Budget 2019 - the highlights
Budget 2019 was announced yesterday. We've featured the main highlights here, as detailed by Chartered Accountants Ireland.
"Budget 2019 definitely dished out a little something to many and maybe that is what will make it forgettable. A hike in the tourism VAT rate, a 50 cent rise in the price of a packet of cigarettes and a doubling of betting duty allowed the Minister to significantly increase spending and paved the way for €291 million in personal tax cuts. As expected, measures to tackle the housing crisis dominated the headlines. The small amount of money left to go around saw the squeezed middle benefit from minor cuts to USC and a tweak to the standard rate tax bands."
- Income Tax: USC changes with the 4.75 percent rate reduced to 4.5 percent. Standard rate band threshold for all earnings raised by €750 i.e. single rate band increased to €35,300.
- VAT: Special 9 percent VAT rate for the hospitality sector reinstated to its original rate of 13.5 percent
- CAT: Group A threshold raised by €10,000 to €320,000
- Housing: Total budget of €2.3 billion with €1.25 billion set aside to deliver 10,000 new social homes and €310 million for a new affordable housing scheme
- Brexit: Several measures were flagged including funding for an additional 270 Revenue staff to work on customs.
Personal Tax: - many low and middle income families and individuals will see a bit extra in the bank from January, a move in the right direction coming just over ten years after Ireland officially declared itself to be in recession and after many years of “austerity” budgets and pain for Irish taxpayers.
Corporation Tax: - Ireland’s commitment to retaining the 12.5 percent corporation tax rate was confirmed by the Minister, while some of the recent corporation tax revenue surges are being put into a Rainy Day Fund. Today’s measures introduce with immediate effect a new exit tax on unrealised gains of assets located in Ireland as well as a new system of accelerated capital allowances for gas-propelled vehicles. As expected, CFC legislation will be written into Finance Bill 2018.
Capital Tax: - capital taxes were largely untouched in the Budget 2019 announcements.
VAT, Excise and climate change: - the special VAT rate for the tourism sector went from 9 percent to 13.5 percent, cigarettes and betting was also hiked, but there was no change to carbon tax.
Housing: - the Minister promised to increase capital spending on all housing measures by 26 percent on 2018 numbers to €2.3 billion. Budget measures are mainly aimed at fixing supply issues, however, from January 2019 landlords will be able to get a 100 percent deduction against rental income for interest on certain loans.
Brexit: - no change announced to VAT import rules to deal with the upfront VAT charge that traders will face when they import from the UK after Brexit. Chartered Accountants Ireland has been calling for measures to alleviate this cash flow hit - you can read more on this here.
Agri-Taxation: - tax measures were announced to help alleviate the economic difficulties and plan for sustainability, with Brexit posing specific challenges and threats.
The Finance Bill comes on Thursday 18 October - that's when we can really drill down into the changes that may impact businesses. Watch this space.