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Budget 2019

Executive Summary

This year’s Budget was the third and final budget of the current government’s confidence and supply agreement with Fianna Fail. It remains to be seen if there will be a fourth.

Brexit and the potential implications have underpinned the preparation of Budget 2019 and the budget was prepared on the expectation of a “orderly” exit of the UK, with a transition period, and ultimate “soft” exit following some form of bilateral trade agreement between the UK and EU.

Eliminating the budgetary deficit forms a key part of the Government’s policy response to Brexit. The Government is also establishing a Rainy-Day Fund in order to mitigate any future downturn in economic activity. At the same time, the Government is committed to using receipts from the disposal of assets for public debt reduction.

The budget reflects a recovering economy which will grow by 7.5% in 2018 and a projected 4.2% in 2019. A backdrop to the recovery is that unemployment levels have decreased to c. 5% in 2018.

In keeping with recent trends, the vast majority of changes announced in the budget were disclosed in recent days via various media outlets. As a result, there is little contained within the budget at a first glance that can be described as a shock.

This summary will focus primarily on the main policy changes and provisions presented by Minister Donoghue.

The main features of Budget 2019 as they will affect you are as follows;

  • An increase of €750 in the income tax standard rate band for all earners, from €34,550 to €35,300 for single individuals and from €43,550 to €44,300 for married one earner couples.
  • An increase in the Home Carer Tax Credit from €1,200 to €1,500.
  • An increase in the Earned Income Credit from €1,150 to €1,350.
  • No changes to income tax rates. Income tax rates remain 20% and 40%.
  • Incomes of €13,000 or less are exempt from USC. The USC rate for incomes between €19,874 – €70,044 is to be reduced from 4.75% to 4.5%.
  • The VAT rate for the tourism / hospitality sector has been increased from 9% to 13.5%.
  • No changes in CGT or CAT rates. Modest increase in Group A CAT threshold.
  • Cigarettes to increase by 50c per packet of 20 from 9 October 2017.
  • No change to main Corporation tax rate.
  • State Pension will increase by €5 per week from March 2019 while all other social welfare payments will increase by €5 per week in line with State Pension.
  • The Christmas bonus for social welfare recipients will be restored to 100 per cent of the recipient’s weekly payment.
  • Mortgage Interest relief on loans used to purchase, develop or repair a residential property will be granted at 100% 1 January 2019.

Income Tax and Levies

  • As outlined previously the main change in terms of income tax are the minor reductions targeted at “middle income earners” while the Standard rate income threshold has increased by €750.
  • Changes to the USC will benefit those earning between €19,874 – €70,044 as the rate is to be reduced from 4.75% to 4.5%.
  • For the self-employed the additional surcharge on income in excess of €100,000 appears to remain. However, self-employed individuals will now benefit from an increased earned income credit of €1,350, an increase of €200 from last year’s budget.

Universal Social Charges

USC Rates & Bands from 1 January 2020:

    Incomes of €13,000 are exempt. Otherwise:

  • €0 – €12,012 @ 0.5%
  • €12,012 – €19,874 @ 2%
  • €19,874 – €70,044 @ 4.5%
  • €70,044+ @ 8%
  • Self-employed income over €100,000: 3% surcharge

Tax Bands Amendments

  • €34,550 to €35,300 for single individuals
  • €43,550 to €44,300 for married one earner couples.

Private Business

  • Key Employee Engagement Programme (KEEP)- A share-based remuneration incentive was introduced in last year’s budget. In recognition of the slow take up under the scheme the following changes are proposed:
    o to increase the ceiling on maximum annual market value of shares that may be awarded to equal the amount of the salary (up from 50%);
    o to replace the three-year limit with a lifetime limit; and
    o to increase the quantum of share options that can be granted under the scheme from €250,000 to €300,000.
  • Three Year Start Up Relief provides corporation tax relief for profitmaking start-up companies which create and maintain jobs. The relief is being extended a further three years, until the end of 2021.
  • Employer’s PRSI from 1 January 2019 the weekly income threshold for the higher rate of employer’s PRSI will increase from €376 to €386. This follows a recommendation of the Low Pay Commission to ensure that the increase in the hourly minimum wage does not lead to work disincentives for workers, in particular those seeking to work full-time.
  • A Future Growth Loan Scheme for SMEs and the agriculture and food sector is being launched providing up to €300m.

VAT

  • VAT rate on tourism activities to increase to 13.5%, with the exception of newspapers and sporting facilities. The VAT rate on electronic newspapers will reduce from 23% to 9%.

Property

  • Landlords will also benefit with the news that from January 2019 Mortgage Interest Relief will be accelerated thereby allowing 100% of interest on loans to purchase, develop or repair a residential property against income.

Capital Acquisitions Tax (CAT)

The current Group A tax free threshold which applies primarily to gifts and inheritances from parents to their children is being increased from €310,000 to €320,000.

No changes were announced with regard to the Group B or C Thresholds.

Corporation Tax

The Government has stated its commitment to maintaining the 12.5% Corporation Tax rate.

