PROPERTY/LOCAL PROPERTY TAX

LOCAL PROPERTY TAX (LPT).

  • A new Local Property Tax will commence on 1 July 2013.
  • The tax will be charged at 0.18% of market value up to €1m.
  • A rate of 0.25% will apply to any excess in value over €1m.
  • Only a half year will be charged for 2013.
  • There will be a system of taxable bands in increments of €50,000 for properties valued less than €1m.
  • LPT will be calculated by applying the tax rate to the midpoint of the band.
  • Properties valued over €1m will be assessed at the actual value (no banding will apply), i.e. 0.18% on the first €1m in value and 0.25% on the excess.
  • Owners of residential properties including rental properties will be responsible for payment of the tax.
  • The initial valuation will be valid up to and including 2016.
  • Certain properties will be exempt from LPT. These exemptions largely correspond to exemptions from the Household Charge.
  • Where LPT remains outstanding, a charge will attach to that property.
  • In the case of the self-employed, the Revenue Commissioners will not issue a tax clearance certificate where there is unpaid LPT. In addition, non-compliance will be linked to the filing of an Income Tax return, thus exposing a self-employed taxpayer to an Income Tax surcharge.

Click to link through to LPT Ready Reckoner

HOUSEHOLD CHARGE / NON - PRINCIPAL PRIVATE RESIDENCE CHARGE (NPPR)

  • The Household Charge will cease with effect from 1 January 2013.
  • In relation to the Household Charge, any arrears that are not discharged before 1 July 2013 will be increased to €200 and will be collected through the LPT system.
  • The NPPR charge will cease with effect from 1 January 2014. However, unpaid arrears together with any interest and penalties will remain a charge on the property.

REAL ESTATE INVESTMENT TRUST (REIT)

  • A REIT is an established internationally recognised model for property investment which is to be introduced in order to allow investors to access property investment in a risk diversified manner. Qualifying income and gains in a REIT will be exempt from Corporation Tax at the level of the REIT company. The REIT is required to distribute profits annually for taxation at investor level.

PERSONAL TAX & PENSION

INCOME TAX

  • There were no changes to the Income Tax rates.
  • The exemption limits, tax credits and standard rate bands applicable for the tax year 2013 are unchanged from the previous year.

UNIVERSAL SOCIAL CHARGE

  • The only change to USC is that the reduced rate of USC for those over 70 years of age with an income in excess of €60,000 will be discontinued from 1 January 2013 and the standard rates of USC will apply.

MORTGAGE INTEREST RELIEF

  • Enhanced mortgage interest relief introduced in last year’s budget will end on 31 December 2012. Thereafter anyone who purchases a new residential property will no longer qualify for mortgage interest relief.

PENSION CHANGES

  • From 1 January 2014 tax relief on pension contributions will be allowable where the pension schemes will deliver income up to €60,000 per annum.
  • Tax relief on pension contributions will continue at the marginal rate of tax.
  • The levy on pension funds announced as part of the Jobs Initiative Scheme will not be renewed after 31 December 2014.
  • An individual will now be allowed a once-off option to withdraw up to 30% of the value of additional voluntary contributions (AVCs) pre-retirement. Withdrawals will be liable to tax at the individual’s marginal rate. This option will be available for 3 years from the passing of the Finance Bill 2013.

TERMINATION PAYMENTS

  • Top Slicing Relief will no longer be available from 1 January 2013 on ex-gratia lump sums in respect of termination and severance payments where the non-statutory payment is €200,000 or over.

BIK AND PREFERENTIAL LOANS

  • From 1 January 2013 the specified interest rate used in calculating the taxable benefit for preferential loans will increase from 12.5% to 13.5%.
  • The specified rate used to calculate the taxable benefit from home loans will decrease from 5% to 4%.

DIRT

  • The rate of retention tax that applies to deposit interest is being increased from 30% to 33%.
  • The rate of tax that applies to life assurance policies and investment fund payments made less frequently than annually is also being increased by 3% from 33% to 36%.
  • The increased rates will apply to payments made on or after 1 January 2013.

