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Budget 2017 Announced


Budget 2017 was announced by Minister for Finance, Michael Noonan, and Minister for Public Expenditure and Reform, Paschal Donohoe, on 11th October 2016.  The budget package of €1.3bn of tax cuts and increased spending includes:

  • The Universal Social Charge is being cut for lower and middle income earners.  The three lowest rates are being reduced by 0.5% and will now stand at 0.5%, 2.5% and 5%. 
  • The Earned Income Tax Credit will be increased from €550 to €950 for those who do not have access to a PAYE credit e.g. self-employed and farmers.
  • Social Welfare: Home Carers will receive a €100 increase in tax credits to €1,100.  The State Pension will increase by €5 from next March.  All weekly social welfare payments (carer’s and disability allowances and job seekers’ benefit and allowance) will rise by €5 per week, also from March.  The 2016 Christmas Bonus for social welfare recipients will be increased to 85%.
  • DIRT will be reduced by 2% for each of the next four years from 41% to 33% in 2020.
  • Housing:  A 5% rebate is being introduced on income taxes paid by First-time Buyers of a newly built home, capped at €20,000.  The Rent-A-Room scheme ceiling will also be increased by €2,000 to €14,000.
  • Capital Acquisitions Tax on all inheritances will be reduced, especially from parents to children where the threshold for CAT will rise by €30,000 to €310,000.
  • Foreign Earnings Deduction is being extended until the end of 2020. The minimum number of days for travel is being reduced to 30 days per annum, from 40.
  • A Debt to GDP ratio of 45% is being targeted by the mid-2020s.  A Rainy Day Fund is to be introduced from 2019, entailing a saving of €1 billion per year.
  • A reduction in the Capital Gains Tax to 10% will apply to the disposal in whole or in part of a business up to an overall limit of €1 million on chargeable gains.
  • The Special Assignee Relief Programme (SARP) is being extended for a further 3 years until the end of 2020.
  • The Start Your Own Business tax relief is being extended for a further two years until the end of 2018.
  • Retention of the 9% VAT rate for tourism.
  • Programme of targeted compliance interventions against those engaged in offshore tax evasion.
  • Relief on VRT on electric vehicles to be extended for a period of five years and two years for hybrid vehicles.
  • The sole tax increase is the 50c increase in excise duty on a packet of cigarettes.

For further reading, below is a summary of the main changes included in Budget 2017, prepared by a number of professional services firms:

Grant Thornton


William Fry