Executive Summary

This year’s Budget was billed as the “Brexit Budget” and was very much prepared on a “worst-case scenario” footing.

As such a lot of the budgetary measures were targeted at businesses, industries, and sectors that are significantly exposed and at risk to a no-deal Brexit.

In this regard, a fund of €1.2bn has been allocated to prepare for a no-deal Brexit.

Social welfare increases have been targeted at the less well off, rather than across the board increases to payments.

There was an increase in Carbon Tax of €6 per tonne [€26 per tonne] resulting in an increase in petrol and diesel from midnight while increases to other fuels has been deferred until May 2020.

No changes to Income Tax, rates, bands or USC were announced.

While estimating economic growth of 5.5% for 2019, projected growth of 0.7% for 2020 is very much dependant on Brexit unfolds. The unemployment rate which currently stands at 5.2% is expected to rise to 5.7%, while a budgetary deficit is almost certain in the event of a no deal.

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 2020 as they will affect you are as follows;

• An increase in the Home Carer Tax Credit from €1,500 to €1,600.
• An increase in the Earned Income Credit from €1,350 to €1,500.
• No changes to income tax rates. Income tax rates remain 20% and 40%.
• No changes to the USC rates.
• Group A inheritance Tax Threshold [Parent – Child] increased from €320,000 – €335,000.
• No changes in CGT or CAT rates.
• Cigarettes to increase by 50c per packet of 20.
• No change to main Corporation tax rate.
• Stamp Duty rate applicable to non-residential property will increase from 6% to 7.5% from tonight.
• Help to Buy Scheme to be extended until December 2021.
• Increase in Carbon Tax [fuel] by €6 a tonne.

Income Tax and Levies

• No changes to the rates or tax bands.
• No changes to the USC rates.
• Earned Income Credit for self-employed individuals will increase from €1,350, to €1,500.
• Home Carer Tax Credit will also increase from €1,500 to €1,600.

Tax Bands Amendments

• €35,300 for single individuals
• €44,300 for married one earner couples.

Private Business

• Key Employee Engagement Programme (KEEP)– A share-based remuneration incentive was introduced in 2018. There will be an amendment to the scheme
  • to allow companies who operate through a group scheme to qualify for KEEP and
  • The legislation is to be amended to allow existing shares to qualify for KEEP
• Employment and Investment (EII). This relief provides individual investors with tax relief for investing capital investments in qualifying SMEs. The main changes to the scheme are as follows:
  • full income tax relief (40%) to be provided in the year in which the investment is made.
  • the annual investment limit will be increased from €150k to €250K and to €500k in the case of those who invest for a minimum period of 10 years

Property

Help to Buy (HTB) HTB

• is an income tax incentive measure designed to assist first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. The current scheme which was due to expire on 31 December 2019 is to be extended until 31 December 2021.

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 €320,000 to €335,000.

No changes were announced regarding the Group B or C Thresholds.

Corporation Tax

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

Climate and Environmental Measures

Carbon Tax- increase of €6 per tonne to €26. This increase for auto fuel will take place from midnight while it will be deferred until May 2020 for other fuels.

Customs & Excise

Excise duty on a packet of 20 cigarettes is being increased by 50c with effect from 09 October 2019.

Pensions

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

Social Welfare Benefits

• State Pension- no changes.
• Social welfare payments- no blanket increase to payment. Targeted increases to less well off.
• Christmas – 100% Christmas bonus will remain in place.
• Free GP for children u8 and dental care for children u6 from September 2020.

Advice

Please note that this is a general summary and no action should be taken without taking detailed advice.