Customs & Excise

Excise duty on a packet of 20 cigarettes is being increased by 50c with effect from 09 October 2018. No changes to duty on alcohol, petrol or diesel.

There will be an increase in the betting duty on bets placed by customers in the State will provide the additional yield:

  • from 1% to 2% for all bookmakers and
  • from 15% to 25% on the commission earned by betting intermediaries

Pensions

There appears to be no changes announced with respect to private pensions.

Social Welfare Benefits

  • State Pension – increase of €5 per week from March 2019.
  • Social welfare payments – all payments to increase by €5 per week in line with the State Pension
  • Christmas – 100% Christmas bonus for social welfare recipients.

Advice

If you require any clarification on any of the Budget matters please do not hesitate to contact your advisers as follows;

Telephone: 01 491 4132
E-mail: cathal@opeswealthtrust.ie
frank@opeswealthtrust.ie
Website: www.opeswealthtrust.ie
Office: 192-194 Harold’s Cross, Dublin D6W AP86
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More Breaking News…

More Breaking News From Opes Wealth Trust

Following the 5th LPI Awards ceremony which was held on Thursday 22nd March in the iconic venue of the Round Room, Mansion House, we are delighted to announce that Opes Wealth Trust were voted Dublin Broker of the Year.

The Brokers Ireland Life, Pensions and Investment Awards for Financial Brokers now in its fifth year running, aims to give recognition to Financial Advisers who have proved their excellence, professionalism and dedication to maintaining the highest standards in the Irish market.

We are delighted that Opes Wealth Trust has been successful in what was a very competitive category and would like to thank everyone for their messages of good wishes and congratulations over the past few days.

We look forward to continuing to maintain these high standards in the provision of financial advice.

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Breaking News

Breaking News From Opes Wealth Trust

We are delighted to confirm that Opes Wealth Trust have been shortlisted in two separate categories for the upcoming Life Pension Investments (LPI) Awards which are due to be held in the Mansion House Dublin on the 22nd March 2018.

Opes Wealth Trust have been nominated in the following categories:

  • Dublin Financial Planning Broker of the year.
  • Dublin Broker of the year.

Our aim is to provide the highest professional standards of financial advice to our clients and we are honoured to be recognised by our industry in this regard.

Winner or not we are delighted to be recognised in an ever-growing Industry and will keep you posted on the result.

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Budget 2018

Executive Summary

This year’s Budget was the second budget of the current coalition’s term and Minister Donohue’s first as Finance Minister.

In keeping with recent trends the vast majority of changes announced in the budget were disclosed in recent days via various media outlets. As a result there is little contained within the budget at a first glance that can be described as a shock.

The 2018 budget aims to balance the books for the first time in years and allocate budgetary resources on a 2:1 basis in favour of capital spending over tax reductions and adjustments.

The budget reflects a recovering economy which will grow by 4.3% in 2017 and a projected 3.5% in 2018. A backdrop to the recovery is that unemployment levels have decreased to 6.3% in 2017 and is expected to reach 5.7% by 2018 which is close to the full employment level.

Following on from last year’s announcement of a “rainy day fund”, the Government has announced plans to make an initial transfer of €1.5bn to this fund in 2018 with a contribution of €500m per annum thereafter. The aim of this fund is to safeguard the economy against future economic shocks.

The debt to GDP ratio continues to fall and is projected at 70.1% of GDP by the end of 2017.

This summary will focus primarily on the main policy changes and provisions presented by Minister Donoghue.

The main features of Budget 2018 as they will affect you are as follows;

  • An increase of €750 in the income tax standard rate band for all earners, from €33,800 to €34,550 for single individuals and from €42,800 to €43,550 for married one earner couples.
  • An increase in the Home Carer Tax Credit from €1,100 to €1,200.
  • An increase in the Earned Income Credit from €950 to €1,150.
  • No changes to income tax rates. Income tax rates remain 20% and 40%.
  • Incomes of €13,000 or less are exempt from USC. 0.5% applies on the first €12,012 of income; 2.5% rate cut to 2%. This applies on income in excess of €12,012 up to an increased threshold of €19,372. 5% rate cut to 4.75%. This applies on income in excess of €19,372 up to €70,044.
  • There is to be no change in the VAT rates, which includes the keeping of the 9% rate for the tourism / hospitality sector.
  • No changes in CGT or CAT rates.
  • Cigarettes to increase by 50c per packet of 20 from 10 October 2017.
  • A tax on sugar sweetened beverages is to be introduced on 1 April 2018.
  • No change to main Corporation tax rate.
  • State Pension will increase by €5 per week from March 2018 while all other social welfare payments will increase by €5 per week in line with State Pension.
  • The Christmas bonus for social welfare recipients will be restored to 85 per cent of the recipient’s weekly payment.
  • Key Employee Engagement Programme (KEEP)- A share-based remuneration incentive is being introduced to facilitate the use of share-based remuneration by unquoted SME companies to attract key employees.
  • Pre-letting Expenses – Rented Residential Property- subject to certain conditions a landlord can receive a tax deduction for pre letting expenses. A cap of €5,000 applies.
  • Capital Gains Tax- the 7-year CGT exemption will be reduced to 4 years to allow individuals who purchased property or land to dispose of property between years 4 and 7 free of CGT.
  • Vacant site levy which will come into force in 2018 will have a rate of 3% in 2018 and 7% in 2019.
  • Commercial Stamp duty will increase from 2% to 6% from midnight. Refund scheme for developer’s subject to criteria.

