Budget 2019

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Budget 2019

 

The Minister for Finance and Public Expenditure & Reform, Mr. Paschal Donohoe presented his Budget speech on Tuesday 9th October 2018. The following changes have been announced and are due to take effect from 1st January 2019, unless otherwise stated.  

Taxation Measures

Tax Rates and SRCOPs

There has been no change to tax rates for 2019. The standard rate will remain at 20% and the higher rate at 40%.

SRCOPs will be increased by €750 from 1st January 2019 as follows.

SRCOP

       2018

       2019

Single/Widowed Person orFirst €34,550 @ 20%First €35,300 @ 20%
Surviving Civil PartnerBalance @ 40%Balance @ 40%
   
Qualifying for the Single PersonFirst €38,550 @ 20%First €39,300 @ 20%
Child Carer Tax CreditBalance @ 40%Balance @ 40%
   
Married Couple or CivilFirst €43,550 @ 20%First €44,300 @ 20%
Partnership – One IncomeBalance @ 40%Balance @ 40%
   
Married Couple or CivilFirst €43,550 @ 20%First €44,300 @ 20%
Partnership – Two Incomes

Plus an amount equal to the lower income (subject to a maximum of €25,550)Plus an amount equal to the lower income (subject to a maximum of €26,300)
 Balance @ 40%Balance @ 40%
Personal Tax Credits
The following changes to tax credits will apply:

Earned Income Tax Credit
The Earned Income Tax Credit will be increased by €200 from €1,150 to €1,350. 

Where an individual qualifies for the Earned Income Tax Credit and PAYE Tax Credit, the combined tax credits cannot exceed €1,650. 

Home Carer Tax Credit
The Home Carer tax credit will be increased by €300 from €1,200 to €1,500.  

Universal Social Charge (USC)
There was no change to the USC exemption threshold of €13,000.

The 4.75% rate has been reduced to 4.5% and the threshold for the 2% rate will be increased by €502 from €19,372 to €19,874. There has been no change to the 8% rate of USC.

For 2019, USC will apply at the following rates for those earning in excess of €13,000:

Rate Bands

Rate

Up to €12,0120.5%
Next €7,8622%
Next €50,1704.5%
Balance8%
Note: Non PAYE income in excess of €100,000 is subject to USC at 11%.

Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will pay a maximum rate of 2%. 

The rate of 8% USC will continue to apply under the Emergency Basis.

As a result of these changes, the marginal rate of tax for those earning up to €70,044 will be reduced to 48.5%.

BIK on Motor Vehicles
The BIK exemption which was introduced in 2018 for electric vehicles provided by an employer to an employee has been extended until 2021 with a cap of €50,000 on the Original Market Value of the vehicle.

Key Employee Engagement Programme (KEEP)
KEEP is a share based remuneration incentive which facilitates the use of share based remuneration by unquoted SME companies to attract key employees. Gains arising on the exercise of a KEEP share option are liable to CGT. There is no liability to income tax, PRSI or USC on exercise.

From 2019, the maximum value of KEEP share options which can be granted to any employee will be increased as follows:
  • From €250,000 in 3 years to a lifetime limit of €300,000, or
  • 100% of the annual emoluments of the employee in the tax year in which the KEEP option is granted.

Employer PAYE Compliance
The implementation of PAYE modernisation is expected to yield an additional €50m savings to the Exchequer from increased compliance levels of employers. 

Deductibility of Interest for Landlords
The deduction for interest accruing on loans used to purchase, improve or repair rented residential property is restricted to 85% of the interest accruing in 2018. This will be restored to 100% in 2019.

VAT
The 9% VAT rate for the tourism and hospitality sector will be increased to 13.5%. However, the 9% rate will be retained for newspapers and sports facilities. The VAT rate for e-books and electronic newspaper publications will be reduced from 23% to 9%.


Other Taxes

Excise Duty
There is no increase in excise duty on petrol, diesel or alcohol products.

The excise duty (including VAT) on cigarettes will increase by 50 cent on a packet of 20, with a pro-rata increase on other tobacco products from midnight on 9th October 2018.  

Vehicle Registration Tax (VRT)
VRT for cars is based on the open market selling price (OMSP) and the CO2 emission level of the car. VRT rates range from 14% to 36% of the OMSP. The VRT rate for diesel cars will be increased by 1%.

VRT relief for hybrid and plug-in electric hybrid vehicles will be extended for 2019.

Capital Acquisitions Tax (CAT)
The current Group A threshold of €310,000 will be increased by €10,000 to €320,000. Group A primarily applies to gifts or inheritances received by a child from a parent.

Finance Bill 2018
The Department of Finance is due to publish Finance Bill 2018 on Thursday 18th October 2018.

 

Employment Law


National Minimum Wage
The National Minimum Wage will increase by 25 cent from €9.55 to €9.80 gross per working hour in respect of hours worked on or after 1st January 2019.

Paid Parental Leave
The Budget provides for 2 additional weeks paid parental leave per parent (paid by the DEASP) to be introduced in November 2019 which must be taken during the first year following the birth of a child. The Minister outlined his intention to increase this leave to 7 weeks over the coming years.  

 

Social Protection Measures

PRSI
The weekly threshold for the higher rate of employer PRSI will be increased from €376 to €386. This will ensure that an employer will pay the reduced rate of employer PRSI of 8.7% in respect of an employee working a 39 hour week who is paid the national minimum wage.
 

National Training Levy
The National Training Levy which is currently collected as part of the Employer PRSI contribution under PRSI Class A will increase from 0.8% to 0.9% in 2019 and to 1% in 2020 to fund further and higher education. This will result in a combined rate of employer PRSI and Training Levy as follows under PRSI Class A, based on the current rates of employer PRSI:

 

201820192020
Employer PRSI Class A Reduced Rate 8.6%8.7%8.8%
Employer PRSI Class A Higher Rate10.85%10.95%11.05%

 

Social Welfare Payments
There will be a €5 increase in the rate of all weekly Social Welfare payments with effect from week commencing 25th March 2019, with a proportionate increase for qualified adult dependants. The rate payable for a qualified child will be increased from €31.80 to €34 per week for children under 12 and to €37 per week for children aged 12 and over.

The maximum personal rate of Illness Benefit and Jobseeker’s Benefit will be increased to €203 and Maternity Benefit and Paternity Benefit will be increased to €245 per week.

A Christmas bonus of 100% of an individual’s weekly payment will be paid this December to recipients of long-term Social Welfare payments.

The income disregard for One Parent Family Benefit will be increased by €20 from €130 to €150.

The Weekly Fuel Allowance of €22.50 will be paid for 28 weeks in 2019, up from 27 weeks in 2018.

The Back to School Clothing and Footwear Allowances will be increased by €25 for each qualifying child.

Extension of PRSI Benefits to Self-Employed Individuals
The rates of PRSI for Class S will remain unchanged but the range of benefits available to Class S contributors will be extended to include Jobseeker’s Benefit in late 2019.

 

Health Measures

Prescription Charges
Prescription charges for medical card holders aged 70 or over will be reduced by 50 cent from €2.00 to €1.50 per item.

Drugs Payment Scheme
The monthly threshold for the Drugs Payment Scheme will be reduced by €10 from €134 to €124.

GP Visit Card
The weekly income limit for qualifying for the GP Visit Card will be increased by €25.




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