A summary of the main tax measures and changes highlighted in the four year National Recovery Plan 2011 - 2014 are as follows:
PAYE workers earning €18,300 until now should have incurred no income tax. This threshold will be reduced to €15,300 by 2014 through the gradual reduction of personal tax credits and bands.
Overall total income tax paid by the average worker to increase from 28.6% in 2009 to 33.7% by 2014. This is an overall increase of 5% in income tax for the average worker.
Changes to tax relief available on personal pensions
1. No PRSI or health levy relief to be given on pension contributions from 2011.
2. Annual earnings cap for tax relief on pension contributions to be reduced from €150,000 (which has already been substantially reduced) to €115,000.
3. Income tax relief on pension contributions to reduce from 41% to 34% in 2012, to 27% in 2013 and 20% in 2014.
Tax credits/reliefs to be abolished
- Tax relief for trade union subscriptions
- Tax relief for rent paid (the rent tax credit)
- The income tax aged credit (a tax credit available for persons over 65)
- Artists Exemption to be restricted to earnings of €40,000
- BIK exemption on employer provided childcare
- Tax exemption on patent royalties
- Ex-gratia termination and pension lump sums in excess of €200k to be taxed
- Approved Share Option Schemes
The 21% VAT rate is to increase to 22% in 2013 and 23% in 2014.
The 13.5% VAT rate is to remain unchanged.
Property tax of an initial €100 per annum per household to be introduced, known as Site Value Tax. The final amounts payable under this tax will be decided in 2013 when property valuations have been completed.
CGT, CAT and Stamp Duty
Plans to abolish many of the reliefs and exemptions available with capital gains tax, capital acquisitions tax and stamp duty. No details yet available.
The government reiterates its firm commitment to maintaining corporation tax at a rate of 12.5%