Income Tax and Levies

  • As outlined previously the main change in terms of income tax are the minor reductions targeted at “middle income earners” while the Standard rate income threshold has increased by €750.
  • For higher rate earners or more specifically those earning in excess of €70,044, USC @ 8% will still apply to income in excess of this level.
  • For the self-employed the additional surcharge on income in excess of €100,000 appears to remain. However, self-employed individuals will now benefit from an increased earned income credit of €1,150.
  • The Minister has announced the set-up of a working group to plan for the amalgamation of the USC and PRSI.

Universal Social Charges

USC Rates & Bands from 1 January 2018:

  • Incomes of €13,000 are exempt. Otherwise:
  • €0 – €12,012 @ 0.5%
  • €12,012 – €19,372 @ 2%
  • €19,372 – €70,044 @ 4.75%
  • €70,044+ @ 8%
  • Self-employed income over €100,000: 3% surcharge
  • Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum rate of 2% USC.

Tax Bands Amendments

  • €33,800 to €34,550 for single individuals
  • €42,800 to €43,550 for married one earner couples.

Private Business

  • Key Employee Engagement Programme (KEEP)- A share-based remuneration incentive is being introduced to facilitate the use of share-based remuneration by unquoted SME companies to attract key employees. Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax on disposal of the shares, in place of the current liability to income tax, USC and PRSI on exercise. This incentive will be available for qualifying share options granted between 1 January 2018 and 31 December 2023.
  • Measures were introduced to prepare for Brexit, including the creation of a Brexit loan scheme that will see €300m available at competitive rates to Irish businesses.

Brexit

  • The Minister announced the introduction of a Brexit package, which includes Brexit loan schemes of up to €300m to support SMEs and up to €25m for the agri-sector. In addition, the agricultural sector has been allocated €50m for Brexit response measures. This will help indigenous Irish companies to remain competitive in a post-Brexit environment.

VAT

  • There was no significant changes to VAT. The 9% rate applicable to certain service industries (tourism / hospitality etc.) will continue in 2018.
  • Compensation to be introduced for VAT incurred by charities based on proportion of non-public funding to State funding.

Property

  • An amendment will be made in relation to CGT treatment on certain disposals of land or buildings otherwise known as the 7-year CGT relief, which will allow the owners of qualifying assets to sell those assets between the fourth and seventh anniversaries of their acquisition and still enjoy a full relief from CGT on any chargeable gains.
  • The Vacant Site Levy due to commence in 2019 will increase from 3% to 7% in second and subsequent years and the holding period
  • Landlords will also benefit with the news that subject to certain criteria, pre- letting expenses may qualify for a tax deduction. A cap of €5,000 will apply and there will be a claw back period.
  • Commercial Stamp duty will increase from 2% to 6% from midnight.
  • Mortgage Interest Relief -Tapered extension of mortgage interest relief for remaining recipients. The relief will cease entirely from 2021.

Capital Acquisitions Tax (CAT)

There appears to be no changes to the CAT thresholds.

No changes were announced with regard to CAT rates.

Corporation Tax

The Government has stated its commitment to maintaining the 12.5% Corporation Tax rate.

Customs & Excise

Excise duty on a packet of 20 cigarettes is being increased by 50c with effect from 10 October 2017. No changes to duty on alcohol, petrol or diesel.

Sugar Tax -A tax on sugar sweetened beverages is to be introduced on 1 April 2018. The tax will apply to sugar sweetened drinks with a sugar content between 5 grams and 8 grams per 100ml at a rate of 20c per litre. A second rate will apply for drinks with a sugar content of 8 grams or above at 30c per litre.

Pensions

There appears to be no changes announced with respect to private pensions.

Social Welfare Benefits

  • State Pension – increase of €5 per week from March 2018.
  • Social welfare payments – all payments to increase by €5 per week in line with the State Pension
  • Christmas – 85% Christmas bonus for social welfare recipients.

Advice

If you require any clarification on any of the Budget matters please do not hesitate to contact your advisers as follows;

Telephone: 01 491 4132
E-mail: cathal@opeswealthtrust.ie
frank@opeswealthtrust.ie
Website: www.opeswealthtrust.ie
Office: 192-194 Harold’s Cross, Dublin D6W AP86
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Budget 2017

Executive Summary

This year’s Budget was the first budget during the current coalition’s term and Minister Noonan’s sixth budget since 2011. In keeping with recent trends the vast majority of changes announced in the budget were disclosed in recent days via various media outlets. As a result, there is little contained within the budget at a first glance that can be described as a shock.

The 2017 budget aims to allocate budgetary resources on a 2:1 basis in favour of capital spending over tax reductions and adjustments.

The budget reflects a recovering economy which will grow by 4.2% in 2016 and a projected 3.5% in 2017 (adjusted downwards following Brexit). A backdrop to the recovery is that employment levels have increased to 2m people and the Government is expected to run a balanced budget in 2017 and a surplus in 2018.

