with this level of general income.

 

Residential Owner-occupier relief is unaffected by these changes.

 

 

Investors in accelerated capital allowances schemes will no longer be able to use any capital allowances beyond the tax life of the particular scheme where that tax life ends after 1^st January 2015.

 

Where the tax life of a scheme has ended before 1^st January 2015 no carry forward of allowances into 2015 will be allowed.

 

 

There were no changes in respect of this taxation.

 

 

 

With effect from 1^st January 2012 the standard rate of VAT will be increasing from 21% to 23%.

 

The scheme which provides relief from corporation tax on the trading income and certain gains of new start up companies in the first 3 years of trading is being extended to include start up companies which commence a new trade in 2012, 2013 and 2014.

 

 

The current rate of 25% is being increased to 30%. This applies in respect of disposals made after 6 December 2011.

 

A new incentive relief scheme from CGT is being introduced for the first seven years of ownership for properties bought between Budget night and the end of 2013, where the property is being held for more than seven years. Where such property is held for more than seven years the gains accrued in that period will not attract CGT. This measure comes into effect after 6^th December 2011.

 

The rate of tax has been increased from 25% to 30%. The new rate of tax of 30% applies to gifts and inheritances taken on or after 7 December 2011.

 

 

The amendments made in this respect are as follows:

 

Group A – The Tax free threshold has been reduced from € 332,084 to € 250,000.

Group B & C – The Tax free threshold for the two groups remain unchanged.

 

 

The rates for petrol and auto diesel are increased with effect from midnight on 6^th December. These increases, when the VAT is included, amount to just under 1.5 cent on a litre of petrol and just over 1.5 cent of auto diesel.

 

The new MOT Rates are €587.71 per 1,000 litres for petrol and € 479.02 per litres for auto diesel.

 

The rate of aviation gasoline, which is aligned to the petrol rate and the rates of heavy oil used for non commercial navigation and flying, which are aligned to the auto diesel rate are increased accordingly.

 

 

Tobacco Products Tax rates are increased with effect from midnight on 6^th December. The increase amounts to 25 cent, inclusive of VAT on a packet of 20 cigarettes with pro rata increases on other tobacco products.

There were no changes announced in the budget.

 

A new lower rate of 2% has been introduced for non residential property. The single rate will apply to the entire amount of the consideration and the current threshold of € 10,000 has been abolished.

 

The new rate applied to instruments executed on or after 7^th December 2011.

 

Transitional arrangements will apply where as a result of the new rate, a taxpayer is disadvantaged compared to the stamp duty treatment applicable prior to 7 December 2011. The transitional arrangement will apply where an instrument is executed on or after 7^th December 2011 and before 1^st July 2012 solely in pursuance of a binding contract which had been entered into prior to 7^th December 2011.

 

Consanguinity relief, which reduced the stamp duty liability by 50%, will cease to apply to non residential property for instruments executed after 31^st December 2014.