MATERNITY BENEFIT

  • Maternity benefit will be taxable for all claimants with effect from 1 July 2013. This benefit is not liable to USC.

FILM RELIEF

  • The film tax relief scheme is to be extended to 2020.

CAPITAL TAXES

CAPITAL ACQUISITIONS TAX (Gifts & Inheritances)

  • The rate of Capital Acquisitions Tax is increased to 33% from 30% in respect of gifts and inheritances made after 5 December 2012.
  • The new thresholds are set out hereunder:
  • A-Parent to child
  • €225,000
  • B-Between related persons € 29,887
  • C-Between non-related persons € 14,944


CAPITAL GAINS TAX

  • The rate of Capital Gains Tax is increased to 33% from 30% in respect of disposals made after 5 December 2012

SMEs/BUSINESS

CORPORATION TAX RATE

  • The 12.5% Corporation Tax rate will remain in place indefinitely.

TAX EXEMPTION FOR START-UP COMPANIES

  • The 3 year tax exemption for start-up companies is being extended to allow any unused relief arising in the first 3 years of trading to be carried forward.
  • This is subject to the maximum amount of relief in any one year not exceeding the eligible amount of employer’s PRSI in that year.

RESEARCH AND DEVELOPMENT TAX CREDIT

  • The expenditure allowed on a volume basis for the purpose of the 25% R&D tax credit is being increased from €100,000 to €200,000.
  • The R&D tax credit regime will be reviewed in 2013.

CLOSE COMPANY SURCHARGE

  • The de minimis amount of undistributed investment, rental and professional income which may be retained by a close company without giving rise to a surcharge on such income is being increased from €635 to €2,000.

VAT

  • The annual VAT cash receipts basis threshold for small and medium enterprises is being increased from €1m to €1.25m with effect from 1 May 2013.

EXCISE DUTY RELIEF FOR HAULIERS

  • A rebate of excise duty on auto-diesel for licensed road hauliers will be introduced from 1 July 2013.

FOREIGN EARNINGS DEDUCTION

  • Foreign earnings deduction is to be extended for work related travel to certain countries beyond the BRICs which support exports.

EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)

  • There is to be an extension of the EIIS from 2014 to 2020.

AVIATION SECTOR

  • An accelerated capital allowance scheme over 7 years in relation to the construction of certain aviation-specific facilities will operate for a period of 5 years.

AGRI FOOD INDUSTRY

STOCK RELIEF

  • Stock relief of 25% has been extended for a further 3 yearsto 2015.
  • The Young Trained Farmer stock relief of 100% is also extended for a further 3 years to 2015.
  • There is an extension to the definition of registered farm partnerships to include other registered farm partnerships such as beef production partnerships for the purpose of the 50% rate of stock relief.

RELIEF FOR FARM RESTRUCTURING

  • To enable farm restructuring, relief from Capital Gains Tax will be available where the proceeds of the sale of farmland are re-invested for the same purpose.
  • The initial sale or purchase transaction must occur within the period commencing 1 January 2013 and ending on 31December 2015. The sale and purchase of the farm land must occur within 24 months of each other.

REDUCTION IN THE FARMERS’ FLAT RATE

  • The farmers’ flat rate addition will be reduced from 5.2% to 4.8% with effect from 1 January 2013.

MISCELLANEOUS

CHARITABLE DONATIONS

  • A simplification of the scheme of tax relief for donations to charitable and other approved bodies is being introduced to give a blended rate of relief of 31%.

EXCISE DUTIES

  • No increase on excise duty on diesel and petrol.
  • Excise duty on a packet of cigarettes is increasing by 10 cent.
  • Excise duty on a pint of beer or cider and a standard measure of spirits is being increased by 10 cent.
  • Excise duty on a 75cl bottle of wine is being increased by €1 with pro-rata increases on other products.
  • These increases take effect from midnight on 5 December 2012.

MOTOR

  • Motor tax rates and VRT will increase with effect from 1 January 2013.

CARBON TAX

  • The Carbon Tax will be extended to solid fuels on a phased basis. A rate of €10 per tonne will be applied with effect from 1 May 2013 and a rate of €20 per tonne from 1 May 2014.
 
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