With an eye to the future, the Government plans to commence contributions to a “rainy day fund” in 2018 with a projected annual contribution of up to €1bn subject to available resources. The aim of this fund is to safeguard the economy against future economic shocks. National debt currently stands at 76% of GDP and while there is a short term target of 60% to reach to comply with the Stability and Growth Pact, the Government have announced a new long term National debt target of 45% of GDP by mid-2020’s.

This summary will focus primarily on the Taxation measures presented by Minister Noonan with a brief outline of the Public Expenditure adjustments announced by Minister Donoghue.

The main features of Budget 2017 as they will affect you in business and in your personal life are as follows;

  • No changes to income tax rates of bands. Income tax rates remain 20% and 40%.
  • Incomes of €13,000 or less are exempt from USC. 1% rate cut to 0.5%. This applies on the first €12,012 of income; 3% rate cut to 2.5%. This applies on income in excess of €12,012 up to an increased threshold of €18,772. 5.5% rate cut to 5%. This applies on income in excess of €18,772 up to €70,044.
  • Individuals over 70 and with aggregate income which does not exceed €60,000 will pay a maximum USC of 2.5%.
  • Increase of €100 in home carer tax credit to bring it up to €1,100.
  • An increase in the Earned Income Credit for the self-employed from €550 to €950.
  • Increase in interest rate relief for landlords from 75% to 80% of interest for new and existing mortgages with a proposed 5% increase each year until full deductibility is restored.
  • Help to Buy scheme for first time buyers announced. Scheme will allow first time buyers an income tax rebate for the previous four years and up to 5% of the purchase price up to €400,000. Relief will also apply to homes with a value of €400,000-€600,000 but the rebate will be capped at €20,000. The scheme will run until 2019 and will only apply to new homes with a mortgage of at least 80% of the purchase price.
  • Rent a room relief increased to €14,000 per annum.
  • Home Renovation Initiative extended until 31st December 2018.
  • Start your own business relief has being extended by another two years until 2018.
  • A reduced CGT rate of 10% will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in chargeable gains.
  • Capital Acquisitions Tax – all thresholds have been increased
  • Increase in farmer’s flat rate from 5.2% to 5.4%.
  • Income averaging regime to be amended to allow farmers “opt out” in a year of poor income. Currently the income average regime allows a farmer’s taxable income or profit to be averaged out over a 5-year period.
  • DIRT to be reduced by 2% each year for the next 4 years until it reaches 33%.
  • There is to be no change in the VAT rates, which includes the keeping of the 9% rate for the tourism / hospitality sector.
  • No changes in CGT or CAT rates apart from the above special CGT rate of 10% for entrepreneurs.
  • Cigarettes to increase by 50c per packet of 20 from 11 October 2016.
  • No change to main Corporation tax rate.
  • State Pension will increase by €5 per week from March 2017 while all other social welfare payments will increase by €5 per week in line with State Pension.
  • The Christmas bonus for social welfare recipients will be restored to 85 per cent of the recipient’s weekly payment.
  • Proposal to develop new share based remuneration scheme for budget 2018 which is aimed at updating the current arrangement is to be put in place and subject to European Commission approval.
  • Introduction of sugar tax proposed for April 2018 to coincide with UK sugar tax.

Income Tax & Levies

As outlined previously the main change in terms of income tax is the reduction is the USC rates on incomes of up to €70,044. Any income over this is still liable to the USC at 8%. For the self-employed the additional surcharge on income in excess of €100,000 appears to remain.

There were no changes to the income tax rates or bands. However, self-employed individuals will now benefit from an increased earned income credit of €950.

Landlords will also benefit with the news that interest relief allowed as a deduction against rental income will be increased by 5% from a current level of 75% each year with the aim of allowing a full deduction of interest against rental income in the future.

Universal Social Charges
Incomes of €13,000 or less are exempt. Otherwise,

  • €0 to €12,012 @ 0.5%
  • €12,013 to €18,772 @ 2.5%
  • €18,773 to €70,044 @ 5%
  • €70,045 to €100,000 @ 8%
  • PAYE income in excess of €100,000 @ 8%
  • Self-employed income in excess of €100,000 @ 11%
  • Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum rate of 2.5% USC.

VAT

The 9% rate applicable to certain service industries (tourism / hospitality etc.) will continue in 2017. No further changes.
Farmers will now be entitled to an increased flat rate addition of 5.4%

Home Renovation Incentive (HRI)

This incentive which came into force following Budget 2014 provides a tax credit to homeowners who carry out renovation and improvement works on their principal private residences and investment properties. The tax credit is calculated at 13.5% of qualifying expenditure over €5k to a maximum of €30k. This scheme has now been extended to December 2018.

Capital Gains Tax (CGT)

The CGT relief for entrepreneurs introduced from January 2016 will be amended to reflect a CGT rate of 10% and will apply to the disposal in whole or part of a business up to an overall limit of €1m in chargeable gains.

No changes were announced with regard to CGT rates.

Capital Acquisitions Tax (CAT)

The Group A threshold (Parent to child, primarily) has been increased from €280,000 to €310,000 with immediate effect.

The Group B threshold which applies to gifts and inheritances made to parents, siblings, nieces, nephews or grandchildren is raised from €30,150 to €32,500.

The Group C threshold which applies to gifts and inheritances made to all others (except spouses and civil partners) is raised from €15,075 to €16,250.

No changes were announced with regard to CAT rates or bands.

Corporation Tax

The Government has stated its commitment to maintaining the 12.5% Corporation Tax rate.

Start your own business tax relief is being extended until the end of 2018.

Deposit Interest Retention Tax (DIRT)

DIRT to be reduced by 2% each year for the next 4 years until it reaches 33%.

Customs & Excise

Excise duty on a packet of 20 cigarettes is being increased by 50c with effect from 11 October 2015. No changes to duty on alcohol, petrol or diesel.

VRT & Motor Tax

The VRT reliefs available for the purchase of hybrid vehicles is extended until December 2018.

No other changes were announced with regard to VRT or private motor tax.

Pensions

There appears to be no changes announced with respect to private pensions.

Brief outline on the Public Expenditure measures

• Public services- provision made for hiring more nurses, guards and teachers, pay increases under Lansdowne Road agreement.
• Housing – budget of €1.2bn to build 47,000 social housing units by 2021.
• State Pension- increase of €5 per week from March 2017.
• Social welfare payments- all payments to increase by €5 per week in line with the State Pension.
• Christmas – 85% Christmas bonus for social welfare recipients.

Advice

Over the coming days we will be reviewing the budget in detail and preparing appropriate analysis. If you require any clarification on any of the Budget matters, please do not hesitate to contact your advisers as follows;

Telephone: 01 491 4132
E-mail: cathal@opeswealthtrust.ie
frank@opeswealthtrust.ie
Website: www.opeswealthtrust.ie
Office: 192-194 Harold’s Cross, Dublin D6W AP86
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BREXIT

It’s not you it’s me!

In what has been an unexpected move, the British decided last week to vote to leave the EU. The result of the referendum has already led to the resignation of the Prime Minister David Cameron and the fallout does not stop there as Scotland’s first minister has renewed calls for another independence referendum which may see the beginning of the end of the UK as we know it.

How Have Markets Reacted?

As expected the financial markets have not reacted well to the result of the referendum and will remain volatile in the short term due to the uncertainty. At the time of writing this piece Sterling has dropped to £0.82 pence against the Euro which makes Irish exports to the UK more expensive.

Global stock markets are down across the board with European indices finishing down 7%-8% on Friday while the US markets lost circa 3%. Markets have traded downwards on Monday too. Traditional safe havens such as Gold has bounced up by 4% while investors also poured into Government Bonds.

Markets were not expecting the result so the reaction is not unexpected albeit somewhat kneejerk. It is difficult to find anyone who is not negatively affected by the result of this referendum. For example, Irish residents who receive an income from the UK in terms of a pension or investment income will see a reduction in their income due to the weakness of Sterling while individuals who have a pension fund or investment portfolio which is likely to have exposure to the financial markets will also be affected.

At times like this, it is important remember that investments either personal or via a pension fund are made with the long term in mind and generally speaking equities in the long run will recover despite short term volatility.

It is also equally important to note that your personal or pension investment portfolios have been designed so that you the investor are not overweight in any one sector, currency or geographic location and as such your exposure is global with no particular bias towards the UK. Most investors are invested in well diversified global portfolios which invest in large blue chip companies who themselves do not have an overexposure to the UK.

At the moment we recommend that investors sit tight and make no sudden changes to a portfolio which will crystallise a loss. What the Armageddon of 2008 has thought us is that over time portfolio’s will recover, particularly well-constructed, diversified portfolios which invest in good companies.

We are monitoring developments closely and intend to provide updates as things develop over the coming weeks and months. If you have any queries at all, please feel free to contact us.

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TIMES THEY ARE A CHANGING!

TIMES THEY ARE A CHANGING!

DOES YOUR MORTGAGE RATE!

A SWITCH IN TIME SAVES €€€€€€€€€€€€

Over the past 12 months the subject of the margins charged by Irish Bank’s on their standard variable rate mortgages has rarely been off the front pages. Irish rates remain one of the highest in Europe with the average standard variable rate in Ireland at 3.6%. Now thanks to pressure from Government and the European Central Bank we are now beginning to see some real competition in the mortgage market and particularly within the switcher market. Yet the statistics continue to show that Irish homeowners remain reluctant to switch. So is it worth your while taking sometime out to review what your mortgage is actually costing you? The answer to that question is a very definite YES.

Given the present Central Bank of Ireland conditions which apply to the first time buyer market and in particular the amount of the initial deposit required many of the Bank’s operating in the market have seen a considerable slowdown in this area of their business. In order to increase their mortgage market share a number of them have now put additional emphasis on the switcher market and as a result there are now some very attractive deals on offer. Irish consumers appear to be quite reluctant to switch providers and the main reason for this is the cost and perceived amount of time involved in the switching process. Well the good news is that at Opes Wealth Trust once you complete the loan application and supply the supporting documents we will take it from there. No need to take time off work to attend appointments etc, we will do all the Heavy Lifting for you. Opes Wealth Trust have agencies with all the main providers in the Irish mortgage market and as a result we can guarantee you the most competitive deals within the market.

Example:

John and Patricia are a married couple with two children. Their fixed rate mortgage recently expired and their existing provider offered them a variable rate of 3.9% with repayments of €1,305.83 over a remaining term of 25 years. John and Patricia requested Opes Wealth Trust to review their Situation and within a short period of time we successfully negotiated a variable rate of 3.2% with another provider. This resulted in immediate monthly savings of €94.13, annualised savings of over €1,100 and over the term of the mortgage John and Patricia could save over €28,000 if the mortgage ran its due course. The projected overall savings would be more than sufficient to pay for their children’s third level education fees.

There are costs involved in switching providers mainly the legal costs and the property valuation (€127) However, in order to entice switchers all the banks are offering incentives to switch to them. For example both PTSB & Bank of Ireland are offering a 2% cash-back on the value of the mortgage; however you should note that penalties will arise if the mortgage is subsequently refinanced within a 5 year period. KBC bank currently offers €2,000 towards legal expenses (this offer expires on the 30th Sept 2016) and 50% off your home insurance for the first year. Ulster Bank offer €1,500 towards your legal fees up until the 30th of June 2016 as do Haven mortgages.

Best mortgage rates based on LTVs.

Bank Product Rate
KBC Bank Ireland Discounted Variable 3.10%* LTV 50% OR LESS.
KBC Bank Ireland 2 Year Fixed 2.99%*LTV 60% OR LESS
KBC Bank Ireland 3 Year Fixed 3.10% LTV 60% OR LESS
Ulster Bank 5 Year Fixed 3.35% LTV 60% OR LESS

 

Please note that the rates quoted for KBC Bank Ireland are conditional on one party to the mortgage transferring their current account to KBC Bank. The discount of 0.20% is for the duration of the mortgage. Should you switch your mortgage and extend the term or borrow additional funds then a new mortgage protection policy will be required which we will be happy to arrange for you.

So why not pick up the phone arrange a meeting and let us start to save you money.

Our dedicated team of advisers who have considerable experience in this area will manage your application in a professional manner from start to finish and keep you fully appraised during the switching process.

WARNING
IF YOU ARE IN AN EXISTING FIXED RATE AGREEMENT THEN YOU IN ALL PROBABILITY YOU WILL HAVE TO PAY A BREAK FEE TO EXIT THE AGREEMENT.THIS AMOUNT CAN VARY AND WILL DEPEND ON THE SIZE OF THE MORTGAGE AND THE TERM REMAINING ON THE FIXED RATE AGREEMENT.YOU SHOULD CONSULT YOUR LENDER TO CONFIRM THE AMOUNT OF THE BREAK FEE AS IT COULD BE SIGNIFICANT. ALSO THE RATES ON OFFER ARE DEPENDANT ON THE LOAN TO VALUE (LTV).THE LOWER THE LTV THE BETTER RATE YOU WILL BE ABLE TO SECURE.
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WHAT TO DO IF THE VULTURE FUNDS START TO CIRCLE

If you had asked anyone in early 2011 who Blackstone, Cerberus or Lone Star was not many would have been able to answer you correctly. Roll on the clock 5 years and chances are that most people will have heard of one if not all of the above companies. When the bottom fell out of the Irish property market and the recession hit home and all the banks foreign and domestic operating in Ireland started to see an alarming increase in non-performing loans, certain shrewd investors particularly in the USA saw an opportunity to make a lot of money in Ireland.

For the 90,000 mortgage borrowers in arrears and for thousands of business borrowers with problem debt and cash flow issues it is no longer the bank they need to worry about it is the so called vulture funds who have amassed vast tranches of Irish debt over the past 6 years. Many of the foreign banks who operated in the market during the nineties such as Bank of Scotland Ireland and Danske Bank have long since closed their doors and left having had to write off huge sums of money. The history of Anglo Irish Bank and Irish Nationwide Building Society is well documented so what happened to all the loans? To put it simply they were bundled into various portfolios such as residential, commercial, buy to lets, performing and non performing and subsequently sold to the above funds at a substantial discount. They are also showing no signs of slowing down when it comes to acquisitions so more and more Irish debtors are going to learn what it means to owe money to a vulture fund.

At Opes Wealth Trust we have been dealing with these funds for a number of years now and have considerable experience in negotiating with them on behalf of our clients. We have been successful in negotiating significant write downs on behalf of our clients. In order to assist our clients reach a suitable long term agreement with the various vulture funds there are no hard and fast rules when dealing with vulture funds as no two cases are exactly the same, every case has its own nuances. The following are a few pointers to bear in mind if you have been advised that your loan has been sold on to a third party.

  • When you first receive the letter advising you that your loan has been sold don’t panic. Nothing is going to happen immediately. You should gather all the relevant documents regarding your loan including details of your previous negotiations with the original bank.
  • You will be advised in the letter the date your loan was sold and who the new owners are and in most cases the new payment details for the new owner’s bank accounts and their contact details.
  • Get Professional Advice. Most people do not know what they are dealing with. Most of these funds do not interact directly with their customers so they appoint servicing agents to act for them. If you get a letter from Pepper Asset Servicing or Capita Asset Servicing you are dealing with a servicing agent. The servicing agent is a buffer between the client and the vulture fund. This can make the process slower and at times quite frustrating.
  • Debt Management Firms such as Opes Wealth Trust deal with these firms on a daily basis and as a result are on a first name basis with most of their staff. We have an extensive knowledge of their processes and requirements and most importantly will be in a position to quickly gauge what type of a deal if any may be possible given our previous experiences to date. You will pay an agreed fee to any Debt Management Firm you employ to act for you, however in the long run they will save you money and time.

It’s not all bad news however; vulture funds by their very nature are very commercial and pragmatic. The lifespan of these funds tends to be around three to five years so they are literally looking to make as big a profit as possible in a relatively short period of time. Whilst there is no doubt they can be ruthless on the other hand they are prepared to write down debt and if a deal is possible they will do it quicker than the domestic banks. The other issue to bear in mind is that just because your loan has been sold it does not mean that your rights under the Consumer Protection Code or Personal Insolvency Legislation have in any way been diluted in particular where the family home is concerned they have not.

So in conclusion no one is saying that dealing with a vulture fund is going to be a ‘bed of roses’ you need to know what to expect and you need to go through the process with the assistance of a specialist who can get you through the process and out the far side relatively unscathed. At Opes Wealth Trust we have an excellent  track record of doing just that so if you have recently received a letter regarding your loan been sold on to such a fund just pick up the phone and one of our experienced advisers will be delighted to meet with you and carry out a full review of your case.

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Q1 Stock Market Update

Stock Market Update – Q1

Stock markets have endured a very volatile start to the year with most indexes suffering significant losses in what points to being a difficult and challenging year for investors.

Concerns are predicated on China experiencing a much harder landing that what is expected and concerns over the strength of US recovery both resulting in concerns that global economic growth will be lower than anticipated. Since the beginning of the year this has resulted in large sell offs in the market.

Please see below for a commentary of current events from Quilter Cheviot along with an outlook for the year ahead.

https://www.quiltercheviot.com/latest-news/dont-panic-captain-mandarin/

So what does all this mean for investors?

Stock market volatility such as that experienced in 2008 and again in 2011 should not be a cause of significant concern for a long term investor. This is because history indicates that like in the period after 2008 and 2011 markets recover and investors who remained invested benefit from the uplift.

Most long term investors will have multi asset portfolios so they do not have complete exposure to equites. Therefore, at this moment in time we do not advise that investors who have actively managed multi asset portfolios make any changes.

As with previous dips in the markets the current volatility will present opportunities for investors who wish to enter the market. However, for now we would recommend that such investor waits until current volatility levels off and a much clearer pattern emerges.

Warning: Past performance is not a reliable guide to future performance. The material is not intended to provide advice and is provided for general information purposes only.

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Budget 2016

Executive Summary

This year’s Budget was the fifth and final budget during the current coalition’s term. Such was the volume of budgetary leaks over the past 24 hours, this update could have been circulated at 9 a.m. this morning.

Ireland is currently the fastest growing economy in Europe, and with rising growth rates, better than expected exchequer returns and of course a general election around the corner, this Budget was well flagged as a give-away budget and an opportunity to give back something to the people after years of austerity. 

This summary will focus primarily on the Taxation measures presented by Minister Noonan with a brief outline of the Public Expenditure cuts announced by Minister Howlin.

The main features of Budget 2016 as they will affect you in business and in your personal life are as follows;

  • No changes to income tax rates of bands. Income tax rates remain 20% and 40%.
  • Entry threshold to USC increased from €12,012 to €13,000. 1.5% rate cut to 1%. This applies on the first €12,012 of income; 3.5% rate cut to 3%. This applies on income in excess of €12,012 up to an increased threshold of €18,668. 7% rate to 5.5%. This applies on income in excess of €18,668 up to €70,044
  • Increase of €190 in home carer tax credit to bring it up to €1,000.
  • Introduction of a tapered PRSI credit for low earning workers. This change will ensure that low-income earners will see a significant improvement in net incomes.
  • For Employer PRSI, the entry point to the top rate of 10.75% is increased by €20 per week to €376 per week from €356.01.
  • Capital Acquisitions Tax- the Group A tax-free threshold, which broadly applies to transfers between parents and their children, is increased from €225,000 to €280,000.
  • Proposal to be made to government to postpone Local Property Tax revaluation dates from 2016 to 2019.
  • Pension fund levy to be abolished by the end of 2015.
  • Introduction of earned income tax credit of €550 for self-employed individuals.
  • There is to be no change in the VAT rates, which includes the keeping of the 9% rate for the tourism / hospitality sector.
  • Stock relief and stamp duty relief for young trained farmers extended to December 2018.
  • New farm succession plan to be announced to make it easier to transfer farms.
  • Commercial motor tax rates are to be simplified, with the 20 existing rates to be replaced by five new rates, ranging from €92 to €900. The maximum rate had been €5,195.
  • Introduction of lower corporation tax rate of 6.25% for income arising from Knowledge Development Box.
  • A reduced CGT rate of 20% for entrepreneurs is to apply from the 1st of January 2016 onwards on the sale in whole or in part of a business up to an overall limit of €1 million in chargeable gains.
  • No changes in CGT or CAT rates apart from the above special CGT rate of 20% for entrepreneurs.
  • Extension of Home Renovation Tax Inventive Scheme to December 2016.
  • Stamp Duty of €2.50/€5 per annum on ATM/Debit cards to be abolished from 1st January 2016 and replaced by a new 12c ATM withdrawal fee from 1st January 2016, which would be capped at €2.50/€5 per annum per card.
  • Cigarettes to increase by 50c per packet of 20 from 14 October 2015
  • No change to main Corporation tax rate.
  • DIRT remains at 41%.
  • Minimum wage to increase by 50c to €9.15 per hour from January 2016.
  • Increase in child benefit by €5 to €140 from January 2016.
  • Introduction of Statutory paternity leave of two weeks will be introduced from next September. 
  • State pension to increase by €3 per week from January 2016.
  • Extension of free GP care for children under 12 (subject to successful negotiation with doctor’s representatives).
  • Free pre-school childcare will be available for children from 3 years until they start primary education or reach the age of five and a half years.
  • The Christmas bonus for social welfare recipients will be restored to 75 per cent of the recipient’s weekly payment.
  • The fuel allowance will be increased by €50 per week to €22.50.
  • The respite care grant for carers will be restored to its previous level of €1,700.
  • The bank levy is to remain in place until 2021 which is expected to bring in an addition €750 million over the period

Income Tax & Levies

As outlined previously the main change in terms of income tax is the reduction in the USC rates on incomes of up to €70,073. Any income over this is still liable to the USC at 8%. For the self-employed the additional surcharge on income in excess of €100,000 appears to remain.

There was no changes to the income tax rates or bands. However, self-employed individuals will now benefit from a tax credit of €550.

Universal Social Charges:

  • Incomes of €13,000 or less are exempt. Otherwise,
  • €0 to €12,012 @ 1%
  • €12,013 to €18,668 @ 3%
  • €18,669 to €70,044 @ 5.5%
  • €70,045 to €100,000 @ 8%
  • PAYE income in excess of €100,000 @ 8%
  • Self-employed income in excess of €100,000 @ 11%
  • Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum rate of 3% USC.

VAT

The 9% rate applicable to certain service industries (tourism / hospitality etc) will continue in 2016. No further changes.

Home Renovation Incentive (HRI)

This incentive which came into force following Budget 2014 provides a tax credit to homeowners who carry out renovation and improvement works on their principal private residences and investment properties. The tax credit is calculated at 13.5% of qualifying expenditure over €5k to a maximum of €30k. This scheme has now been extended to December 2016.

Capital Gains Tax (CGT)

A CGT relief for entrepreneurs will be introduced from January 2016 and a lower CGT rate of 20% will apply to the disposal in whole or part of a business up to an overall limit of €1m in chargeable gains.

No changes were announced with regard to CGT rates.

Capital Acquisitions Tax (CAT)

The Group A threshold (Parent to child, primarily) has been increased from €225,000 to €280,000 with immediate effect.

No changes were announced with regard to CAT rates or bands.

Corporation Tax

The Government has stated its commitment to maintaining the 12.5% Corporation Tax rate.

The 3 year start up tax exemption has been extended for a further 3 years, while a special corporation tax rate of 6.25% will apply to certain qualifying income from R&D activity.

Deposit Interest Retention Tax (DIRT)

No changes were made to rate of DIRT.

Customs & Excise

Excise duty on a packet of 20 cigarettes is being increased by 50c with effect from 14 October 2015. No changes to duty on alcohol, petrol or diesel.

VRT & Motor Tax

No changes were announced with regard to VRT or private motor tax.

Changes were made to the rate of tax for heavy goods vehicles. The rate of motor tax will now reduce.

Pensions

No change to tax relief and confirmation that the pension levy will now be abolished at the end of 2015.

Brief outline on the Public Expenditure measures

  • Child Benefit – increase in the amount by €5 per child.
  • Extra Pre-school year- proposed extension for children aged 3 and up to 5 ½ or until they start school.
  • Statutory Paternity Leave- 2 weeks leave from September 2016.
  • Christmas – 75% Christmas bonus for social welfare recipients.
  • State Pension- increase of €3 per week.
  • GP Care- proposed extension to children under 12.

Advice

Over the coming days we will be reviewing the budget in detail and preparing appropriate analysis. If you require any clarification on any of the Budget matters please do not hesitate to contact your advisers as follows;

Telephone: 01 491 4132
E-mail: cathal@opeswealthtrust.ie
frank@opeswealthtrust.ie
Internet: www.opeswealthtrust.ie
Office: 192-194 Harold’s Cross, Dublin D6W AP86

 

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